Technology is playing a larger role than ever in helping organizations support and scale their diversity, equity and inclusion (DE&I) initiatives, according to a new study from RedThread Research, an HR research and advisory firm in Woodside, Calif.
The study found the number of technology vendors serving the DE&I market has grown by 87 percent since 2019, and DE&I vendors experienced an 82 percent compounded annual revenue growth rate over a four-year span.
The study also found more HR and diversity leaders have shifted their focus from gender to race and ethnicity over the past two years, and more DE&I technology providers are deploying artificial intelligence as a way to help mitigate bias in talent decisions.
Stacia Garr, co-founder and principal analyst of RedThread, believes organizations may adopt DE&I technologies at even higher rates this year, given the events of 2020 and new requirements from the U.S. Securities and Exchange Commission (SEC) about disclosing human capital resources.
"Many organizations made promises around diversity, equity, inclusion and belonging following the summer of unrest triggered by the death of George Floyd," Garr said. "So I think there will be a real push this year for greater accountability and transparency around what organizations are doing. More CEOs are now focused on it, and technology is one of the simplest ways to provide answers corporate leaders are looking for around progress."
Tolonda Tolbert, co-founder and head of strategy and culture for Eskalera, an employee experience platform provider in San Francisco, said organizations increasingly are turning to technology to help support, scale and assess their DE&I initiatives.
"Technology can be used to tell the real story of DE&I in organizations beyond colorful company brochures and statements of solidarity," Tolbert told the audience in a keynote session at the HR Technology Conference and Exposition last October.
A New Focus on Inclusion
Technology supports DE&I initiatives in four key areas, experts say: to help identify and remove unconscious bias from hiring and promotion decisions, to create greater equity in pay practices, to track progress toward DE&I goals through the use of analytics, and to create improved development and advancement opportunities for underrepresented employee groups.
"One of the big findings from our new study was a shift to focusing broadly on inclusion with the use of technology," Garr said. "When we analyzed the technology vendor market in 2019, the focus was largely on talent acquisition. But for a host of reasons, including the social justice movements of last summer, the trend has been toward using technology to foster more-inclusive work environments."
For example, today's technologies can help organizations look at differences in inclusion, engagement and belonging across key demographic groups—including intersectional groups, such as Black women—to determine if those groups are having different experiences in organizations. Other technologies can give managers feedback on how they're communicating with their team members and if there are differences by demographic type, Garr said.
She said two promising but often-underutilized opportunities for technology to support DE&I lie in helping to identify high-potential employees (HIPO) in underrepresented groups and to audit performance management data for biases.
"We know that people who get into HIPO programs usually already have strong networks in the organization and tend to be from majority populations and not underrepresented ones," Garr said. "Organizations sometimes unintentionally reinforce biases that already exist in the way they run HIPO programs."
One technology that can help identify HIPOs in underrepresented groups is organizational network analysis (ONA) software that captures data from e-mail, internal collaboration platforms, calendaring software, instant messaging and more to help map networks, communication patterns and information flow in a company. ONA helps organizations identify hidden "stars" by determining if underrepresented groups are forming the right networks and being included in the right conversations to boost their visibility and chances for promotion.
Software that audits performance management data for potential bias is similarly useful, Garr said. Such tools can analyze written performance feedback to see if biases might exist, or look at performance data like the popular "9-box grid" and identify if certain demographics are more or less likely to receive scores of high performance or high potential, Garr said.
"Such technology can help determine things like whether groups of people consistently rated as 'highly effective' haven't been promoted in the last three years," she added.
Growing Use of DE&I Analytics
One of the fastest-growing DE&I technologies is analytics software that allows leaders to better understand how they're performing against DE&I goals. Yet despite the high adoption rate, Tolbert believes companies need to move beyond simply capturing aggregate representation data to drilling down deeper into metrics to truly understand what's happening with DE&I in their ranks.
For example, if companies examine only aggregate DE&I metrics, they might see women account for 50 percent of the employee population. "But when you cut that data by job level, you might see the lion's share of women are still in the lower levels of the organization," Tolbert said.
Tolbert said organizations too often are content only with measuring whether they're hiring diverse talent. "If you don't look at what happens beyond the point of hire, you often won't be able to retain your diverse talent," she said. "What are the gaps in pay, development and advancement opportunities, and retention rates from a DE&I perspective? We must look deeper than representation when it comes to analyzing DE&I data."
Tolbert said next-generation technologies allow for things like DE&I analytics to be overlaid on engagement survey results to provide valuable insights, and can deliver automated "nudges" to leaders to help build more-inclusive cultures. Such technology can, for example, provide a nudge to managers each time they receive a calendar reminder of an upcoming team meeting about the importance of engaging all voices on their team and offering tips for how to do it, Tolbert said.
Importance of Scaling DE&I Technology
Garr said one sign of the DE&I technology market's accelerating maturation is that many vendors now have more large organizations as clients than they did two years ago. "That indicates an improved ability to scale, or larger companies wouldn't be buying these technologies," she said.
Tolbert said such scalability is crucial to DE&I initiatives. For example, new e-learning or virtual reality training platforms can bring learning to every level of an organization so the workforce begins to speak the same language and develop similar norms around DE&I issues. "You can't just train top leadership and expect the benefits will trickle down," Tolbert said. "Everyone must have a hand in practicing and sustaining the culture."
Dave Zielinski is a freelance business writer and editor in Minneapolis.