March 30, 2021
Incorporating D&I Metrics in Pay Programs? Consider These Items First
– Lynn Jokela
We’ve blogged a few times about use of D&I metrics in incentive plans – here’s an entry about use among Fortune 200 companies. As stakeholders continue with increased calls for companies to do more on the D&I front, many are looking at how and what they might do – whether it’s by incorporating D&I metrics into comp programs or pursing initiatives outside of pay programs. A recent Semler Brossy memo provides a framework and considerations to help companies through the process.
For companies to make optimal use of D&I metrics incorporated in incentive programs, the memo suggests companies check whether the majority of the following conditions would be achieved and if not, it might be preferable to delay implementation and address D&I outside of pay programs.
– There is a well-articulated strategy for execution and clarity on how success will be defined
– There is an understanding that elevating DEI may send unintended signals (e.g., tying pay to DEI but not sustainability may send a message about company priorities)
– The DEI metric(s) are part of a balanced, comprehensive assessment. Narrowly defined metrics can miss the spirit of the overall commitment (e.g., meet recruiting targets, but miss on culture)
– There is a willingness to maintain a DEI component in pay for an extended period of time
– There is a willingness to set real, stretch goals that are durable and can withstand shifts in strategy
– If goals are missed, boards are willing to disclose externally how or why goals were not achieved