The DEI challenge: Measuring progress

Reasons for optimism, but still causes for concern.

That’s the biggest takeaway from our first-ever KPMG Diversity, Equity, and Inclusion Progress Survey, which also reflected that, in general, corporate leadership remains both universally serious about and highly committed to creating a culture of inclusiveness.

Naturally, intention alone can’t undo workforce challenges for people of color, women, people with disabilities, and other underrepresented talent over the past century—although it is a start. But how best to measure, quantify, and build on progress?

This, our survey reports, is the biggest DEI challenge facing leaders today.

Making inroads on DEI has been on many companies’ to-do list for a decade or more. But DEI’s profile and urgency fundamentally changed in May 2020 in the wake of protests over police violence, which exposed systemic racism within American culture that many had been blind to—and provoked self-reflection in corner offices and boardrooms across the country.

More than two years later, we wondered: How are we progressing? And where do we go from here? For our report, The Diversity Journey, we surveyed 300 C-suite executives and interviewed leading chief diversity officers (CDOs) across a broad range of industries. The findings are both heartening and sobering.

One stark example: 7 in 10 executives in our survey say they have taken specific DEI-related actions since 2020—but only 1 in 10 say those changes have materially shifted the diversity makeup of their workforces and C-suites.

This underscores the biggest question DEI leaders are asking today: How do we turn plans into progress?

Here’s the good news: People from underrepresented groups are increasingly joining the workforce. Since 2020, the number of employees at all levels from historically marginalized groups has been steadily rising.

For example, representation of people of color has risen 7 percentage points in the overall workforce, with a 4-point boost in leadership roles. The financial services sector leads all industries in this transformation, with a 10-point increase in the workforce and a 7-point increase in leadership.

Even more promising, our survey finds that organizations expect to increase those percentages by a similar magnitude over the next three years, as DEI is now considered a business imperative. Consider:

This is all encouraging. That said, the absolute number of workers from underrepresented groups, while growing, is still relatively small. There are only six Black CEOs leading Fortune 500 companies today. And the percentage increase in the workforce of the LGBTQ+ community, people with disabilities, veterans, and older employees has seen only modest growth over the past two years.

More alarming, the so-called Great Resignation during the pandemic disproportionately impacted women—especially working moms—who left the workforce at twice the rate of men. Their representation in corporate America is at its lowest point in 30 years.

As our report explains, many organizations report that they are more transparent about their goals than their results. The most often cited reason, according to 47 percent of survey respondents, is a lack of knowledge and clarity on how to create sustainable change.

This presents a fabulous opportunity to accelerate progress through the sharing of successes, failures, and best practices. Our report, which includes first-person testimonials from several CDOs as well as the results of our own KPMG internal DEI efforts, aims to do just that.

Making progress on diversity, equity, and inclusion is not easy. Through discussions with CDOs, our work with clients, and our own lessons from our DEI efforts at KPMG, we’ve begun to identify some of the emerging leading practices that companies can take to invigorate DEI efforts, empower teams, and deliver meaningful change. Here’s a look four key steps to consider:

Step 1: Watch your words

Progress on DEI can be thwarted when companies don’t have formal definitions of key terms. For example, equity is not the same as equality—some underrepresented groups don’t have the opportunity to start from an equal place and thus require help. Identifying that talent and the assistance they need should be a primary goal of DEI programs.

Defining and fostering DEI will ensure underrepresented talent trust that their employers have an unwavering commitment to their development, mobility, and advancement. That means creating a welcoming environment where everyone feels safe to bring their authentic selves to work and raise thorny issues—and DEI issues are no longer considered “difficult conversations.” Instead, they become “necessary conversations” that reflect the view that promoting underrepresented talent is an opportunity, not a stressor.

Step 2: Measure what matters—and socialize it

You can’t improve what you don’t measure, Peter Drucker famously noted. And while annual DEI surveys of employees are great, organizations must remain nimble to changing needs within the workforce—as well as evolving perceptions in the zeitgeist. For example, disaffection among Black employees has been a particularly dominant theme since 2020. And now, with women still struggling with childcare issues stemming from the pandemic, losing progress on gender equity has become a highly acute concern as well.

Also, be sure to share your diversity statistics, best practices and learnings with both employees and clients. And continue to monitor employee perception and trust around your DEI efforts as these are powerful indicators of your success on par with the absolute numbers.

Step 3: Blow up the barriers to change

Fact: Women, people of color, people with disabilities, and those in the LGBTQ+ community collectively comprise the majority of today’s workforce. So, why don’t you have more of them on your team? Could a lack of will among corporate leaders, rather than a limited talent pipeline, be the most salient barrier to your DEI progress?

To break this cycle, consider applying the marketing axiom “right person, right place, right time” to your talent pipeline. Establish strong relationships with Historically Black Colleges and Universities (HBCUs), Hispanic Serving Institutions (HSIs), and other universities with ethnically mixed student bodies to put together a diverse entry-level “class.” And then invest in on-the-job training, upskilling, and mentorship specifically geared toward underrepresented talent to ensure a robust future pipeline for your company.

Step 4: Empower your DEI leadership

Motivating colleagues to challenge traditional approaches and make progress on diversity requires an empowered DEI team. Ultimately, successful DEI is not a narrow update to the hiring plan but a companywide change-management initiative.

But rather than focusing on forced efforts like “mandatory” diversity training, consider more meaningful ways to better foster personal engagement in the organization’s diversity mission and create more direct contact with underrepresented talent. Don’t be afraid to seek outside help if necessary to evaluate any aspect of your DEI efforts, including enhancing your measurement methodologies, managing stakeholder perceptions, and creating programs that shift mindsets and actions across the organization.

Align with your DEI leadership around the idea that, yes, diversity, equity, and inclusion can help drive growth and profitability. But more importantly, it’s about making a positive societal impact and making DEI central to your employee value proposition.

For a deeper dive into our survey results and the emerging leading practices—and to learn more about creating a sustainable DEI culture that positions you for the future—check out the resources below.