How do you currently measure employee diversity in your organization? Like many others, your business probably measures the breakdown of gender, ethnicity, and other employee demographics. Such breakdowns (e.g., 45 percent female / 55 percent male) are very common for organizations to monitor and action as “outcomes” of diversity initiatives (e.g., “Did the introduction of a structured interview process increase diversity in our workplace?”). But how do we know if our diversity efforts have succeeded?
Within Namely’s 2018 Workforce Diversity Report, one key table refers to a metric called Simpson’s Diversity Index (SDI), a metric that offers organizations a more robust way to “quantify” diversity. Simply put, this index distills the measurement of diversity into a single, trackable metric. Here’s how you can get started measuring it today.
What is Simpson’s Diversity Index?
Simpson’s Diversity Index (SDI) originated as a tool for measuring the diversity of species in an ecosystem––in our case, we’ll use it to measure employees in an organization. The metric was designed to capture two critical elements of diversity: richness and evenness. Richness refers to the number of different groups represented (e.g., how many ethnicities are present), while evenness refers to the spread across those groups (e.g., whether employees are spread evenly).
Examples of the Simpson Index for Sample Group Breakdowns:
Note: Data is illustrative
The philosophy behind the Simpson Index is that both of these criteria matter. For example, you are probably not a diverse community if only two groups are represented compared with ten groups (i.e., low in richness), and if you have 90 members in one group and one member in each of ten other groups (i.e., low in evenness). The index incorporates both of these criteria in a single, clean snapshot of diversity. The metric ranges in score from zero to one, where zero represents a complete lack of diversity, and one representing (get ready for it…) infinite diversity!
Why use Simpson’s Diversity Index?
Although infinite diversity would be fantastic, in organizations we typically work with demographics that have a limited number of groups, such as ethnicity. However, this metric is still useful to HR professionals and their stakeholders because it captures the essence of common diversity measures in a single, reportable number.
It’s also readily explained to those who want more detail on what the metric actually represents: the probability that two randomly-selected employees are from different groups. By monitoring this metric as a supplement to traditional breakdowns, you can now more objectively determine if shifts in representation across your company could be considered increases or decreases in diversity.
How do you calculate Simpson’s Diversity Index?
The formula for Simpson's Diversity Index is:
D = 1 - ( ( Σ n(n-1) ) / ( N (N-1) ) )
n = number of individuals of each ethnicity
N = total number of individuals of all ethnicities
The value of D ranges between 0 and 1
To make calculating this metric even easier for you, download this free spreadsheet or use our Diversity Index Calculator to simply enter employee counts for each group of the demographic you’re interested in studying. You can’t change what you don’t measure, so get started now!
Calculating Simpson's Diversity Index for your organization can help you gauge just how diverse your organization is, but it won't help you understand how you compare to your competitors and peers. For that added context, you might want to consider using Namely's quarterly benchmarking reports to see just how your business stacks up. In addition to comparing your SDI score to Namely's database of over 1,300 companies, Namely benchmarking reports gives you an in-depth look at your company's diversity, pay equity, and more. Learn more about Namely benchmarking reports here.
Eric Knudsen is a Manager of People Analytics at Namely, the all-in-one HR, payroll, and benefits platform built for today’s employees. Connect with Eric and the Namely team on Twitter, Facebook, and LinkedIn.
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