Companies have increasingly turned to formal racial equity audits to identify and address systemic bias and discrimination. Typically, a third-party or external law firm conducts a racial equity audit for a company by evaluating its policies, procedures, and practices. For instance, the auditor may look at the company’s recruiting, interviewing, hiring, promotion, and retention processes. The auditor also may examine the type of training, advertising, social media messaging, and algorithms the company uses in its daily operations for any indications of bias or discrimination.

The audit aims to detect any signs of inequity and point them out to the employer. By identifying these issues, the employer can target and address where they fall short in creating a more diverse and inclusive workplace. For example, a racial equity audit could recommend that a company engage in various actions, such as further training for employees, adjusting, eliminating, or replacing certain policies, addressing pay inequity, or conducting culture surveys among employees.

Shareholders, investors, and other stakeholders are driving the increase in demand for racial equity audits in large corporations. Consumers and the public also demand greater accountability regarding the environmental, social, and government impacts of companies. Increasingly, the emphasis appears to focus on the impact on communities of color and social justice issues.

Every company has different goals when they request a racial equity audit. Although they may have primary goals of increasing diversity and creating a more inclusive workplace, the overarching hope is that these initiatives will increase profits and the company’s competitive advantage. Implementing audit recommendations takes time and does not happen solely because a company’s human resources department modifies or improves a few policies.

Conducting an effective audit involves the following:

Once the audit is complete, the company must follow the auditor’s recommendations. Completing the audit is useless unless the company is willing to take action to implement the audit’s suggestions.

Source: Hall Benefits Law

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