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What's an Equity Audit and Why is it Important?


LAST UPDATED: 07 June, 2023

Following the summer of 2020, many companies adopted a more proactive approach to assessing and building racial diversity within their organisation. They also pledged to do the internal work of assessing their broader commitment to diversity and equity with an eye towards making change. But this requires an organisation to do far more than analyse company climate survey data or look at recruitment statistics. 

An organisation’s incomplete assessment of how equitable and diverse their workplace is can actually do more harm than good.

It can result in an organisation thinking that they are much more progressive than they are when, in actuality, their policies, practices, and climate create oppressive or harmful workspaces for BIPOC (Black/ Indigenous/ People of Colour), as well as other historically marginalised groups. To thoroughly assess a company’s commitment to racial equity and social justice, a robust organisational equity audit is an important step that can shed light on how inequities might be replicated across the organisation.

So what exactly is an equity audit? 

An equity audit is a comprehensive benchmarking tool that can be used to assess equity and inclusion broadly within an organisation. More specifically, as a tool for advancing organisational racial equity, it relies on key indicators to identify problem areas where racially hostile practices can be reproduced and flourish—to the detriment of BIPOC employees.

Hiring and Promotion

One focus area of equity audits is an organisation’s hiring and promotion practices. After the summer of 2020, many employers made commitments to increase the representation of BIPOC employees in their organisations. However, while a company might be making strides in hiring BIPOC into entry-level positions, the upper-level management and C-suite are still disproportionately white. Additionally, BIPOC often have disproportionately lower rates of promotion than their white counterparts. And when there isn’t diverse representation among the people at the top (who hold the most decision-making power), this can impede necessary change within the organisation.

An equity audit can address this by looking holistically at an employee’s trajectory within the organisation and by comparing those numbers for BIPOC employees versus white employees. Through these comparisons, an equity audit can identify potential areas where racial inequities might be being reproduced. For example, an equity audit can identify areas of focus such as:

  • How are human resources ensuring that they reach a wide range of racially diverse candidates during the search process?
  • How is unconscious bias being mitigated during the interviewing and hiring process?
  • How are employers offering mentorship to employees of colour in predominantly white workplaces?
  • What is the average time-to-promotion for employees of colour versus white employees?
  • How might the annual review process allow managerial biases to inhibit the promotion of BIPOC employees?

Retention and Climate

Another frequent phenomenon is that a company might make strides in hiring BIPOC, but their retention numbers are dismal compared to their white counterparts. This underscores how problematic it is to put a hiring focus on diversifying the ‘pipeline’ of talent without understanding the organisation’s racial climate. 

This belies a mentality where one might assume that if there’s a considerable effort made to hire BIPOC, they will simply want to stay at the company. But in predominantly white workplaces, BIPOC employees often face considerable challenges that could take the form of micro and macro-aggressions from their colleagues, racial prejudice from their management, and/or a racially hostile work environment. 

For example, they could be frequently talked over or have their ideas co-opted in staff meetings. They could be singled out or ‘othered’ (they’re constantly asked about the ‘ethnic’ food they eat or why their hair looks ‘like that’). Or they could be tapped to perform extra emotional labour because of their race (for example, being asked to mentor another person of colour or lead the organisation’s Diversity Equity and Inclusion task force without compensation). 

This creates significant additional labour for BIPOC in predominantly white workplaces and often translates to lower retention rates when the organisation’s racial climate becomes untenable.

Equity Audits can reveal these challenging workplace dynamics by asking questions such as:

  • Does the organisation invest in frequent training and learning opportunities in areas of diversity, equity, and racial justice?
  • Does the organisation have a Diversity, Equity, and Inclusion policy?
  • Do employees have the opportunity to share frequent feedback about the racial climate (for example, in anonymous surveys or focus groups)?
  • Is there an expectation that BIPOC employees participate in committees, task forces, or employee resource groups related to diversity? Are they compensated either financially or with PTO?

Mission, Vision, and Values

Finally, an equity audit can reveal a lot about where an organisation is at present, but it can also expose a lack of vision for where an organisation is going. 

Many companies set lofty goals about how they hope to diversify their employees, but they’re not willing to invest in the long-term, comprehensive strategies that are required to create those changes.

Instead, they want quick-fix strategies that look good (like inviting a big-name DEI expert to present a keynote, or giving Juneteenth off as a company holiday), but don’t translate to structural shifts. Similarly, if the company does not use the equity audit data to inform their future goals for creating a racially equitable and inclusive workspace, the audit is a meaningless data-gathering exercise. 

Leaders must be willing to invest in the comprehensive, sustained assessment of their organisation’s racial climate and use that data to inform best practices and policy changes—this process is neither short nor easy. But fundamentally, a robust process like an equity audit is necessary in order to build a racially diverse workplace where all employees feel included and have an equal seat at the table. 

Furthermore, an equity audit that identifies racially discriminatory practices can also be a powerful intersectional tool that highlights policies and practices that might be harmful to other historically marginalised groups such as the LGBTQIA community or employees with disabilities, to name two.