CLC HUMAN RESOURCES

November 2010

Diversity Effectiveness Diagnostic

CLC Human Resources, Corporate Leadership Council 2010 The Corporate Executive Board Company. All Rights Reserved. CLC6163410CUS

Diversity Effectiveness Diagnostic

CORPORATE LEADERSHIP COUNCIL CLC HUMAN RESOURCES Research Analyst Prashasti Mishra Senior Research Analyst Alexandra Mininger Managing Director Brian Kropp Senior Director George Penn

NOTE TO MEMBERS This project was researched and written to fulfill the research request of several members of The Corporate Executive Board Company and as a result may not satisfy the information needs of all member companies. The Corporate Executive Board Company encourages members who have additional questions about this topic to contact the Member Support Center at EXBD_Support_CLC@executiveboard.com for further discussion. The views expressed herein by third-party sources do not necessarily reflect the policies of the organizations they represent. PROFESSIONAL SERVICES NOTE CLC Human Resources has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however, and CLC Human Resources cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, CLC Human Resources is not engaged in rendering legal, accounting, or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs are responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by The Corporate Executive Board Company or its sources.

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Diversity Effectiveness Diagnostic

Overview
To assess organizational effectiveness at managing diversity, organizations must move beyond measuring demographic data to measuring how effectively their people and programs support an inclusive culture. This resource helps you evaluate the current state of diversity in your organization and identify how well diversity is embedded into your organizational culture and talent management processes. It also presents an overview of the attributes of a best-in-class diversity strategy.

How to Use the Diversity Strategy Assessment

Step 1: Review Attributes of a Best-in-Class Diversity OrganizationStudy the attributes of a best-in-class diversity organization on Page 4 and share them with senior leaders and other stakeholders. Step 2: Distribute AssessmentsAsk diversity council members, HR staff, and other diversity stakeholders to complete the Diversity Strategy Assessment on Page 5-6 in order to use their feedback to assess diversity effectiveness. Step 3: Score AssessmentsScore the returned Diversity Strategy Assessments in the following two ways: first, add the scores for all questions for all the returned assessments to get an overall score and divide that number by the total number of assessments completed. This will give you the average overall assessment score. Second, calculate the average score for each individual attribute by adding up the scores for the three questions within that attribute (for all the returned assessments) and then dividing by the number of assessments completed. Step 4: Review Overall Level of CapabilityAssess the strength of your diversity strategy by reviewing the levels of capability associated with overall assessment scores on Page 7. This score will help you track progress over time. Step 5: Identify Areas for ImprovementIdentify individual diversity attributes that you need to focus on to improve your organizations diversity capability. Refer to Page 8 for CLC Human Resources support to improve performance against specific diversity attributes.

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Diversity Effectiveness Diagnostic ATTRIBUTES OF A BEST-IN-CLASS DIVERSITY ORGANIZATION

This placemat shows the 12 most important attributes for a best-in-class diversity organization. CLC Human Resources identified these attributes by surveying employees to determine which aspects of a diversity program have the highest impact on employees overall diversity satisfaction, a measure that correlates with employee attraction and commitment. In addition to impacting employee attraction and commitment, focus on the right diversity attributes helps improve level of organizational innovation and business performance. You can use this placemat to set your diversity strategy, communicate the importance of diversity initiatives to relevant stakeholders, and assess your organizations 1 progress against diversity goals. Demographic Diversity of the Workforce
The presence of different demographic groups in the workforce

Employee Resource Groups

The effectiveness of employee resource or affinity groups

Diversity Reputation
The organizations reputation for diversity in the external media

Diversity Mission and Values

The comprehensiveness of a diversity mission statement and diversity values

Diversity Function
The effectiveness of a diversity function or department

Attribute Grading Potential Impact If performed to the highest standard, the impact of this diversity attribute on employee attraction and commitment would be the following:

Demographic Diversity in Leadership

The presence of different demographic groups in leadership positions

1 = Moderate 2 = High 3 = Very High

Demographic Diversity in Board of Directors

The level of diversity (presence of minority groups) on the Board

This grading system has been determined based on CLC Human Resources data on the impact of diversity attributes on overall employee satisfaction with diversity, which in turn impacts employee attraction and commitment. Attributes impacting diversity satisfaction levels by more than 29% are very high impact attributes, followed by high impact attributes (12%-28% impact), and moderate impact attributes (3%-11% impact). The higher the impact of the attribute on employees diversity satisfaction level, the greater the importance of the attribute for employee attraction and retention. The high impact attributes also better support organizational innovation and business performance. Diversity Recruiting
The effectiveness of recruitment practices for minority groups

