DIVERSITY RETURN ON INVESTMENT
Making the Business Case for Diversity
Diversity recruitment is one of the hottest topics in corporate America today. The results of the latest Census firmly established that the ethnic make-up of the U.S. is changing at a rate faster than anyone anticipated. Corporate America is aware of the changing demographics, in fact, many corporate frontrunners established diversity initiatives in the mid-1990s. More than a decade later, the bottom line results have not yet been measured in dollars, but rather in the demographics of women and minority recruitment, retention and supplier diversity.

Diversity enhances:
• Connection with the customer: The diverse needs of diverse customers need to be understood
• Employee motivation: Employees maintain productivity when they are treated with dignity and respect.
• Employee innovation: A work environment favorable to diversity is open and flexible and also favorable to employee innovation.
• Employee recruitment and retention: A workplace that emphasizes interest and concern for its employees as people first is able to attract a higher-quality workforce.
• Continuous quality improvement: An environment where employee talents are valued will help to continually improve quality.

Calculating DROI — Metrics
While little specific research data exists regarding the financial benefits of diversity to associations, it has long been established that private companies with the highest rating on equal employment opportunities have performed better in the stock market than companies with poor performances in areas related to hiring and advancing women and nonwhites. According to research conducted by Covenant Investment Management, the earnings of these highly ranked companies were two and a half times higher on average. It is fair to say, that any company that does not meet the opportunities and challenges of a rapidly changing work force and marketplace will be left behind the competition.

According to SHRM: (Society for Human Resource Management)
• Diversity initiatives can improve the quality of an organization’s workforce and be the catalyst for a better ROI in human capital.
• Customer bases are becoming more diverse than the workforce:
• Minorities are the majority in six of the eight largest metropolitan areas of the U.S.
• The combined Black, Hispanic and Asian buying power is more than $750 billion
• Women are the primary investors in more than half of the U.S. households

The financial rewards of appealing to a more-diversified customer base are significant. Women purchase 70 to 80 percent of all products; African Americans spend nearly $500 billion each year on goods and services; and Hispanics are the fastest growing consumer groups in the United States. A reputation for fair treatment is one of the primary reasons women and minority consumers say they remain loyal to a company. According to Dr. Edward E. Hubbard, author of Measuring Diversity Results and How to Calculate Diversity Return on Investment, diversity performance is challenging to measure, because not everything can be easily measured with numbers (i.e. creativity, diverse work team productivity, innovation). Diversity impacts individuals, teams, the organization, customer markets, and communities at large.