Why bother with DEI data collection?
Historically, companies have held little personal information on their employees beyond their gender and age (as found on an employee’s passport). However, employers have been under increasing pressure in recent years to collect a broader range of diversity data, most notably on racial and ethnic backgrounds.
What has changed? In part, the establishment of Black Lives Matter as a global movement has broadened the conversation around diversity in the workplace. There is also a growing global regulatory focus on DEI reporting and governance, including the EU pay transparency directive.
Organisations are under pressure from investors as well. The business case for greater workforce diversity is a powerful one: different backgrounds and experiences bring greater innovation, and that can feed into the bottom line.
At the same time, employees have become increasingly vocal about the importance of being able to “bring their whole selves to work”. Indeed, according to our 2022/23 Global Talent Trends research, one of the key indicators of a thriving employee is “feeling as if they belong in the workplace”. Furthermore, 85% of UK organisations feel that employees are placing sustained and/or increasing pressure on them to improve their racial and ethnic diversity profile.
Broad data collection — not just around racial and ethnic diversity but also encompassing other characteristics such as sexual orientation, gender identity and social mobility — gives companies the scope to adopt a more holistic and impactful approach to DEI.
What are the benefits to your company?
Without baseline DEI data, you can have no understanding of the current state of diversity in your business, and no way to measure the impact of your DEI strategy on workplace diversity or business performance.
As a starting point, DEI data can help shed light on the extent to which the diversity of your company’s employees mirrors the community it serves. A representative workforce can help cement an organisation’s reputation among both customers and potential employees. Such a workforce can also help a company better understand the requirements of its customers. When the employee population reflects the customer base, businesses are more likely to spot unfulfilled customer needs and see how products or services can meet those needs.
From an internal perspective, DEI data can:
- Show the extent of any pay gaps between demographic groups and explain them (e.g., in terms of different roles or experience). If the gaps cannot be explained, then this might well highlight unconscious biases in pay and promotional programmes, which can then be addressed.
- Enable you to understand how the hiring, promotion and exit rates in your organisation vary by demographic group and also assess what is driving this.
- Highlight which groups of employees are using your benefit solutions and which may need more targeted education or signposting to get the support they need.
- Allow the identification of differences in employee experience by demographic and intersectional groups.
What are the pitfalls?
The challenges around collecting DEI data are multi-dimensional.
At the most basic level, one of the biggest issues is whether a company’s HR system has the ability to collect and/or analyse the employee data required. Even where the HR system does have this ability, the response options to the questionnaires it uses are often pre-coded and therefore may limit the question set.
Even if the HR system is effective, the collection of data may be hampered by specific national legislation. While it is legal to collect DEI data in the UK and the US, it can be illegal or socially unacceptable to ask such questions in other parts of the world. For example, Germany does not allow questions around race, while employees are more likely to be reluctant to share their data in Asia Pacific nations.
The UK has the opportunity to be a leading nation in this area, yet only 72% of UK organisations are collecting race and ethnicity data. This is partly explained by the finding that one in every three UK organisations state that they face obstacles when trying to implement a global DEI data collection framework. In reality, given the multinational challenges involved, organisations need to start collecting data locally and then collate the information they gather to deliver a global view, where this is possible.
Collecting DEI data also relies on the participation of (and self-identification by) employees. Employees may be worried about breaches of their privacy or suspicious of their company’s motives for data collection. They may therefore be reluctant to participate. Communication and trust-building need to be central to any DEI data collection process. This will help ensure buy-in from as many people as possible and so help deliver a representative data set for your organisation.
So, how to start collecting diversity data?
- Ensure that the right technology is in place for smooth and regular data collection. Ensure that it is functioning well and that it can link with every area of your business. Your system should also create DEI metrics to monitor progress and communicate this to stakeholders.
- Identify the governance and ownership of your data collection project. The project team should have sufficient authority to successfully collect and analyse the necessary scope and amount of data.
- When it comes to drafting DEI data collection questions and answers, the options should be genuinely inclusive and be relevant to all employee groups globally. This may require questions that have local nuance to reflect individual national circumstances. These should then be rolled up into global descriptors.
- We recommend that you engage with local employee resource groups or networks to stay up to date with preferred terminology. For global organisations, we also recommend piloting the data collection drive in a few countries where you know the task will be easier. This will allow you to improve your approach as you move forward.
- Ensure the survey is as comprehensive as possible, because it will not be easy to ask additional questions.
- DEI data collection will only be successful if employees feel safe to share their data. This means building trust through inclusive communications. You should explain to employees why they are being asked for personal information, what it will be used for, who will see it and what the benefit to them will be.
DEI data collection is vital for any forward-looking company, and the time to act is now. Whatever stage you have reached in the DEI data collection process, Mercer can help you build a holistic, data-driven DEI strategy that resonates with employees and other stakeholders.