Proving the impact of D&I on business performance

Over the past few years, many organisations have accepted that investing in D&I is the right thing to do. But in our experience, most companies are still skeptical about there being a direct link between D&I and business performance. And many companies still don't see the value in investing meaningfully in D&I.?

At HR DataHub, we’re creating a world-first tool, to allow businesses to map correlations between D&I and business performance. We'll assess the diverse make-up of each company and identify the impact this has on a range of business measures, including profitability, employee turnover, innovation, share price, and more.

Why evidencing a link is a game-changer

Demonstrating a provable link between D&I and business performance using objective data, will influence companies and governments to embrace D&I and improve their financial and social performance. It will also disrupt the way businesses think about D&I, helping unlock the UK talent pool to drive innovation and excellence.

If you’re a senior HR leader, accessing this data means you'll be more likely to receive support for investment in D&I by directly linking to business outcomes.. By making outcomes more tangible, Instead, you'll be able to present business cases that show the bottom line impact of D&I to get the investment that's needed.

Proving that a diverse workforce drives improved business performance can convince companies to act faster and more meaningfully. Our objective will be to use quantifiable evidence to enhance opportunities for people from diverse backgrounds, while helping to improve financial results for the entire UK economy.

What the research says

While there’s been some research done, to date there’s been no solid empirical study that directly links business performance to D&I.?

For example, in 2013, Deloitte identified that a dual focus on both diversity and inclusion could improve performance, though the sample size was small and focused only in Australia. In 2017, PwC released a report on the reputation risks of not focusing on diversity and inclusion, including the detrimental effect on recruitment, attracting customers and investors. And in 2018, McKinsey tried to reinforce the link between diversity and financial performance, suggesting organisations develop better inclusion strategies to maintain a competitive edge.

In 2020, McKinsey released their 'Diversity Wins' report, identifying the connection between diversity on executive teams and financial outperformance over time. For example, companies in the top quartile for racial and ethnic diversity were 35% more likely to outperform within their industry financially. While this recent report was ground-breaking, it had some limitations. It focused exclusively on the US and looked only at the top management of organisations, exploring race and gender.?

HR DataHub? aims to look at diversity across all levels, and a broader set of characteristics, including disability, age and LGBTQ+. Exploring a fuller range of diversity gives us a far more robust view of determining whether a link between D&I and business performance exists.?

Our vision is to create a tool that would be the first of its kind, and an added dimension of analysis in HR DataHub’s existing toolkit. Much like HR DataHub’s current approach, the tool will be powered by HR data at all levels of an organisation,? sourcing data directly from their HRIS, including every employee in the company, not just senior executives. The ambition is for our dataset to grow from one to three million UK employees, exploring the contribution they make across all levels of the organisation, from the frontline to the boardroom.

As always, our intention is to connect? deep data analysis to action, by providing practical guidance, identifying toolkits, case studies, and best practice guidelines to help companies create truly diverse and inclusive workplaces.?

Building the tool

The tool will build on our ground-breaking D&I Index, launched in 2022, which assesses the D&I performance of a company, in relative terms against industry peers. The Index allows companies to see how they're performing, what areas to improve and what actions to take solely using empirical data.??

We will roll out the tool to our 150 members, representing some of the UK’s largest organisations and seek out other companies to ensure we've covered each sector in the UK.

We will correlate the D&I data we collect as part of the submission,? including representation across all levels, including tenure, pay and talent movement, to key performance indicators, such as new product delivery, profit, engagement, customer service, and turnover.??

The impact? for companies and society?

Many businesses still do not frame D&I through the lens of business cases and ROI. Our objective is to provide a solution that will allow businesses to spend their D&I budget in a targeted and meaningful way, to create the most significant impact on their people and business. In addition, it will help convince senior leaders that there is an undeniable link between improving D&I and business performance.

The data could also impact how the government views D&I. We’ll have a definitive data set that accurately shows the makeup of the UK workforce by level, role, and protected characteristic.?

By influencing both government and business, we can create real social change through a mixture of legislation and corporate strategy. Through data, we will get more people from all backgrounds into work, developing and fulfilling their potential.

We need help to make this happen

Providing a clear understanding of how a business’s approach to D&I affects underlying performance doesn’t happen on its own - we need help to make this happen. Accessing data is critical to building our solution, which will enable HR leaders to drive meaningful change, strengthen diversity and improve business performance.?

For the first time, companies will be able to use our platform to see their D&I performance based on subjective data, specifically looking at the link between diversity and company performance.?

The value of this new product for businesses is enormous, as it will simplify the? ability to identify D&I performance and key areas of focus to improve business performance. Our product will help companies target the areas that need attention and offer recommended actions. Even better, you’ll be able to track performance over time to continually improve and report on your success.

If you’re ready to take your HR data game to the next level, get in touch with us today .