Workforce Compliance and Diversity: Challenges, Solutions and Tools

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1 A PeopleFluent White Paper Workforce Compliance and Diversity: Challenges, Solutions and Tools According to U.S. census data, a racial or ethnic minority won t exist by If you had to make the same projections about your organization, could you do it? When it comes to your workforce, few things are more complex than compliance, diversity and understanding your analytics. But more and more businesses are seeing the value of all three and looking for a better way to monitor and report on diversity and compliance.

2 You use analytics to evaluate your company s financial health for strategic business initiatives. It makes just as much sense to use workforce analytics to monitor compliance risks related to HR decisions or progress on diversity initiatives. And the fact is, powerful metrics can simplify workforce compliance and diversity. Challenges, Risks and Rewards For many businesses, monitoring and reporting on compliance and diversity becomes challenging when it comes to finding the people and time to do it. What s more, learning and retaining all of the components of compliance can be daunting. Once these hurdles are overcome, organizations must find a way to incorporate compliance and diversity initiatives into their existing business processes. And most reporting tools on the market only allow companies to look backward or evaluate the current make-up of their workforces. A recent McKinsey & Company study found that the 10% increase in women s share of the labor market over the last 40 years accounts for 25% of GDP in the U.S. So why should your organization care about workforce compliance and diversity analytics? In many cases, it s the law. Federal contractors with 50 or more employees risk losing contracts or bids if they don t comply with reporting on gender, race and ethnicity for contracts greater than or equal to $50 thousand (in most cases and major industries). Compliance is a critical revenue deal-breaker for government contractors. Beyond government contracts, diversity drives economic growth. For example, a recent McKinsey & Company study found that the 10% increase in women s share of the labor market over the last 40 years accounts for 25% of GDP in the U.S. The more direct impact to organizations is significant as well. Companies can expect to spend $40 to $50 thousand dollars on audits alone and that s not counting what they ll pay in fines for noncompliance. Those organizations that do value diversity can expect to see a competitive advantage. According to the Center for American Progress, diversity fosters innovation and creativity. In addition, more and more businesses want employees who look like their customers for a larger market share. And diversity is attractive to potential hires, creating a competitive advantage for talent acquisition. Plus, the ability to measure yourself against competitors is business-critical as organizations increasingly compete for top talent. Workforce Compliance and Diversity: Challenges, Solutions and Tools 2

3 Simplify Compliance and Diversity by Knowing What to Measure So what should you be monitoring when it comes to workforce compliance and diversity? We ve compiled a list of key metrics in critical Workforce Compliance and Diversity areas to help you better incorporate compliance and diversity measurements into daily business processes and to help save you time and resources. Table 1: Workforce Compliance and Diversity Metrics and Impact identifies the three areas of workforce reporting and planning where Workforce Compliance and Diversity metrics are important, along with specific metrics and the bottom-line impact of each. Table 2: Workforce Compliance and Diversity Metrics Glossary is an actionable breakdown of key terms, with definitions and formulas for each metric and how to monitor and apply those metrics. This glossary also outlines the boardroom-ready reports and analytics available within InSight, the SaaS solution from the workforce planning and analytics division of Peoplefluent. Having a better understanding of which metrics mean most for your compliance and diversity initiatives plus why and how to monitor them is the first step in simplifying workforce analytics for your business needs. Table 1: Workforce Compliance and Diversity Metrics and Impact Key Impact Area Related Metrics Bottom-Line Impact Workforce Makeup Talent Mobility Headcount Years of service Female percent percent Average age Promotion rat Job level Career path ratio Learning and development cost Compensation Equity Average total compensation Reduced claims risk Audit readiness Visibility into whether diversity/compliance gaps exist Audit readiness and reduced risk Reduced EEOC and OFCCP claims Go beyond compliance to create a competitive advantage with a diverse workforce Promote the best talent and identify high performers Reduced risk of claims Workforce Compliance and Diversity: Challenges, Solutions and Tools 3

