Diversity Annual Reports Yield Business Benefits

Few organizations have the resources available to publicize their diversity and inclusion efforts in a glossy, full-color diversity annual report, experts say. However, there are good business reasons for small employers to consider sharing their diversity story and ways to do so that won’t break the bank.

Diversity annual reports are most common among Fortune 50 or other large organizations, according to Jennifer Brown, president and owner of a New York City-based leadership and diversity consultancy. That’s because organizations must have a track record in diversity and inclusion, as well as commitment from the top, to produce such a document, Brown told SHRM Online. After all, such reports are “shared externally with the world,” she said, and must therefore be produced and vetted like a marketing piece.

To justify the time and resources needed to produce a diversity annual report, an organization needs to be clear about the report’s purpose.

Some companies use their diversity annual report to communicate their employment brand to prospective applicants. For example, on Aug. 28, 2012, Kellogg Company issued a news statement announcing the release of its third diversity and inclusion report. The report, titled “Features,” outlines “the company’s efforts toward building a diverse workforce reflective of the consumers it serves and the communities in which it operates,” according to the statement.

“Fostering diversity within our workforce and our supplier base is not just the right thing to do; it’s critical for helping us achieve our strategic vision,” said John Bryant, president and chief executive officer, Kellogg Company, in the statement announcing the report. “An actively inclusive, welcoming and respectful work environment promotes employee engagement, drives innovation, improves retention and boosts productivity—all of which contribute directly to our bottom line.”

Similarly, on Dec. 7, 2011, Sodexo Inc., a global provider of “quality of daily life solutions,” announced the release of its diversity and inclusion annual report for North America. The report “reveals the business rationale for Sodexo’s commitment to diversity and inclusion by providing examples of how it drives the company’s ability to attract, develop, and retain the best talent, foster an engaged and committed workforce, and deliver innovative quality of life solutions to their clients and customers,” according to the news release.

Few companies achieve this level of clarity, however. “Most companies have not considered incorporating diversity into the development of their employer brand,” according to a presentation posted on the Employer Branding Today website on Sept. 12, 2012. This is problematic, it added, because companies that do not manage part of their employment brand through diversity “will be at a disadvantage in the war for talent.”

Should You Produce a Diversity Annual Report?

Experts say there are a number of factors to consider before publicizing diversity results.

Eric C. Peterson, MSOD, manager of diversity & inclusion (D&I) for the Society for Human Resource Management (SHRM) said that an organization’s decision to publish a diversity annual report—or to include D&I in its main annual report—will depend on whether the organization sees any inherent value in diversity and inclusion or has a good story to tell.

If the organization meets these criteria, “there’s no reason to not put something out there,” Peterson told SHRM Online. “If they have enough good stuff going on that can be backed up with data, it could make a real difference for consumers, job seekers, potential suppliers and members of the surrounding community,” he explained.

If an organization’s D&I story is not a good one, however, it’s not going to tout it too strongly, he added.

Even if an organization does publish a report of some kind, “it doesn’t mean that the story is a perfect one … it’s likely there’s something that they aren’t telling us,” Peterson noted.

“The value of a diversity annual report depends upon the extent to which it complements the organization’s overall diversity and inclusion strategic framework,” Peter Bye, president of MDB Group Inc., a New Jersey-based diversity and intercultural consultancy, wrote SHRM Online in an e-mail. “To be effective, a diversity annual report should be part of an internal and external communication plan that is itself an integral part of the D&I strategy.”

“It should communicate strategic goals, progress and accomplishments in all areas of focus in the strategy,” Bye explained. “If, for example, a [D&I] strategy focuses on workforce diversity, supplier diversity, community relationships, philanthropy, investments and reputation, then these should be included in the report. Used in this strategic way the diversity annual report provides useful information, conveys commitment and business purpose, and helps build the organization’s reputation.”

Deciding What to Include

Diversity annual reports are fairly easy to find online. Some of the examples reviewed for this article include Citi’s 2011 Global Diversity Report, Warner, Norcross and Judd, LLP’s 2011 Diversity and Inclusion Annual Report and Deloitte’s Diversity & Inclusion Annual Report.

Reports vary in length, though 24-36 pages is common.

