Weekly Newsletter

CHALLENGES FOR CORPORATES, CONSULTANTS, ASSET MANAGERS

The DEI Data Issue

The Data Issue Inside of Companies:

Following a boom in the DEI industry after the death of George Floyd, we are now witnessing an oversaturation in the market of inclusivity approaches that vary in effectiveness. Lily Zheng writes about this issue and more in their article on the DEI-Industrial Complex, or Performative DEI. Lily highlights the biggest issues as:

• Businesses are excited to invest in DEI practices that might not be the most effective
• DEI professionals continue to do that type of work to keep their careers
• Not all initiatives target explicit issues or outcomes, but are rather vaguely “good”
• Many DEI professionals and service companies today are generalists, when specialists may more effectively solve the real issues in the space
  Oftentimes, inputs are being tracked rather than outcomes – how many people attended a seminar versus did we hit our hiring/retention goal
• Company leaders tend to make decisions about DEI budgets without consulting DEI professionals

In a nutshell – DEI is not a very data-driven space at the moment, to its detriment. Practitioners and consultants that aren’t making data-based decisions, or tracking success with data, are not driving good results, and it’s unclear what best practice is in this new space.

The Data Issue Outside of Companies:

The data problem extends beyond the work that people are doing in their companies to build a more diverse and accepting workforce. The issue prevails at the highest possible level: the reporting of human capital data to the public.

Disclosing human capital data is a new enough process that there is no standard or best practice, and HCM disclosure is still very unregulated in the US.

To highlight just how new:

• At the start of 2020, only 5% of the S&P 500 publicly disclosed their EEO-1 data, the intersectional workforce representation data by gender, race/ethnicity, and job category that every company with at least 100 employees must report to the government.
• Today, 77% of the S&P 500 either make this data public or have committed to future disclosure.

A major driver of this change was pressure from investors through shareholder engagement and stewardship from the likes of the world’s largest asset managers (BlackRock and State Street), stewards of retirement funds (Illinois, NYC and NYS comptrollers’ offices), and nonprofits such as As You Sow.

Three years ago, the issue was almost complete lack of publicly available information. While lack of disclosure is still an issue, disaggregation and lack of standardized HCM and DEI data are now the primary issues for analysts, companies, and firms.

Asset managers, consultants, and DEI practitioners go to great lengths to research human capital management (HCM) data, or pay large data providers who don’t actually have great depth in their DEI data.

PeopleReturn solves both issues. Read the full article.