4 Table 2: Workforce Compliance and Diversity Metrics Glossary Metric Definition/What to Monitor Formula Headcount/ Employee and Hire Ratios Female Percent Percent Job level Years of service Average age Promotion rate Headcount is the number of employees in an organization who receive compensation directly from the organization. Includes employees on a leave of absence, paid or unpaid. Employee and Hire Ratios are percentages of employees who fall into certain groups (female, diversity, etc.) either as a percent of new hires or total headcount. This demographic category is used to identify patterns and trends and generally includes the following (as defined by organization): Executive level Management level Individual Contributor level Years of service is the length of employment with an organization, calculated from the hire date. The term can also be referred to as tenure, but should not be confused with seniority date, which is determined by an organization s HR policy. The average age of the organization s total employee population. The rate of internal employee movement in which there is an advancement of rank or position in an organizational hierarchy system. Employees who self-identify as an Aboriginal Person, Person with a Disability, or Member of a Visible Minority/Headcount New Hires who self-identify/ Total New Hires Most job level metrics are evaluated by filtering other metrics (Current date Hire date)/12 Total Age of Employees/ Headcount Promotions/Headcount InSight s Boardroom-Ready Reports/Analytics profile org charts and gender filters on headcount reports and trend lines Internal talent mobility trend lines Org charts by job level and diversity profile Promotion rate Employee tenure Staffing age profile org charts Internal talent mobility trend lines Promotion rate Quality new hire & gender filters Initiatives Affected Compliance reporting Workforce visibility Audit readiness New business Retention Career path ratio Employees moving upward in the organization as a percentage of all employee movement. Promotions/(Promotions + Transfers) Career path ratio reports with diversity and gender filters Retention Learning and development cost Costs incurred to design and administer training. Cost formulas include: Learning & Development Cost/FTE Learning & Development Cost/ Revenue Learning & Development Cost/ Labor Costs Internal talent mobility trend lines based on development events Average total compensation The average labor cost to the organization for each employee. Total Comp/Headcount Average total compensation Org charts showing headcount and compensation Compliance reporting Workforce visibility Audit readiness

5 Workforce Compliance and Diversity Checklist With looming compliance audits and increasing pressure from executive leadership to focus on diversity and inclusion, putting the right processes and measurements in place can be downright daunting. We ve compiled a list of questions to ask yourself and exercises to complete covering everything from your current state of compliance to the processes you need to put in place that will help you overcome workforce compliance and diversity challenges. Working through these lists of questions will put you on the path to both audit readiness and the diverse workforce you need for a competitive advantage. Working through these lists of questions will put you on the path to both audit readiness and the diverse workforce you need for a competitive advantage. Compliance visibility Ask yourself these questions to assess what metrics you need to see and share. What is our current state of compliance? Are our Affirmative Action plans complete? Have they been implemented? Has our plan been communicated to management? How? Are we monitoring self-identification/collection activities? Do we have a true hierarchical structure in place from which to measure the talent mobility of diversity groups? Looking forward It s not enough to know where you stand right now. Consider these questions about where you want your organization to be headed. Where do we want to be in terms of compliance and diversity? How are we measuring progress against our goals? How do we want to measure progress? Are we Identifying risk areas when it comes to hiring and promotions? Driving change To measure how effective your organization is at meeting compliance and diversity goals, ask yourself the following key questions. Workforce Compliance and Diversity: Challenges, Solutions and Tools 5

