The case for change

How can your teams benefit from a work environment that embraces the values of equality, diversity and inclusion?

As the Society celebrates its 75th anniversary this month I commend it for its work in the EDI space. It’s recent accreditation and gold status as a leader in Diversity from the National Centre for Diversity, is not only testimony to its efforts as an employer but to the wider initiatives being taken to help the profession at large, including most recently its new disability inclusion guide. 

Creating a workplace culture that values diversity and inclusivity is not just a moral imperative but also a strategic advantage. Diverse teams are proven to be more innovative, better problem solvers, and more adept at understanding and meeting the needs of a diverse client base. By actively participating in these observances, we can further our EDI goals and foster a workplace where everyone feels valued and respected.

I’ve had the opportunity recently to collaborate with the Society in developing the first of its kind EDI certification course. It has, without doubt, been the highlight of my year; working with colleagues who are as passionate as me with a shared vision for a truly diverse and inclusive profession.

But knowing me as they do, they will also expect me to set them a challenge. So, what’s next? Perhaps a culture inclusion guide to help us battle the threats of polarisation and further embed the society’s admirable principles of fairness, respect, equality, diversity, inclusion, and engagement.

Before that though, let’s explore how you all can make a case for change with your employers, and what benefits a diverse workforce has.

Maintaining a diverse workforce has become imperative for modern organisations to succeed. Companies with diverse staff are better positioned to meet the needs of diverse clients, changing social demands and unpredictable market trends.

Research from McKinsey showed that:

• racially diverse companies are 35% more likely to outperform their less diverse counterparts, and
• companies with a strong female representation in leadership positions are 25% more likely to outperform.

Research conducted by Harvard Business Review demonstrated that diverse companies are 70% more likely to capture new markets than organisations that do not actively recruit and support talent from under-represented groups.

According to the McKinsey study “Why Diversity Matters”, companies in the top quartile for gender-diverse executive suites are 15% more likely to generate above-average profitability compared to the bottom quartile of companies, whose leadership or executive teams were predominantly white and male. When it comes to staffing, companies that have a higher degree of racially and ethnically diverse employees have a clear advantage over companies relying on a "culture fit" that tends to trend white and monocultural.

The same study also found that companies with gender-diverse executive teams in the highest quartile outperformed male-dominated companies by 21% in terms of EBIT (earnings before interest and taxes) and 27% in terms of creating long-term value, which is particularly important during times of economic instability.

Racially diverse executive teams provided an advantage of 35% higher EBIT and 33% more long-term value creation over the least racially diverse companies. Subsequently, companies with diverse talent and executives are more likely to retain the best talent and engage in progressive decision-making attracting a larger variety of clients.

Innovation

A global study by the Boston Consulting Group (BCG) found that offering education and training that underrepresented groups may not have had access to in the past can further foster innovation by exposing employees to new skills and ideas.

More recent research by Forbes, suggested that companies with greater than 30% female representation in management and executive leadership roles, outperform their peers, with one industry leader observing, ”Afterall, women, particularly Black women, have long juggled multiple priorities inside and outside the workplace, developing sharp instincts and formidable skills that translate into (successful) business results”. This shouldn't come as a surprise but now we have the figures to prove it.

Economy and health

What about the UK? All of the above research has been conducted on a global level and the figures include analysis of UK companies. However, Censuswide on behalf of Perkbox carried out research in June 2022. It surveyed 508 workplace managers and leaders in the UK. It found 42% of businesses reported an increase in productivity due to improved D, E & I policies. A quarter (25%) of those who have taken action have seen a direct correlation between improved policies and increased revenue. The research also revealed that 33% of teams are noticeably happier due to improved D E & I policies, 32% of teams became more creative and innovative, and 31% are finding it easier to attract new talent.

Despite all of this, the research found that a fifth (17%) of businesses still don’t think it was necessary to improve diversity, equity and inclusion in the workplace. The research revealed that reluctance to make improvement stemmed from fundamental barriers, including concerns around employee privacy, skills shortages and budget constraints:

• 32% of businesses want to respect their employees' privacy and understand they may not wish to share aspects of their personal lives. With personal data being such a valuable tool in both identifying and removing D, E & I barriers, this is a stumbling block many businesses find difficult to overcome, and yet it is an essential tool to better plan and execute an effective D, E & I strategy.
• 22% have access to a limited talent pool and are under pressure to hire fast. With leadership teams themselves lacking diversity, this perpetual cycle becomes increasingly difficult to break.
• 20% claim not to have the budget to hire external consultants to support them to improve D, E &I, leaving their HR personnel with increasing pressures and workloads. Add to this the effects of the pandemic and its stressful aftermath on HR personnel, HR managers are facing their own ‘great resignation’ leading to companies finding HR talent hard to recruit and retain.

Scotland’s position

Scotland has a slightly lower percentage of women-led businesses (15.4%) as compared to the U.K. average (16.8%).The figure is also lower in terms of ethnic minority led businesses. In 2020, ethnic minority led businesses were most common in England, with 6% of SMEs being based there, compared to 2% in Scotland.

On a positive, Scotland is not closed off to global trends, with Scottish businesses recognising the need to keep pace. According to a recent survey by Bank of Scotland, half of businesses in Scotland plan to introduce new policies and training to improve inclusivity in the workplace – and more than a quarter plan to act in the next six months. The survey found that Scottish business confidence climbed in nine of the twelve UK regions and nations, with the biggest rises in Wales, Scotland and London.

The survey was carried out in February of 2023 as part of the monthly Lloyds Bank Business Barometer. It surveyed 1,200 UK companies - including 100 businesses in Scotland - from all industry sectors, regions and firm sizes with annual turnover above £250,000. It found:

• 31% of businesses plan to prioritise training their staff on diversity and inclusion to build a more inclusive working environment.
• 27% intend to have a more diverse team of employees and a fifth want to adopt more flexible working arrangements.
• 30% said they need access to specialist HR skills
• 23% said financial incentives from government would help with their progress towards building a more inclusive workforce.
• 22% cited legislation from government as essential to help them move forward.

The research also found that for many businesses, delivering their plans will require external support and guidance.

In conclusion all the research finds that Diversity + Equity + Inclusion = Profitability, Sustainability and Well-being. The case is well made.

Written by Naeema Sajid, founder of Diversity+