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Whether you are a charity or a commercial business, private sector or public, money and impact will always be core considerations in your inclusion efforts. Being able to show that you are using your budget in the most effective and impactful way can really help to make your case for further inclusion work and even help to make the business case for further investment in inclusion activities in the future. There are many ways to understand your impact and return on investment of inclusion activities, including financial, cultural and reputational.

How do you measure return on investment?

Return on investment (ROI) is a simple ratio that divides the net profit (or loss) from an investment by its cost. In terms of inclusion that means dividing how much you have or are likely to save or lose by how much you have or are likely to spent on an activity, then multiplying that by 100 to get your return on investment percentage. A percentage over 100% means you have saved more money than you spent.

The graphic reads: Saving/loss and money spent x 100 = return on investment %

Image description: Saving/loss divided by money spent x 100 = return on investment %

Let’s use an example to demonstrate what this could mean in an organisation: ‘Company X’ is an engineering and construction company with 500 employees. When looking at their staff turnover data they noticed that their voluntary attrition rate (the rate people quit their job) had risen to 8% for that year. Meaning based on the number of employees they had, 40 people quit their job that year and needed to be replaced. According to research by Glassdoor the average cost of recruiting and onboarding a new employee in the UK is £3000. Meaning having to recruit 40 people cost ‘Company X’ an estimated £120,000.

When looking at their exit interview data they noticed a high percentage of people had mentioned problems with their manager or an inconsistent management experience as one of the reasons they chose to leave. To address this ‘Company X’ decided to implement an inclusive management training programme to upskill their managers and make the management experience more consistent across the organisation, which they hoped would reduce the amount of people leaving.

The inclusive management training programme they implemented cost them £18,000. The year following the training programme their voluntary attrition rate had dropped to 6.6%. Meaning their recruitment spend was now £99,000, a reduction of £21,000, resulting in a return on investment of 117%, meaning they saved 17% more than they spent.

£21,000 divided by £18,000 x 100 = 117%

Image description: £21,000 divided by £18,000 x 100 = 117%

Like most measurements of inclusion, it is impossible to be sure that the management training was the only reason for the voluntary attrition rate reducing. However, if that was the only change made it is safe to assume that at least some of the impact can be attributed to the training programme.

“There is no obligation to report your return on investment like there is with pay gaps, but it is a great way to keep inclusion as a priority and showcase the impact activities are having.”

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How can I attribute financial amounts to inclusion activities?

This approach to measurement is dependent on being able to ascribe a financial figure to inclusion activities. These fall into 3 main themes:

1. Reduction in labour waste

These figures are calculated by the financial impact of a loss of productivity or ineffective processes.

  • The average cost of recruitment per person – £3,000.
  • The average cost of sickness – the average hourly rate for your organisation multiplied by the sickness hours reported. Based on the average wage in the UK, 1 day of sickness (on full sick pay) would cost the company £107.85.
  • The average cost of low productivity – this is more difficult, you need to estimate the percentage of productivity lost, and the financial value would the that percentage of your annual wage bill.

2. Avoiding incidents

These figures centre around how much it would cost if the worst was to happen, so sometimes these are not as impactful when trying to make a business case as the loss/spend has not actually happened. Examples of this are:

  • The average cost of a discrimination or harassment claim – this depends on the severity. There is no upper limit but usually claims fall into 3 bands. Lower band £900 to £8,600, middle band £8,600 to £25,700, higher band £25,700 to £42,900. Find out more about how claims are calculated.
  • The average cost of a serious injury/death at work – this seems extreme but with a lack of due care and attention to psychological safety often comes a lack of due care and attention to physical health and safety. There are ways to work out exactly how much it would cost based on age, care needs and income loss, using Odgen tables. However, you can visit the UK Law website to find estimated average bands.

3. Increase in brand/reputational value

You may also want to take a more positive outlook and look at the potential increases in revenue and brand reputation as a result of inclusion. This could be an increase from Bronze to Silver on the Inclusive Employers Standard.

Research by the London School of Economics suggest that a company’s revenue could increase by up to 1% for every 7% increase in their net promoter score. Simply put if customers feel valued and included, they are more likely to suggest you to others, and therefore more people will be buying from you.

How do I report on return on investment?

Whilst reporting this data to the board and senior leadership can help inform decision-making, it is also important to report this information, in a high-level and engaging format (such as infographics) to the whole organisation. This helps to build trust and understanding of how diversity data is used to inform decision-making and organisational priorities. Below is an example of an easy and engaging way to report the impact and return on investment of the training example we used earlier.

  • In 2023 our voluntary attrition rate was at 8% and feedback from leaver interviews highlighted management experience as an area for development.
  • In early 2024 we invested in a virtual inclusive management training programme for all line managers. 65% of managers have attended the training.
  • This month our voluntary attrition rate was 6.6%. This means we are saving £21,000 per year in recruitment costs, which is a return on investment of 117%.
  • Moving forward we are committing to 100% of managers attending the training by the end of 2024.

Next steps for maximising your inclusion impact

Maximise your inclusion efforts and understand your return on investment by taking these steps:

  • Review your current data to identify where you can measure impact and ROI, and consider what additional data you need.
  • Select one or two key activities to start tracking your inclusion impact—build this into your process from the start.
  • Begin incorporating impact/ROI discussions into your inclusion planning to guide better decision-making.

To explore how the Inclusive Employers Standard (IES) can help you measure and embed impactful inclusion, fill in the form below to find out how we can support you.


Register for National Inclusion Week

Join us for National Inclusion Week 2024 and get access to an exclusive toolkit and free webinars.
Book Now

Learn more about the Inclusive Employers Standard