DiversityInc Top 50 Methodology

The process of determining The DiversityInc Top 50 Companies for Diversity list became more sophisticated this year with our switch to SAS software. This has enabled us to measure more human-capital ratios than ever before and to refine our measurements, which we believe give us better accuracy. We’ve also utilized the power of the software to better measure what actually constitutes top performance and to eliminate outliers.

We enhanced our accountability by having notarized CEO sign-offs on submissions from companies where we have not met with the CEO directly.

The survey continues to be completely based on empirical data. Participation in the survey is free and companies that do business with DiversityInc receive no preferential treatment. There are seven companies on this list—including two in the top 10—with whom we have no business relationship at all.

The number of companies participating in the survey has increased annually, but this year saw the largest jump of all—from 587 companies in 2012 to 893 in 2013. The reason is twofold: We had a focused marketing outreach to many more companies, and interest in diversity management in corporate America is growing rapidly.

In order to participate, an organization must have at least 1,000 employees and fill out our detailed 300-question survey, which is divided into four equally weighted areas: CEO Commitment, Human Capital, Corporate and Organizational Communications, and Supplier Diversity. Each company is judged within its own industry, and each application is vetted by our staff. The data is kept secure and
confidential; it is never shared with anyone outside of the company.

Although the weightings of the questions are not released, we do discuss the evolution of what correlates to measurable results—what, therefore, is emphasized. In recent years, we have placed increased importance on resource-group and cross-cultural-mentoring participation and best practices since they yield demonstrable human-capital improvements. Next year, we plan to increase the emphasis on what percentage of a company’s gross revenue goes to philanthropy, since that is a critical indicator of corporate values and ability to build community support.

Here is a brief explanation of each of the four areas we measure:

CEO Commitment: How the CEO leads and implements diversity-and-inclusion management. Although this is 25 percent of the total score, we have observed that it is the most critical factor in achieving overall diversity-management success.

We assess the CEO’s presence internally and externally as a visible proponent of diversity and inclusion. Factors include a presence on the corporate website from the CEO linking diversity management to business goals; integration of diversity and inclusion in the corporate mission statement; regular meetings with leaders of resource groups; and the CEO taking on a leadership position with a multicultural nonprofit. We have expanded the criteria to also assess the visible diversity-and-inclusion support from the next two levels of management.

Leadership’s ability to drive diversity-management best practices throughout the organization and hold executives accountable for results are measured through factors including compensation tied to diversity-and-inclusion metrics; using an executive diversity council to set and evaluate corporate-diversity goals; and the use of diversity and inclusion in succession planning.

Demographics of the top three levels of the company as well as the board of directors also are evaluated in this section. Our data show a correlation between senior-executive participation in mentoring and promotion and employee engagement rates so a series of questions on mentoring and executive involvement are weighted into the evaluation.

Human Capital: This section has the most number of questions as workforce diversity as well as management demographics are evaluated. The emphasis is on ratios that show significant progress in creating a more diverse workplace. Among the critical ratios our SAS software measures are overall workforce diversity compared with the demographics of new hires; workforce diversity compared with first promotions into management; and management demographics compared with promotions within management.

Measurable demographics include race/ethnicity, gender and age. A series of questions on orientation and disability also assess whether the company is using diversity-management best practices to create an inclusive workplace. Questions include best practices on recruitment, benefits, flexible work arrangements and retention.

Supplier Diversity: The importance of supplier diversity is emphasized in its accounting for 25 percent of the survey points. Supplier diversity’s value lies in the ability of diverse vendors to create innovative solutions to business challenges and as a critical component in building community support. Those two factors are assessed through questions ascertaining the percentage of Tier 1 (prime) and Tier II (subcontractor) business awarded to certified Minority-Owned Business Enterprises (MBEs), Women-Owned Business Enterprises (WBEs) as well as vendors owned by LGBT people, people with disabilities and veterans, as well as community-building best practices including mentoring suppliers, providing financial assistance and education, and supplier-diversity presence on the website.

Methods of holding executives accountable for supplier-diversity results, including compensation, are included as well as metrics to evaluate progress and to ensure that ethical and accurate numbers are reported.

Corporate & Organizational Communications: The evolving diversity-management best practices that contribute to sustainable business growth are measured in this section. Internal diversity-and-inclusion initiatives such as resource groups and formal mentoring are analyzed from a variety of perspectives, including participation rates, availability across the organization and metrics to assess contributions to employee engagement and promotion rates.

External diversity-and-inclusion initiatives measured include philanthropic contributions to multicultural charities and a series of website criteria evaluating visible commitment.

How to Apply, Free Report Card and Reporting Period

The 2014 surveys will be due by Feb. 28, 2014; however, you may pick any one-year reporting period ending after June. This means you may fill in your survey well before the end of the previous year. There is no fee to enter. Every company that fills out the survey receives a free report card assessing performance overall and in those four areas measured.

The survey is accompanied by FAQs that answer common concerns about each question, but our staff is also available to help with questions about technical issues and the meaning/intent of the questions. Please contact top50@DiversityInc.com for staff assistance. We also offer these tips on how to do well in this year’s survey.

The same application is used to determine placement on the 14 other lists, which can be viewed at www.DiversityInc.com/top50.

DiversityInc also annually recognizes companies with Special Awards that go beyond the empirical data and show substantive ways they connect diversity management to business results. This year’s winners will be honored at our Oct. 16 event. For previous Special Award winners, click here.

For more DiversityInc Top 50 reading, see:

Top 3 Reasons to Participate in the DiversityInc Top 50

6 Case Studies: Why Companies Rise & Fall in the DiversityInc Top 50

CEI Index: Twice as Many Top 50 Companies Have 100% Ratings Vs. Fortune 500

CEO Commitment

8 CEOs Whose Inclusive Styles Change Corporate Cultures

Where’s the Diversity in Fortune 500 CEOs?

DiversityInc CEO Interviews

Human Capital

What HR Really Needs to Succeed

HR & Legal: Setting Goals

Diversity Web Seminar: Talent Development