Diversity Development Opportunities

The effectiveness of development programs for diverse employee groups

Manager Commitment to Diversity

The level of manager commitment to diversity

Diversity Training
The effectiveness of diversity and inclusion training for all employees

Marketplace Diversity
The effectiveness of customer and supplier diversity programs

For more information on diversity attributes and their impact on employee attraction and commitment, refer to the Employment Value Proposition Design Center and select Diversity Preferences within Step 2 after launching the tool.
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Diversity Effectiveness Diagnostic DIVERSITY STRATEGY ASSESSMENT

Rate the diversity attributes listed below on a scale of 1-5 to assess how well your organization is performing against each of them. Rating Scale: 1Strongly Disagree, 2Disagree, 3Neutral, 4Agree, 5Strongly Agree Attributes Workforce Diversity Employee Resource Groups (ERGs) Diversity Reputation Diversity Mission and Values Management and Leadership Diversity Diversity Development Programs Measures Our employee population effectively reflects the demographic make-up of our areas of operation. We are satisfied with the demographic diversity of project teams in our organization. We are satisfied with the alignment of our diversity definition to the demographic characteristics of our operating location. We are satisfied with the number of Employee Resource Groups (ERGs) in our organization. We are satisfied with the level of financial support provided to ERGs to organize events. We are satisfied with employee participation in our ERGs. We are satisfied with our level of participation in external diversity events (fairs, conferences). We are satisfied with the level of third-party recognition and/or awards for our diversity efforts in the past two years, compared to peers. We are viewed as an employer of choice for diverse employees. Diversity forms a part of our overall organizational mission statement. Diversity forms a part of our organizational values. We are satisfied with the content and comprehensiveness of our diversity mission statement and values. We are satisfied with the diversity representation in our management and leadership team (gender, ethnic, and racial diversity). We are satisfied with the diversity representation within our High-Potential talent group. We are satisfied with the level of development opportunities available to minority employees to help them succeed in leadership roles. We are satisfied with our efforts to proactively understand the development needs of minority employees. We are satisfied with the quality of mentoring opportunities provided to minority employees. We are satisfied with the level of career development support provided to minority employees. Rating

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Diversity Effectiveness Diagnostic DIVERSITY STRATEGY ASSESSMENT (CONTINUED)

Rate the diversity attributes listed below on a scale of 1-5 to assess how well your organization is performing against each of them. Rating Scale: 1Strongly Disagree, 2Disagree, 3Neutral, 4Agree, 5Strongly Agree Attributes Marketplace Diversity Diversity Training Diversity Recruiting Management and Leadership Commitment to Diversity Board of Directors Diversity Diversity Function Measures We are satisfied with the effectiveness of our supplier diversity program. We are satisfied with our marketing initiatives for diverse customer groups. We are satisfied with the level of investments in businesses owned by minority groups. Our workforce understands the importance of organizational diversity. We are satisfied with the effectiveness of our diversity, inclusion, and anti-discrimination training for employees. Our employees understand their role in supporting diversity at the organization. We are satisfied with the level of sponsorship we provide in recruiting events targeted toward minority groups. We maintain internship programs that effectively target minority groups. We are satisfied with the level of diversity within our new-hire population. Our senior and middle-management are skillful at resolving employee racial, gender, ethnic, and/or religious conflicts. Our senior and middle-management effectively role model how to interact with employees from different cultures. Our senior and middle-management cultivates an inclusive and diverse work environment, valuing different employee perspectives. We are satisfied with the diversity representation in our Board of Directors. Presence if minority members facilitates more original thinking at the Board level. The Board of Directors values diverse opinions. We are satisfied with the effectiveness of our diversity team in designing programs to support overall diversity goals. We are satisfied with the effectiveness of our diversity team at implementing programs to support overall diversity goals. We are satisfied with the budget dedicated toward diversify initiatives. Rating

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Diversity Effectiveness Diagnostic LEVEL OF DIVERSITY CAPABILITY

Tracking your organizations level of diversity capability over time helps you measure overall strategic progress and communicate about high-level effectiveness to stakeholders. This measure is often used in an HR scorecard or other annual reports. To determine your organizations overall level of diversity capability, add up the total score from all returned Diversity Strategy Assessments and divide that number by the total number of assessments. This will yield your organizations level. The diversity capability levels defined below are based on a model developed by Lockheed Martin.2

Diversity Capability Level Score Range 36-71 Diversity Capability Level Level 1: Foundational Description The organization maintains limited diversity practices and they tend to not be integrated or strategic.

