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Having a diverse workforce is not only right, but good for business

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In recent years, more and more companies are realising that having a diverse workforce isn’t just the right thing to do, it’s good for business too.

Not only does the greater range of perspectives lead to more creative and innovative decision making, but the consultancy firm McKinsey & Company found that companies with gender-diverse leadership teams were 25% more likely to experience above-average profitability for their sector – which rose to 36% if their executive team was ethnically diverse too. And the more women and people from minority ethnic groups there were, the greater the likelihood of outperformance, with companies in the US earning 0.8% more for every 10% rise in racial and ethnic diversity among their senior management.

Dr Olivia Tomlinson, Associate at the Centre for Responsible Business, University of Birmingham, and Lecturer (Assistant Professor) in Strategy, Enterprise and Sustainability at Manchester Metropolitan University, explains that the importance of diversity goes beyond just the legally protected characteristics of race, gender, disability, age and sexual orientation, though. Less visible diversities, such as class, neurodivergence and parenthood, are often ignored, yet the skills, knowledge and experiences of people from a range of backgrounds all add value to a company. Time and time again, researchers have found that companies that go beyond diversity and actively encourage an agenda of inclusion – whereby every employee feels part of a safe and respectful workplace in which they can openly be themselves – attract the best talent, yield better employee satisfaction and perform better overall.

Unfortunately, a shocking survey by YouGov – commissioned by Business in the Community in 2021, in response to the Baroness McGregor-Smith Review into race in the workplace – shows many UK employers still have a very long way to go. Among the 24,600 people who responded to the Race at Work Survey, many reported widespread discrimination, racist harassment, bullying and inequality in their workplaces. Far from starting to move beyond just diversity to inclusion, it seems racism continues to be a persistent, routine and systematic feature of working life in Britain, contributing to the built-in disadvantage that ethnic minority workers face.

A consistent theme in the survey data is that workers from a Black, Asian, Mixed Race and ethnically diverse background feel that they need to “work twice as hard, to get half as far”, suggesting that even with an obvious business case for increasing diversity at the top level, workers are expected to contribute at least double the time and effort of white employees to even be considered for promotion. The survey also recorded the disturbingly wide range of different sources of racist harassment and bullying that minority ethnic workers regularly faced, including from customers, colleagues, the public and wider business networks. Worryingly, the most reported perpetrators were senior leaders.

The fallout from these personal experiences or witnesses of racism is, of course, hugely damaging. The respondents described the negative impacts on their mental health, emotional and psychological wellbeing, and career prospects, such as opportunities for training and career progression. Understandably, as a result, many viewed their employer’s diversity and inclusion initiatives as merely “lip service”, “done only for show”, “box- ticking exercises” and “PR stunts”. Instead, the respondents said they wanted their employers to be more accountable and transparent on pay gap reporting, decision-making, recruitment, progression and any interventions in response to incidences of harassment and bullying. Acknowledgement by the employer of their staff’s experiences of racism and discrimination was also seen as important, as was the increased allyship of non-marginalised colleagues.

These insights – while shocking – should be invaluable to any business leader concerned about these issues in their workplace and how best to mitigate them. But one strategy that’s been proven to be effective, particularly in terms of hiring and progression, is having dedicated (ideally senior) advocates within the company for diversity and inclusion. A 2006 study of 708 private sector companies showed that conventional diversity training and evaluations for managers were the least effective at bringing through more women and minority ethnic candidates into managerial roles. The best method was creating dedicated staff roles or committees that were held responsible for hitting diversity targets. It was also found to improve the efficacy of any diversity training, evaluation, networking and mentoring schemes the company ran too. Business in the Community’s ‘Race at Work Charter’ provides a good template for such an approach, as well as resources for creating diversity targets that are more likely to work.

However a company chooses to go about it, the outcome must be the proactive embedding of inclusivity in the daily operations of the business, from board-level commitments and HR metrics to individual managerial responsibilities and supply chain policy. Only then can the culture of a workplace be truly transformed, since the ingrained and often tacit norms of any organization’s culture have a habit of stubbornly reproducing themselves regardless of executive edicts from above. It will also have the added benefit of making the business more agile and responsive to the ever-changing and increasing expectations of wider society, avoiding potential controversies that can seriously impact on people’s trust in a company.

To echo the words of the McGregor-Smith Review: “Now is the time to act”. But action needs to be authentic and get to the root of the problem. It isn’t enough for a business to celebrate its diversity if their Black, Asian, Mixed Race and ethnically diverse employees are overlooked for promotion and senior roles in favour of their white colleagues. Employers have nothing to lose by making sure their diversity and inclusion programmes are creating meaningful change, but they do have everything to gain. Otherwise, as one of the survey respondents rightly warns, “If we keep doing the same thing we will end up with the same results”.

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