With diversity and DEI issues tasking a front seat in business, new research from corporate leadership data solutions firm Equilar and the HR Policy Association finds a renewed push to increase diversity in management, along with a focus on diversity, equity and inclusion in employee engagement surveys—and a belief in the importance of tying executive compensation to ESG.
“Companies are making diversity and inclusion a top priority for 2022,” said Ani Huang, president and CEO of HR Policy Association’s Center on Executive Compensation, in a news release. “The survey results show that most companies aim for rigorous diversity goals, even if they don’t necessarily tie those targets to pay.”
To improve overall workplace and leadership diversity, companies are setting aspirational targets to hire or promote qualified underrepresented employees and engaging in widely recognized affirmative action practices. Many companies require a diverse slate of candidates for all roles, with about half of all companies requiring diversity in management roles specifically.
How do you determine levels of employee engagement?
“The joint survey provides more granular data on how companies are addressing these critical issues,” said David Chun, CEO and founder at Equilar, in the release. “The insights shared by CHROs at surveyed organizations show the varied methods companies use to drive employee engagement and diversity initiatives, the importance of ESG and candid thoughts on tying ESG metrics to compensation.”
Which topics do you highlight in engagement with employees?
In total, 93 responses were collected in May 2022, with topics covering current ESG and human capital management (HCM) practices.
A push for women and people of color in management
The most common approach to promoting diversity in the workforce was increasing the number of women and people of color in management roles by setting specific percentage targets, with 71.4 percent focused on women and 62.5 percent on people of color.
What steps are you taking to promote a more diverse workforce?
Regular pay gap analyses are becoming the standard
Seven in ten (71.9 percent) survey participants reported performing pay gap analyses periodically, either annually or otherwise.
Most respondents approve of tying executive compensation to ESG issues
Although their companies may not have taken this step yet, most participants felt that tying executive compensation to ESG issues was at least moderately important, with some saying it was very important. In their reasoning, respondents cited accountability, focus and the importance of measuring in order to make progress.
Do you feel it’s important to tie executive compensation directly to ESG issues?
However, only two out of five respondents currently do so
Four in ten (41.6 percent) participants tie ESG to pay in an explicit, quantitative way. A third of survey participants said they don’t currently tie ESG metrics to the annual plan at all, with another 19 percent including ESG metrics but not setting explicit goals.
If you tie ESG metrics to the annual plan, what is your approach?
Employee engagement surveys highlight DEI topics
Ninety percent of participants reported conducting a periodic employee engagement survey. When asked which topics they highlight in engagement surveys and discussions, 87 percent said they focus on DEI topics; 81.5 percent focus on current business and operational issues, with 79.4 percent highlighting mental health and well-being.