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Diversity, equity and inclusion are hot, but tools need vetting

The diversity, equity and inclusion tools market is going mainstream, giving HR buyers more options than ever before. But due diligence is needed.

Social unrest and even COVID-19 are driving expansion in diversity, equity and inclusion tools. But experts advise performing an extra dose of due diligence before standing in the software checkout line.

Two years ago, RedThread Research pegged the global diversity, equity, inclusion and belonging (DEIB) tools market at $100 million. Since then, the HR research firm has increased its valuation to $313 million, according to its latest study.

The number of DEIB vendors, sometimes referred to as diversity, equity and inclusion or DEI vendors, has almost doubled in the two years from 105 to 196. Most are HR vendors adding tools to their existing platforms.

Stacia Garr, co-founder of RedThread, credits the Black Lives Matter movement and COVID-19's impact on diverse populations for some of this recent growth. These forces have "really helped drive an urgency around the space," she said. 

DEIB tools help to identify patterns in a workforce that companies would not be able to see otherwise, Garr said. Other types of enterprise HR analytics software perform similar people analytics, but analysis done by diversity, equity and inclusion tools is targeted at specific workforce groups, she said.

For instance, when analyzing engagement, the software might look at underrepresented groups and compare their engagement to the overall population, she noted.

If a vendor can't tell you what's happening with the AI, they make it sound like a black box, then you need to walk the other way.
Stacia GarrCo-founder, RedThread Research

Many diversity, equity and inclusion tools -- as well as many HR tools, generally -- have some AI capabilities. The understanding of how these systems work, as well as their limitations, is improving among HR managers, Garr said. Customers are also pushing vendors to explain what's in their AI, she said.

"If a vendor can't tell you what's happening with the AI, they make it sound like a black box, then you need to walk the other way," Garr said.

Vendor transparency is needed

There are also "plenty of vendors who are not fully as transparent as they should be about their training data sets, the biases that may exist in the algorithms," Garr said. But she sees the industry heading in the right direction.

In considering diversity, equity and inclusion tools, Farzana Nayani, a diversity, equity and inclusion consulting and training expert in Los Angeles, said HR buyers should consider whether the development team that built the software is, itself, diverse.

"Look at who makes these tools -- when they don't have diverse [development] teams, I can almost guarantee you, there's going to be bias in it," Nayani said.

Raising the issue of development diversity with vendors is also "a form of advocacy so that we can get more diversity in tech," Nayani said.

It's leadership, not tools, that matters

Josh Bersin, an industry analyst and head of Josh Bersin Academy, believes diversity, equity and inclusion technology is a "very minor contributor" to diversity and equity success at a firm.

More important is leadership, Bersin said. He pointed to President Joe Biden, who is making equity an important theme in his initial public policy rollout.

"Everything the Biden administration is doing is being done with an equity lens: Who gets masks and gets vaccines, who gets money, who gets unemployment -- everything."

Firms that are doing a good job on diversity, equity and inclusion are looking at this "as a core, defining part of their business in everything they do, not just who they hire, but who they sell to, what products they develop, what cities they do business in, how they price things," Bersin said.

That said, better analytics, intersectionality, anonymizing resumes and creating skills-based assessments are crucial and can contribute to diversity, equity and inclusion success, Bersin said.

But the firms that are attracting a more diverse slate of candidates are doing so because of their corporate culture, Bersin said. The diversity and equity tools "are enablers, but they don't create a solution." 

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