A Lack of Funding for Diversity Hiring Continues to Plague Orgs – ERE


Business leaders at the smallest startups to the biggest global corporations have publicly committed to taking action against bias and discrimination in their own workplaces. They’ve even listed out the specific actions they plan to take to improve. Yet, progress toward better diversity and inclusion outcomes has been slow. Why?

One reason for the gap: money. Companies aren’t funding their D&I initiatives at a level congruent with their public statements. In fact, according to the 2021 SmartRecruiters State of Diversity Hiring Report, only 32% of companies report having a budget for diversity sourcing that aligns with their diversity hiring objectives.

It’s a huge missed opportunity, given the proven ROI on well-planned D&I initiatives. Companies that take a strategic approach to D&I are consistently more likely to financially outperform companies that don’t. 

For many organizations, the challenge is that they don’t know how and where to invest — nor how to calculate that ROI for their own business.

Companies Don’t Know How to Invest 

Some business leaders mistakenly view D&I as a social issue rather than a key driver of business results. Consequently, their companies choose to invest heavily in external activities as part of a corporate social responsibility campaign. 

While donating to nonprofits and advocacy groups is certainly a noble gesture that can positively impact the community, it’s not a substitute for investing in fundamental internal D&I initiatives. Thus, if your strategy so far has been primarily about giving money away to other organizations, it’s time to bring some of that money back in-house. 

By investing in your talent operations, for example, you can mitigate the effects of bias and attract and retain the diverse talent you need at your organization. That kind of investment can transform your business.

Companies Don’t Know Where to Invest

Once you’ve decided to invest your money within your organization, you have to figure out where to actually invest it for the biggest impact.

The challenge here often tracks back to a lack of concrete goals for D&I. Many organizations are building the right infrastructure for D&I improvements ahead of getting a strategic plan in place. In these situations, you can see significant gains just by adding specific diversity hiring goals and allocating appropriate resources to achieve those goals.

Internal investment can take many forms, depending on where you are in your D&I journey, which can look like this:

  • Auditing your recruiting processes to make them more inclusive, including for those with disabilities 
  • Dedicating funds toward diversity hiring events, conferences, and community partnerships
  • Investing in market-leading technology to support a more inclusive candidate experience
  • Boosting your strategic sourcing initiatives and resources
  • Implementing specific reporting to track and monitor the results of your initiatives
  • Investing in the training and development of currently employed diverse talent

Decisions related to the points above should not be made in silos. Appropriately engage diverse team members in the organization. Work toward greater diversity in the C-suite and the boardroom. Consult with members of your ERG groups, if you have them, to confirm priorities and where they think additional resources can have the greatest impact. 

Companies Don’t Know How to Measure ROI

Most organizations haven’t yet connected the dots between D&I and better business outcomes. As a result, they don’t have the infrastructure in place to measure their return on their D&I investment. 

Other strategic business initiatives have mechanisms for measurement and governance. But only 26% of companies report having a way to measure or assess their activities and progress as they relate to diversity hiring goals. Similarly, only 24% of companies report having a way to govern their activities and progress as they relate to diversity hiring goals.

To understand the full scope of any steps they do take towards improving D&I, companies need to invest in developing the infrastructure for measuring and governing their initiatives.

Ultimately, people are tired of seeing companies make empty promises to improve D&I. By authorizing adequate funding for diversity hiring initiatives, company leaders signal their commitment to diversity with capital — a much stronger (and more meaningful) action than public statements alone.



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