How to Spend Your D&I Budget?
Diversity and inclusion practices look different for every organization. At some companies, diversity and inclusion fall under the human resources department’s scope, while at others, the company creates an independent department to manage the scope of D&I efforts by hiring a Chief Diversity Officer.
According to Workforce Management, companies in the US spent approx. US$8bn on D&I. For example, in 2016, Intel set aside US$300mm to support diversity and inclusion in the workplace. Glassdoor states that 35% of hiring decision-makers expect to spend more on diversity and inclusion programs than they have in years prior. This illustrates the increasing capital allocation with respect to D&I initiatives among companies.
The size and budget of a company ultimately dictate what specific D&I practices will look like. Companies must assess D&I responsibilities and desired outcomes for their unique organization and determine the appropriate budget.
Little to Show for Surface Level Efforts
Forbes recently reported the downfall of current D&I initiatives rolled out by many firms. Organizations spend upwards of $8 billion and have little to show for their efforts. Why is this?
Recent research shows that traditional diversity programs do not alleviate the issues faced in the workplace but actually enable them. That training has been seen to reinforce negative stereotypes and commentary, effectively reducing diverse representation in the workplace and counteracting the correct mindsets employed by supervisors.
The crux is that effective D&I spending requires more effort than what organizations have exerted. So, the surface level commitment to D&I not only fails to generate impact, but it fails to resonate with employees. The article by LinkedIn summarizes this perfectly: “Doing ‘stuff’ for the sake of doing ‘stuff’ is really obviously unauthentic for the people who work for you.”
Before you open your chequebook and spend large sums of money for the sake of doing so, read this article and follow the best practices outlined. More importantly, however, ensure that you are in the right place to begin the long journey which is associated with a cultural change.
Setting Goals and Objectives to Determine Budget
Diversity and inclusion initiatives differ significantly in companies based on different goals and objectives.
Your organization may wish to facilitate business development activities (such as workshops), holiday and culture celebrations, exploring new markets to benefit a core diverse customer segment, improve communications related to diversity, improve supplier diversity and source from minority-owned businesses, philanthropy, and many more. The list of practices that a company can engage in to address diversity and inclusion is lengthy and highly actionable.
Ask yourself what goals or objectives the company has. Does your company wish to improve diversity among employees after looking at your own statistics? Alternatively, does your company wish to benefit society by sponsoring or donating to diversity and inclusion related initiatives in the community? Maybe your company wishes to increase community appeal and organize several social gatherings and cultural diversity celebrations.
When considering the funding towards a specified D&I initiative or program, your organization should look at the business case for diversity in its corporate environment. There are many reasons for creating a culture of inclusion and promoting diversity, outlined by Diversio. For example, a more diversified workforce is proven to lead to high employee productivity and retention, as inclusion is placed first and foremost among the management team.
Leaders at companies with established workplace programs related to diversity and inclusion need to support such initiatives by communicating them as top priorities to employees and the business community and by budgeting for diversity and inclusion recruitment and retention initiatives.
A study by the Society of Human Resources Management (SHRM) states that diversity-department budgets at Fortune 1000 companies average around US$1.5mm per year. The range for diversity department budgets was US$30,000 to $5.1mm.
Distributing Your Budget
Research by Catalyst states that 82% of its member companies have a specific budget for diversity programs and activities. These budgets range broadly from $10,000 to $216mm, with a median budget of $1.2mm. Almost half of the respondents reported allocating the most significant percentage of their overall diversity budget to diversity and inclusion training programs and general administrative costs.
The distribution of your organization’s D&I budget is dependent on your goals, as outlined above. Distribution of the budget can be targeted to areas within workplace functions (such as by department, employee age, etc.) or by business activity (such as training, marketing, recruitment, philanthropy, etc.).
Research shows that out of 1000 companies, funds for outreach and recruiting (45% of companies) was also a large portion of the budget. 39% of companies reported that more than 25% of their diversity budget went towards general administrative costs (such as staffing and payroll for D&I related staff), and 25% of companies reported that diversity marketing accounts for more than 25% of their budget.
Recruitment, Staffing, and Hiring
As mentioned prior, the D&I scope and department responsibility look different for every company. Large companies may choose to hire a Chief Diversity Officer who reports directly to the CEO and oversees all D&I related activities. Smaller companies tend to depend on the human resources department to the forefront of all D&I initiatives.
Generally, the salaries and recruitment budget for D&I purposes is dependent on the budget. The larger the budget equates to the more attributable for hiring in-house employees to promote D&I related activities.
Non-Financial Expenditure is the First Step
Often, the best way to spend on D&I is without even opening your wallet. Aubrey Blanche, the Global Head of Diversity and Belonging at Atlassian, reinforces the idea of raising standards, stating that “a lack of diversity is the first indication that a company isn’t a meritocracy”. Under her leadership, Atlassian boosted its female technical hires by 80%, with 13.1% of all technical employees identifying as members of underrepresented groups.
Blanche believes that before you even spend enormous sums of money into workshops and training, you must understand why you are doing what you are doing. You have only completed the first step once you are able to look inwards, recognize the problems, create goals, and infuse them into your company’s flesh. Only then are you able to generate the right path for your company to follow.
That path will definitely include training, but not the kind that many companies have wasted resources on. Atlassian has implemented and encouraged action-oriented training. Instead of simply informing recruiters and managers on biases that they may encounter, action-oriented training provides them with specific unconscious bias sessions that are designed to give behavioural strategies that they could use to become more objective evaluators. While many evaluation processes, if not all, are subjective, this training enables evaluators to be more conscious of that and actively look to mitigate their biases.
One Diversio Recommendation to Consider
Similar to the discussion above regarding training for evaluators, consider implementing a policy for unbiased feedback training. This recommendation will teach evaluators specific measures as to how to mitigate their personal, unconscious biases. Overall, it will create a more fair and objective evaluation process.
