A recent survey by HR Policy and executive compensation and leadership data provider Equilar found that, 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. The survey focuses on the growing importance of ESG and how companies are tying ESG metrics to compensation.
Many companies require a diverse slate of candidates for all roles, with about half of all companies requiring diversity in management roles specifically.
The survey, which included 93 companies from a range of industries, also found the following:
- Engagement: 90% of participants conduct a periodic engagement survey; 87% of these focus on DEI topics while 81.5% focus on current business and operational issues and 79.4% highlight mental health and well-being.
- Pay equity: 71.9% of participants perform pay gap analyses periodically, either annually or otherwise.
- Diversity goal-setting: The most common approach (63.7%) to promoting diversity in the workforce was increasing the number of women and people of color in management roles by setting specific percentage targets. 71.4% of companies focused on women and 62.5% on people of color. Separately, 62.5% of companies said they require a diverse slate for all roles.
- Executive pay: Although 81.1% of companies surveyed felt that tying diversity to pay was at least moderately important, only 41.6% do so in an explicit, quantitative way (19% do so in a qualitative way).
The survey results mirror early insights from the 2022 proxy season showing that usage of an ESG metric in incentive plans rose from 35% to 46% this year, with another 9% set to add an ESG metric next year.
For more guidance when considering setting an ESG-related incentive plan goal, see the Center’s latest chapter of Executive Compensation Re-Imagined: Diversity and Inclusion Metrics in Incentive Design.