DEI Analysis

Labor Market 5.0: Effectively implement Diversity, Equity & Inclusion (DEI)

Learn how scientific analysis supports the implementation of effective Diversity, Equity, and Inclusion (DEI) policies in companies. Discover how measuring diversity, setting benchmarks, and assessing impact on employees and society can drive positive change. Promote fairness, inclusion, and innovation while meeting the expectations of a diverse labor market.

From underrepresentation of women and people of color in leadership roles to systematic biases in the hiring process – structural discrimination remains prevalent in the business world. But we also know a diverse company culture, rooted in fair and inclusive treatment of employees, benefits from greater employee well-being, enhanced innovation, and higher productivity. Implementing Diversity, Equity, and Inclusion (DEI) in the workplace unites social justice, in areas such as gender disparities and equal access to opportunities, with tackling corporate challenges in meeting demand for skilled labor and pursuing sustainable business growth. This article outlines how companies can effectively implement DEI in their corporate culture and work environment, with the objective of improving both well-being and performance.

Harnessing the opportunities Diversity, Equity & Inclusion present often requires companies to make long-term, meaningful shifts in company policy, workplace, and management. Scientific studies help HR managers to anchor DEI in the corporate culture and at the same time offer arguments to convince skeptics.

Main takeaways from DEI analysis:

  • Measure Diversity using key indicators so that a basis for action can be established.
  • Use relevant and insightful benchmarks to set targets for Diversity, Equity, and Inclusion to be strategically used by HR planning in way of company culture and the workplace.
  • Measure the impact DEI has for employees, companies and society in order to optimize the benefits which result from these policies.

Diversity, Equity & Inclusion: Definition

What is the difference between Diversity, Equity and Inclusion and how have the terms come to be recognized universally in the world of work?

Diversity

Diversity refers to the welcoming of a rich variety of social demographics within a company and its structure. These demographics include, nationalities, genders, ages, sexualities, and religions.

Equity

Equity is the fair and just treatment of all people. Specifically, gender equity refers to the distribution of responsibilities and advantageous outcomes between men, women, and all genders. Tackling discrimination and the inequalities limiting fair access to opportunities is at the heart of equity. 

Inclusion

Open communication, a sense of belonging and mutually reciprocated trust: an inclusive workplace incorporates each of these factors. In essence, inclusion promotes active participation amongst all employees by valuing and respecting one another as individuals. 

Implemented together, Diversity, Equity & Inclusion represent a method of tackling existing problems in the contemporary labor market, fulfilling social responsibility, and enhancing innovation.  

Scientific analysis for implementing Diversity, Equity & Inclusion

The first step towards implementing successful DEI policies in an organization is to measure the status quo. This enables the existing structure to be defined and made visible. WifOR’s Diversity Score measures a company’s diversity based on key indicators, including gender, age, cultural variety, gender pay gap, work flexibility, and qualifications. A Diversity Score is derived from these figures. It offers a nuanced evaluation of a company’s diversity performance and a foundational layer to develop DEI within workplace culture. The Diversity Score provides an accessible approach to identifying strengths and weaknesses in performance, paving the way for effective DEI policies to be developed. Additionally, our Diversity Score enables informed and accurate ESG reporting, which is becoming increasingly a prerequisite for sustainable business growth. The Diversity Score also helps to position organizations as attractive employers amidst the “race for talents” on today’s labor market.

Case study: WifOR’s Diversity-Score

Our experts applied the Diversity Score to discover how diverse WifOR is as an institute. The evaluation provides a performance rating from zero to ten for each indicator as well as an overall score which combines the indicators. The results can be found here.

Diversity-Score WifOR Institute

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Diversity-Score WifOR Institute

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Understanding effect: What impact do DEI policies have?

Holistically implementing DEI in a company relies on understanding the impact these policies have. By measuring impact, companies can realize – as well as communicate – the interplay within their own organization between effective DEI measures, enhanced employee well-being, and durable business success. WifOR’s DEI Impact Study is broken down into three steps:

  1. Analyze a wide range of significant DEI indicators in the company. This includes diversity dimensions such as age, gender, and cultural variety and looks at inclusion factors contributing to a fair, open, and respectful work environment.
  2. Identify the impact DEI has on the mental health of employees mental health.
  3. Quantify the resulting societal impact, measured using a monetization of the avoided productivity losses and burden of illness. The impact of DEI on a company’s performance and wider society is correspondingly calculated.