6 Are we taking corrective action when we do find risk areas? What are the results of corrective initiatives? Are we training managers properly on AA and EEO? What is the ongoing distribution of women & minorities compared to baseline/starting point? How have our hiring/promotion practices changed? What are we doing to attract qualified diversity groups (women, minorities, veterans, disabled)? What are the results? Exercises Once you ve answered the questions that uncover what you need to be measuring, consider completing a few exercises to identify additional analytics needs. Rank your organization s compliance and diversity challenges. For example: i. Have you been audited and had to pay fines? ii. Have there been EEOC claims or OFCCP audits iii. Is there pressure from leadership to build a more diverse workforce? Build your team. Use our worksheet to identify team members who are critical to your workforce compliance and diversity metrics initiatives. Learn more about how to look forward. Work through this checklist for a better understanding of predictive analytics. Solutions and Tools For Reporting and More Peoplefluent s workforce planning and analytics solutions InSight and OrgPublisher simplify how you use workforce data to monitor and report on compliance and diversity for where you are and where you want to be. Monitoring the makeup of your organization Perhaps the most important function of any workforce analytics tool is allowing you to get an accurate picture of compliance and diversity within your organization. Our solutions allow you to identify compliance and diversity gaps to see if real issues exist, plus view and print reports to prepare for audits and minimize risk. These reports and views include: profile org charts Minority and female headcount by department org charts Workforce Compliance and Diversity: Challenges, Solutions and Tools 6

7 Each of these reports can be filtered by department and additional qualifiers. InSight allows you to go beyond compliance to get more from the data you have. The diversity profile org chart shows headcount by ethnic group. See minority and female headcount by department. Visualizing talent mobility Are you promoting and developing your diverse employees? InSight allows you to go beyond compliance to get more from the data you have. You ll maximize your workforce utilization and gain a competitive advantage with reports, metrics and features such as: Career path ratio Promotion rate Quality new hire and gender filters Workforce Compliance and Diversity: Challenges, Solutions and Tools 7

8 Simplifying compensation equity The ROI of monitoring compensation equity is reduced financial risk from EEO claims and OFCCP audits. But you need to see the gaps to make the necessary changes. InSight s compensation reports, with diversity and gender filters, include: Average total compensation Internal talent mobility trend lines Trend lines show diversity trends in the workforce over time. Looking forward It s one thing to see where your workforce is now with regard to compliance and diversity? But where could you be? While most software solutions only let you look backward, solutions that let you project how changes to your workforce will impact your organization help you take the next step in thinking about Affirmative Action, diversity and building a better business. Our trend lines and predictive analytics let you do more with your analytics simply. Pulling data from existing HRIS sources means no manual inputs. And our easy-to-analyze charts and reports mean no complex deciphering. The analytics our solutions unlock are truly boardroom and audit ready. Is your workforce? Learn more about how Peoplefluent can help your organization visualize and measure workforce compliance and diversity. Visit or contact us today. Workforce Compliance and Diversity: Challenges, Solutions and Tools 8

9 About PeopleFluent PeopleFluent, the leading total workforce HCM technology company, redefines Talent Management with an innovative Talent Engagement Cloud that is built around people and not HR processes. By deeply integrating pervasive video, strategic analytics and collaborative social technologies into its complete suite of Talent Management applications, PeopleFluent redefines employee engagement to address productivity loss and diminished financial results due to an increasingly disengaged workforce. With PeopleFluent, companies can change at the speed of business without costly IT interventions through intuitive, highly configurable software that is built upon the right data. Spanning across an organization s entire global workforce with one talent cloud, PeopleFluent equips leaders with the meaningful talent data and strategic analytics necessary to make better business decisions. PeopleFluent has worked with over 5,100 organizations in 214 countries and territories to engage employees to drive better business results. Today, 80% of the Fortune 100 relies on PeopleFluent as part of their talent management delivery strategy, helping them successfully achieve their talent aspirations. Irving, Texas 400 East Las Colinas Blvd., Suite 500 Irving, TX USA Toll-free: (888) Tel: Waltham, Massachusetts 300 Fifth Avenue Waltham, MA USA Tel: Raleigh, North Carolina 434 Fayetteville Street, 9th Floor Raleigh, NC USA Toll-Free: (877) Tel: London, United Kingdom 15 Fetter Lane London EC4A 1BW United Kingdom Tel: +44 (0) Copyright 2014, PeopleFluent. All rights reserved. This document contains registered trademarks and trademarks of PeopleFluent Holdings Corp. or one of its subsidiaries. All other brand and product names are trademarks or registered trademarks of their respective holders.