What does ‘return on investment’ mean for diversity and inclusion?

Fri 21 Jan 2022

What does ‘return on investment’ mean for diversity and inclusion?

There are many benefits to understanding the concept of ROI in diversity and inclusion schemes in the workplace — from the financial impact on the bottom line to staff engagement and senior leadership buy-in

By Murielle Gonzalez

Businesses and public sector organisations measure the return on investment, or ROI, of many aspects of their operations, but despite the crucial part it plays in the future of the organisation, ROI in the D&I space is not yet commonplace. While it’s true that ROI’s primary function is the evaluation of financial impact to the bottom line, return on investment also offers a tangible value to your inclusion and diversity activities and what they bring to your workforce — from skills and experience to an inclusive culture. And even for mission-driven organisations, such as those in the public sector, the financial benefit will follow.

Most D&I initiatives are implemented either as a reaction to something bad that has happened or because the organisation understands that inclusion and diversity in the workplace is the right thing to do. Whatever the case, D&I training for the staff is typically the first step to gain or increase knowledge. At this point, it is important to have a clear picture of what behaviour your D&I work is going to change in three, five, or 10 years' time. Thinking in terms of ROI can help you appreciate that as well.

The key to ROI in inclusion and diversity is to identify what you need to measure to show progress. That way, you will be able to talk about it with confidence, and your senior leadership will appreciate that you understand how to achieve your objectives — and that is a robust argument to get sign-off from senior leadership.

There are many aspects of the work that you can measure — financial, brand reputation, employee lifecycle data, customer service or stakeholder experience, and culture, to name a few. As for data, think about what's available from your engagement surveys, attrition rates, post surveys, voluntary exits, and sickness rates. This is an opportunity to gather all the available data in the organisation and analyse it.

The long-term view

It’s unlikely that a standalone activity will lead to the desired diversity and inclusion outcome, so you must account for multiple initiatives, all working in tandem to achieve your goals. This fact can make it hard to pitch to senior leaders in your organisation.

Take for example the discussion about the budget for D&I training. It may be the beginning of the journey, and the next activity can't happen without it. If you understand what that ROI is going to be, you can explain that there will not be an immediate return on investment from training, but in 12 months you expect to see progression on the D&I objectives that this activity sets in train, whatever those might be.

In addition to helping you see the bigger picture in the long term, the ROI of D&I provides an upskilling opportunity for everyone in the organisation, particularly senior management. Senior leaders and decision-makers have a wealth of experience managing the organisation, but diversity and inclusion might be new to them.

However, when senior executives see the ROI of the D&I work, and understand it, they become better leaders. It makes them more equipped to have conversations about inclusion — and they can push out the agenda across the organisation.

Benefits of ROI

Another benefit of ROI in the D&I space is increased staff engagement. And this is key because staff play the leading role in inclusion and diversity work. For example, diversity engagement surveys only work with their input.

Share the result of your activities with staff, and they will understand what these initiatives mean — and their value to them and the organisation. Ultimately, transparency about outcomes helps you get staff engaged. Moreover, getting into the habit of reporting what the data suggest on a regular basis is good practice.

Recruitment and promotion also benefit from a better understanding of ROI. Part of the success in talent retention and reducing staff turnover has to do with them appreciating your D&I commitments — you have employee networks and inclusive policies and processes, for example. And when staff see the organisation as an inclusion-confident employer, they are more likely to build a career within the organisation.

Understanding ROI also helps with your organisation's reputation. It gives you a data-driven, evidence-based view of the inclusion and diversity culture, and enables you to join benchmarks, accreditations, and awards offered by experts in the field. 

Finally, harnessing the power of ROI for your D&I activities helps your career, too. It will allow you to speak with your manager about how the organisation has changed because of the work you have been involved with, increasing your visibility and promotion opportunities.

ROI — how it works

Once you have decided what data you will use to measure ROI, take it as a snapshot of the current situation in the workplace. It will allow you to compare progress in the future. 

The bigger the range of data you can gather, the higher the confidence. However, bias will inevitably be in the background, so it's a good practice to think about ways to mitigate this.

When you're ready, the ROI calculation is easy — it’s a method of valuing impact improvement compared to the investment in inclusion and diversity initiatives. The calculation results in a benefit-cost ratio (BCR) or an ROI percentage (ROI%) — both describe the extent to which benefits to employees, the organisation, or even the community outweigh the costs of the D&I initiatives.

ROI is just one of the many tools managers and everyone in an organisation can take on their D&I journey. Join us on 10 May for the CIPD-certified training event D&I for Line Managers and you will come away with further insights and guidance to apply in your career and organisation.

Some sessions you don’t want to miss:

  • Uncovering the foundations of diversity and inclusion
  • From EQ to CQ: Managing diversity inclusively
  • Cultivating diverse talent: A skills toolkit for managers
  • Panel Discussion: Achieving culture change: Creating a team culture where everyone can be their whole selves



Murielle Gonzalez, content strategy manager at Dods Diversity & Inclusion, is an experienced journalist and editor. She can be reached on murielle.gonzalez@dodsgroup.com.

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