In the context of Diversity, Equity, and Inclusion, WifOR’s DEI Impact Study investigates the effect workplaces and company cultures have on the mental health of employees. The effect is then used to quantify the value of DEI policies not only for company performance but also at a societal level. Analyzing the interaction between human well-being and socioeconomic impact is the aim. On the basis of this scientific research, the DEI Impact Study also offers empirical data which can be used to promote further DEI measures in both internal and external dialogues.

Which opportunities does DEI offer companies?

Studies show that many companies still limit their search for employees to certain groups. However, due to demographic change and the sharpening shortage of skilled workers, companies will not be able to meet their workforce requirements over the long term following this approach. Therefore, HR managers will have to move away from established work models such as full-time employment, on-site, and round-the-clock availability. A greater pool of skilled workers must be reached.

Such a culture can also help to increase employee satisfaction and create a closer bond between employer and employee. Significantly, this enables companies to retain employees longer while improving their quality of life. Another important factor is that targeted DEI interventions have the been shown to contribute towards improved productivity. For example, a statistical relationship has been identified between diversity in management teams and revenue generated through innovation. In addition, DEI is an issue that is becoming increasingly important in civil society. Both current employees and applicants are entering into public dialog with companies on issues relating to DEI via rating platforms, such as Kununu. A diverse and fair working environment is particularly important for the generations Y and Z, who will form the labor market of the future.

At an institutional level, programs such as the Value Balancing Alliance and the Sustainable Development Goals (SDGs) push organizations to reflect equal opportunity values. There is also increasing discourse in the media on the subject of DEI, such as the responsibility of companies in tackling racism and promoting equality among genders. Companies that commit now to a corporate culture with corresponding values have the opportunity to align their brand image with society’s expectations.

Potential challenges: Undervaluing the complexity and intersectionality of DEI

Companies that want to implement Diversity, Equity & Inclusion often face the challenge that collecting the required data is time-consuming, especially when the demands of European data protection regulations are considered. There is also a certain complexity associated with DEI due to unintentional discrimination occurring when DEI measures are reduced to one-dimensional factors. For example, if a measure aims to improve representation and integration within the company, this might not take into account the inequalities experienced by employees based on their social background. As a result, privileged individuals within one dimension are favored. This multidimensional intersection of social categories is referred to as intersectionality. In addition, due to a lack of resources or management support, companies sometimes engage in token activism instead of striving for long-term, sustainable changes.

Guidance on practical implementing Diversity, Equity & Inclusion

Successful DEI policies focus on the long term and revolve around people. This guidance is applicable for both companies new to the topic as well as those with experience.

  • Obtaining data on DEI metrics within current workforces can be carried out using surveys and studies. Start by finding out answers to questions such as: Which demographics are over/underrepresented in my organization when compared with regional averages of the (employed) population? What are the most important inclusion factors for my employees? By making DEI measurable, companies can identify the impact of their policies and compare against others in the industry as well as international targets set out by the SDGs. Notably, these studies are to be carried out regularly so that policies remain up-to-date and focused on longevity. 
  • Define DEI for all employees at management level and educate them on the topic’s relevance. Focus should be put on sustainably integrating DEI within the company structure as well as embedding it as a core factor in each decision-making process. The goal is to make DEI a standard practice.
  • Increasing interaction within teams and tasks maximizes understanding between employees. The benefits of DEI include nurturing a cultural of open exchange. To capitalize on this, lateral and horizontal communication should be encouraged as far as possible.
  • DEI is a topic relevant to society as a whole and to which we must collectively commit ourselves. Companies are positioned to make a meaningful contribution to the current situation of marginalized groups. Companies can act as leaders in DEI by avoiding tokenism and implementing sustainable measures in their company.

Exploring the Social Impact of Diversity and Inclusion

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Exploring the Social Impact of Diversity and Inclusion

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In a nutshell: Diversity, Equity & Inclusion

In summary, Diversity, Equity and Inclusion (DEI) are important success factors for the sustainable growth of companies. A culture of open communication, with mutual trust and a strong sense of belonging, promotes innovation as well as employee retention and productivity. To successfully implement DEI measures in an organization, it is important to measure the status quo and compare the results with relevant benchmarks in order to develop targeted strategies. WifOR’s DEI studies provide a nuanced assessment of companies and can be used for ESG reporting. Through a targeted DEI strategy, companies can not only promote employee satisfaction and well-being, but also position themselves as an attractive employer in today’s labor market.