The Costs and Benefits of European Commission Diversity Center for Strategy and

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Evaluation Service

Murad Khan Sajjad Rizvi (Workforce Diversity) -Professor Aftab 10th September -2011

Salient Points

Companies that implement workforce diversity policies help to strengthen longterm competitiveness Systematic measurement of the costs and benefits of workforce diversity policies is important for building the business case for greater investment

Obstacles to investment

A complex group of obstacles limit the scale of investment in WFD Public policy has an important role to play in tackling these obstacles As the business case for investment in WFD is fragmented, actions by Govt. and other actors is required to overcome the challenges esp. by using the experience of firms that have invested in WFD

EU Directives

EU directives equal treatment in employment Methods and indicators to assess the costs and benefits in the EU context Indicators will form a critical part of the business case for WFD

Project in three parts

Setup activities + Fieldwork + Main report Assess existing indicators how effective are they in a European context? Develop a new PM framework for the costs and benefits of diversity policies Literature review survey of 200 companies in four EU countries Extensive programme of interviews

WFD in Enterprises

A diverse workplace is difficult to define Depends on the internal culture Difficult to measure the shifts in values WFD policies are adopted for three main reasons ethical, regulatory and economic) here the focus is on the economic reasons and linked to competitive advantage

Economic reasons are:

Diversity investments are taking place due to changes in = product markets Labour markets Capital markets Government influence Wider social values

Benefits of WFD

Strengthen long term value drivers Improve cash flows (ROI benefits) Resolve labour shortages Open up new markets

Costs of WFD

Legal compliance Cash costs of diversity Opportunity costs of diversity Business risks of WFD

Performance Measurement Framework

Why are the costs and benefits of investing in WFD measured by firms? Measurement drives action Assess ROI Justify the opp. cost Learn lessons for future similar investments

Proposed Model Approach

This has three parts: I. Programme implementation II. Diversity Outcomes III. Business Benefits

Indicators of WFD

PROGRAM IMPLEMENTATION Top management commitment; Diversity strategy and plan; Organisational Policies; Employment Benefits; Managerial incentives; Organisational structures; Reporting process (monitoring and evaluation); Communication; Support networks; Education and training; Productivity losses

Diversity Outcomes - I

Workforce demographics (representation); and Employment culture/working environment

Business Benefits - I

Cost Reductions; Labour shortages; Access to new markets; Improved performance in existing markets; Access to talent; Global management capacity; Innovation and creativity; Reputation with governments and other stakeholders; Marketing image; Cultural values

CONCLUSIONS

The business case for WFD is fragmented and complex More advanced in the USA than in Europe Dissemination of this report has to be effective

RECOMMENDATIONS

Develop case studies Invest in company surveys across the EU Support for a network of diversity promotion organizations Develop new tools for measuring the benefits of WFD programmes Support EU level conferences National studies links between diversity investment and business benefits