The following are some of the elements found in various reports:

• The organization’s business case or rationale for diversity and inclusion.
• A history of the organization’s diversity journey.
• The diversity and inclusion vision, mission and strategy.
• Diversity goals and progress toward achieving those goals, often depicted in colorful tables or charts.
• A list of employee resource groups and how they are structured.
• A description of programs and events held that year.
• A list of internal diversity council members or external diversity advisory group members, or both.
• A list of outside groups with whom the organization partners, such as veteran support groups.
• Descriptions of programs that demonstrate a focus on either the local community or that have a direct link to the organization’s purpose, such as health care.
• Information on the organization’s efforts to support diverse suppliers or reach diverse market segments.
• A list of diversity-related awards and honors the organization received that year.

Use Photos to Demonstrate Visible Diversity

Most diversity reports include photographs of employees, often accompanied by testimonials or stories and a statement by a top leader of the organization. Although the use of stock photos in annual reports is an accepted practice, experts suggest organizations select photographs carefully for diversity reports.

Joyce Bender, CEO of Bender Consulting Services Inc. and chair of the American Association of People with Disabilities’ board of directors, encourages organizations to use photographs of employees or other people with disabilities, rather than able-bodied models posing as people with disabilities. In addition, she recommends the use of photographs of people who are blind or deaf, as well as those who live with epilepsy, autism or an intellectual disability. “I would also include veterans with disabilities,” she wrote SHRM Online in an e-mail.

“If the company doesn’t have personal photos of people that demonstrate different aspects of diversity you should get them,” Brown added. “You should have a constant refresh of pictures.”

Add Numbers to Demonstrate Results

Many diversity annual reports contain statistics on the workforce representation of individuals from various demographic groups. Some reports contain several years’ worth of company data to show progress over time, while others compare the organization’s results to national or global workforce demographics.

This presents a dilemma for some organizations, Brown noted, especially when the data shows that the organization hasn’t made as much numerical progress as it would like. This might result in an attempt to downplay poor results and emphasize positive ones.

“Most annual reports are more of a public relations tool than a real measure of a company’s diversity efforts and success,” Dr. Denise Ajeto, principal of a Seattle-based diversity consultancy, wrote SHRM Online in an e-mail message. Thus, organizations can highlight a few areas in which they are doing well, even as they make relatively little progress in what she considers the “real measures” of diversity and inclusion, such as the representation of women and people of color in certain job classifications and higher levels of management, employee satisfaction survey scores and employee retention, she noted.

“Representation numbers are lagging indicators,” Brown explained. “They show up after an inclusive environment is created. There are many things that need to be in place in order to move those representation numbers.”

“It’s like taking a snapshot of a moving target,” she added.

Because there’s an expectation that an annual report will include numbers, Brown suggested that organizations redefine the numbers they use and find different ways to measure success. For example, an organization can focus on the growth of employee resource groups or share promotion rates by group, rather than simply counting the number of people they have.

Other Ways to Use a Diversity Annual Report

Knowing that the organization will need to publish a diversity annual report summarizing a year’s worth of work could motivate business leaders to use such a tool strategically. “Design your annual report a year ahead and use it as an aspirational tool—a starting point—for planning and accountability,” Brown suggested. Ask “What don’t we have organizationally that we need to put into place to achieve the results we want?” she added.

It’s just as important for annual reports to capture where the company is going as it is to capture where the company has gone, Brown noted.

Organizations should not ignore the opportunity to recognize employee efforts, Brown said, such as acknowledging that a sale was made because a diverse group leveraged their network or that a group made a notable contribution to a marketing campaign.

In addition, organizations can use their report to help solve a particular problem, such as attracting recent college graduates. “Always keep the audience in mind,” Brown said.

Smaller companies might have to be a bit more creative, she acknowledged, because they’ll have fewer resources to work with. In that case they might want to broaden the focus of the report by adding corporate social responsibility or innovation, she said.

“It’s a clarifying exercise,” she added. “It gets everyone together to ask ‘What are we most proud of? What is most essential?’”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.

Related Resources:

Creating a Strategic Diversity Management Plan

Mine Diversity Awards for Program Ideas, SHRM Online Diversity Discipline,September 2012

Quick Links:

SHRM Online Diversity page

SHRM Connect Diversity & Inclusion community

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