Once regarded as "nice to have but not critical," diversity and inclusion (D&I) technology has taken on new importance as the evidence mounts that demonstrates D&I's ability to improve companies' financial success.
New research shows the D&I technology vendor market is innovating and expanding as companies make pay equity, creating diverse talent pipelines, and building a fair and healthy workplace a priority for not just HR but also managers throughout the organization.
[SHRM members-only toolkit: Managing Pay Equity]
In a study conducted in February and updated in July, the research and advisory firms RedThread Research and Mercer collaborated to analyze the quickly growing D&I technology market and capture insights from vendors and HR leaders who are using technology to manage diversity in more strategic and efficient ways. A total of 121 D&I vendors were included in the study, said Stacia Garr, co-founder and principal analyst of RedThread Research, and new vendors arrive on the scene with regularity.
While maintaining compliance remains a concern for HR leaders looking to invest in D&I technologies, experts say it's now just one of many buying criteria rather than the dominant one.
"I'm seeing less focus on compliance with D&I technology, with it now being considered table stakes," said Chris Havrilla, vice president of HR technology and solution provider strategy with Bersin, Deloitte Consulting. "It's now as much about talent acquisition and people analytics as it is about pure compliance. There's more of a focus on the business criticality of workforce diversity and inclusion today."
Most vendors in the RedThread-Mercer study were focused on talent acquisition (43 percent) and analytics (26 percent), with fewer focused on development and advancement (19 percent) or engagement and retention (12 percent.) While technology and software alone can't solve inequities or discrimination in the workplace, HR professionals are finding that modern tools can bring those issues to the attention of business leaders in more impactful and efficient ways, experts say.
"Diversity and inclusion has long been owned by HR, but it's reached an inflection point where it's receiving increased attention from business leaders beyond HR, and thus more budget dollars," said Carole Jackson, senior principal of research and products for D&I at Mercer.
The growth in D&I technology solutions is being fueled by companies moving beyond strategies that focus on supporting individuals to those that support entire organizations.
"Rather than just providing one-off training of individual managers in unconscious bias or supporting individuals through employee resource groups, there's a shift to a more systematic organizational focus and a desire to create scalable change around D&I, which the right technology can help drive," Jackson said.
The capabilities of modern technology can help leaders more easily spot trends in D&I practices before they become legal or bottom-line issues, experts say. "There's a new focus on creating transparency around pay equity analytics, removing unconscious bias from hiring and having a diverse workforce," Garr said. "Rather than shying away from pursuing that data, it's now expected that companies dig deeper to find the real story about D&I practices in their companies."
Focus on Talent Acquisition
The D&I technology market is growing at a rapid pace, the Red Thread-Mercer study found, with nearly 60 percent of vendors four years or younger experiencing more than 100 percent year-over-year revenue growth. Experts say HR leaders who are purchasing systems in this developing technology category need to ask the right questions to ensure vendors deliver on what they promise.
"It's important to be laser-focused on what you're trying to achieve with D&I technology because there can be a lot of marketing-speak from vendors out there," Garr said, especially around functionalities like artificial intelligence and machine learning.
Most D&I vendors in the talent acquisition category are focused on helping companies reduce unconscious bias in hiring and create more diverse candidate pools. Technologies in that category were almost evenly split between those targeting candidate sourcing and selection in the RedThread-Mercer study.
Some systems focus on targeting job ads to specific candidates who may be under-represented or on offering enhanced search capabilities that allow recruiters to search for candidates by specific attributes, such as gender or background/ethnicity. Another group of vendors specialize in delivering "blind" resumes or profiles by removing names, photos, nationality, and other details that can be used to identify people as well as in creating blind assessments or reducing bias in background checking processes.
Garr said her recent research shows new vendors continue to emerge in this category. Two examples are Incluzion, a platform for companies to recruit, hire and pay diverse gig talent and the Mom Source Network, which uses virtual networks to connect moms looking to return to the workforce with women who are currently working.
Analytics, Development and Engagement
The RedThread-Mercer study also found that vendors and HR leaders are focusing on three other categories of D&I technology:
Analytics. The study divided D&I analytics into three types of activities—D&I analysis and monitoring (including pay equity analysis), employee resource group (ERG) management and analysis, and D&I business case analysis.
One of the biggest advantages technology can bring to D&I initiatives is improved visibility of data, Jackson said. "Companies typically have relied on a lot of ad hoc analysis to understand where they stand on diversity," she said. "The tools in modern technology make that data more visible and easily analyzed not just for HR leaders or top executives but also for line managers who are increasingly being held accountable for D&I performance as well."
The desire for more analytics goes beyond the need to make a business case for diversity and inclusion, Garr wrote in her research report. Leaders want analytics to help them prioritize D&I areas for intervention and action as they often struggle to identify key areas to improve.
Development and advancement, or processes used to develop and promote employees, including learning and development and mentorship or career management. Garr said her latest research shows more vendors emerging in the mentoring and career development space, with two examples being Everwise and InstaViser.
"But our research shows this area hasn't yet received as much attention from vendors as talent acquisition and people analytics, even though it can be even more impactful on D&I than those two areas," Garr said.
Engagement and retention. These technologies help capture how employees perceive an organization, help companies better understand and analyze diverse groups' work experiences, and show companies how diverse employees are spoken to and how they can speak to the organization.
Other vendors in this category are focused on creating improved systems for reporting misconduct, sexual harassment or discrimination in the workplace.
The ultimate goal of improving in areas like removing unconscious bias in hiring, reporting harassment and creating diverse talent pipelines should be enhanced employee engagement and retention, Garr said. "Yet only 12 percent of vendors in the study said they were directly focused on those two things."
Dave Zielinski is a freelance business writer and editor in Minneapolis.