72-107

Level 2: Progressive

The organization maintains basic diversity practices, but has not yet integrated diversity into talent management strategy.

108-154

Level 3: Integrated

The organization has a well-defined diversity strategy, integrating diversity into talent management programs, but diversity is not perceived as a part of the organizational culture.

155-180

Level 4: Institutionalized

Diversity is embedded as an organizational value and the organization embodies its diversity values, providing an inclusive environment to employees to raise issues and concerns.

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Diversity Effectiveness Diagnostic NEXT STEPS

In addition to understanding the overall diversity capability level of your organization, it is essential to identify specific attributes against which your organization needs to improve. By assessing your performance against these attributes, you can determine where to focus future diversity investments. To calculate the average score for each individual attribute, total the score for each question within the attribute category and then divide that number by the number of assessments completed. Focus on improving against the attributes that have the lowest scores. Refer to the table below for CLC HR resources to improve performance against specific attributes.

Diversity Attributes

CLC Human Resources Support Improve your workplace diversity by appropriately defining the diversity dimensions that reflect the demographic make-up of the workforce. Use to the study Defining Global Diversity Dimensions and Metrics to identify diversity dimensions most commonly tracked by companies in different geographic locations. Effectively maintaining ERGs requires convincing the leadership to sponsor them and communicating their advantages to the employees. Refer to our resources on Sponsoring Employee Resource Groups to effectively build and maintain organizational ERGs. An organizations diversity reputation is based on its commitment to diversity and practices adopted to display that commitment. Access our Diversity Topic Center for end-to-end guidance on embedding diversity in your organization. Organizations can use a variety of ways to define their diversity philosophy, strategy, or mission. Use the study Diversity Mission and Values Statement to understand what type of information companies include in their diversity statements. Organizations should start focusing on high-potential employees at the early stages of their careers, in order to maintain a strong minority representation within the management and leadership teams. Refer to the study Tactics to Develop a Diverse Leadership Pipeline to learn how leading organizations develop formal leadership training programs. Organizations can develop minority talent by making diversity a component of high potential (HIPO) and succession management programs. HR can also launch focused mentoring and development programs to help underrepresented groups gain leadership skills and navigate career challenges. Use our resources on Developing Diverse Talent to improve diversity development and mentoring programs. Organizations should ensure that their diversity strategy includes elements of marketplace diversity. Read our study Developing a Diversity Strategy for information on how to include marketplace diversity within a broader diversity strategy. Diversity training should be offered to all employees with a focus on people managers to help them create a more inclusive environment for their direct reports. Use our resources on educating the workforce to design and run diversity training programs. Maintaining a competitive employment value proposition and targeting attraction and retention initiatives toward underrepresented talent segments helps improve minority hiring. Use our resources on attracting and retaining diverse talent to identify tactics to improve minority hiring.

Workplace Diversity Employee Resource Groups (ERGs) Diversity Reputation

Diversity Mission and Values Management and Leadership Diversity Diversity Development Programs Marketplace Diversity

Diversity Training

Diversity Recruiting

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Diversity Effectiveness Diagnostic NEXT STEPS (CONTINUED)

Diversity Attributes Management and Leadership Commitment to Diversity Board of Directors Diversity CLC Human Resources Support Establishing leadership and management accountability for diversity can improve employee talent outcomes (e.g., engagement, retention, and performance) by as much as 25%. Use our resources on establishing leadership accountability to understand how to establish hard and soft leadership accountability for diversity. Board of Directors diversity is important to demonstrate organization commitment towards diversity. Use the study Prioritizing Diversity and Inclusion Investments to understand why Board of Directors diversity may be important and how to focus on it. Organizations can use varying staffing structures to support diversity strategy. Refer to our resources on selecting diversity function structure to identify the structure most suitable for your organization.

Diversity Function

CLC Human Resources, EVP Design Center, Arlington, Virginia: Corporate Executive Board (2010). Diversity Maturity Model, Lockheed Martin Corporation (Date Unknown). (Obtained through http://www.complianceweek.com/s/documents/Compliance%20Week%202007/Resource%20Materials/Eldridge,%20Alice%20-%20Lockheed%20Martin%20Corp%2349F4/Compliance%20Week%20%20DMM.pdf). [Accessed 10 August 2010].
2

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