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Is the business world becoming too inclusive?

Whilst the business world has traditionally been the domain of white men in the UK, in recent years, diversity and inclusion measures have become much more commonplace and companies have diversified somewhat. So, in this article, Business Leader investigated the effect inclusivity is having on the business world.

Have diversity and inclusion measures gone too far, or not far enough?

In the UK, many companies have diversity and inclusion strategies in place. They are about recognising people’s differences and using them to enable everyone to thrive at work.

However, Rebecca Thornley-Gibson, Partner at law firm DMH Stallard, says that the measures being put in place are often on a risk management basis.

She comments: “Legislation has been in place for many years to minimise the risks of discrimination in the workplace and to encourage diversity.

“Most employers have put in place a range of policies and training measures to ensure compliance with the Equality Act 2010, but this is often on the basis of a somewhat negative mindset of a risk management approach to reduce internal complaints and external legal claims, rather than looking positively at the benefits of having a diverse workforce.”

Pam Dosanjh Phillips, Employment Partner with Spencer West and the Chair of Trustees for Black Voices Cornwall, believes more work on diversity and inclusion measures is needed.

She comments: “People want to work for companies where they feel valued, and a more inclusive workplace is about valuing everyone, so I don’t believe that it has gone too far.

“There is still work to be done, some industries are further ahead in diversifying their workforces than others. It is important, however, to ensure that the measures themselves are not stale or simply a tick in the box. Organisations can do this by measuring outcomes and continually developing the measures, by learning what has worked well and what has not.”

According to Darren Hockley, Managing Director at DeltaNet International, diversity and inclusion measures make sense from a business perspective, but it’s important not to hire for the sake of hitting diversity quotas.

He comments: “Diversity and inclusion representation makes pure business sense – it makes such a significant impact on the bottom line. Having employees and executives from different genders and ethnic backgrounds cultivates creativity. It’s about hiring smartly. Don’t just hire someone to hit diversity quotas. Hire someone from a diverse background – who has the skillset to help the organisation meet its vision.

“Diversity and inclusion measures don’t just stop there. It also includes educating employees to be more aware of unconscious bias to help change viewpoints and build an inclusive culture.”

However, Matt Gubba, CEO of Biz Britain, believes that it’s important to hire the best person for the job and says that positive discrimination is discriminatory.

“I’ve always believed the best person for the job is the best person for the job. It shouldn’t matter what sex, race, or minority someone belongs to. Positive discrimination, however well-intentioned, is in itself discriminatory and helps no one.

“At BizBritain, we have built a team made up of people from all walks of life, a mixture of sexes, nationalities, races, and religions. But we have done this by staying true to our recruitment process and only ever hiring the strongest possible candidate, as evidenced through a mixture of psychometric testing and multi-stage interviews. People should be judged on their merits; not where they come from, or what they look like.”

Whilst many others will agree that it’s important not to hire for the sake of hitting diversity quotes, over 90% of CEOs are white men and men are 30% more likely to be promoted to a managerial role. This means there remains a huge disparity over who is attaining the senior positions in businesses, which suggests that diversity and inclusion measures may not be going far enough.

Jonathan Richards, CEO of HR platform Breathe, also highlights that the majority of boards on the London index are still all white, despite improvements in recent years.

He says: “A key challenge in this field is the relationship between diversity, inclusion and culture, specifically the idea of ‘cultural fit’, which is often referenced in contemporary recruitment practices.

“We certainly appreciate that good recruitment is critical to the success of any business and that it is important for each employee to buy in to a company’s purpose, values and ways of working. But all involved need to be aware of the dangers of ‘like recruiting like’. It’s crucial teams work to ensure that processes are at least standardised (especially at interview) as well as considering controls for unconscious bias.

“A great deal of attention continues to be paid to headline metrics on minority ethnic representation and pay. Back in 2017, it was reported racial inequality in the UK employment market estimated to cost the economy £24bn a year. Reports such as this have stemmed a need for correcting overarching structural problems of prejudice, poor leadership and recruitment practices.

“Lately, there have been notable successes, with the number of FTSE 350 firms with directors of colour having doubled in the last year. Though this is a move in the right direction, the majority of boards on the London index are still all-white.

“That said, diversity and inclusion must be viewed as an opportunity, rather than a box-ticking obligation. Leadership should take on a more holistic stance and appreciation for creating a diverse, inclusive workforce and company culture.

“By bringing in characters from a range of different backgrounds with varying life experiences, people can contribute alternative perspectives and ideas to the table. Such contrasting viewpoints can make for an exciting and innovative working sphere and prevent recurring gatekeeping.”

Do diversity and inclusion measures impact business success?

Whilst diversity and inclusion measures in the workplace can help staff to feel valued, does this translate to business success?

Darren Hockley, Managing Director at DeltaNet International, highlights a correlation between diverse companies and profitability.

He comments: “Diversity and inclusion measures have a substantial impact on the success of a business. According to McKinsey’s Diversity Wins report, organisations in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile.

“Further to this, the report also revealed this was also the case for ethnic and cultural diversity representation. Organisations in the top quartile for ethnic diversity outperformed those in the fourth one by 36% in profitability.”

According to the UK Government website, in 2019, 5.1% of UK SME employers were led by a majority of people from an ethnic minority background. However, the latest ONS population survey figures show that people from ethnic minority backgrounds account for 14.4% of the UK population.

The Alison Rose Review of Female Entrepreneurship in 2019 also found that one in three UK entrepreneurs is likely to be female. However, 50.59% of the UK population is female. Therefore, it appears that women, and to an even larger extent people from ethnic minority backgrounds, are largely underrepresented as leaders of UK SMEs.

Considering the Mckinsey Diversity Wins report, the lack of female and ethnic minority-led SMEs in the UK could be limiting business success.

Pam Dosanjh Phillips also believes diversity and inclusion measures can help businesses to retain staff and has additional benefits.

She comments: “Measures which are managed well, agile, and relevant to the business objectives will allow the business to retain valued staff, recruiting from previously overlooked talent pools and improve productivity.”

According to Rebecca Thornley-Gibson, failing to adequately measure the success of diversity and inclusion strategies can also limit the employers’ ability to attract suitable candidates and leads to a risk of losing staff.

She says: “An employer needs to be able to demonstrate to all potential job applicants that it not only has policies in place to embrace diversity and inclusion, but it also measures the success of those policies through a range of different metrics.

“Those employers unable to do this will fail to attract a wide pool of suitable candidates for roles and find their competitors will have the edge of them in respect of the skills and experience their people have.

“For employees already in the business, they will expect their employer to live up to their diversity and inclusion measures, and take action where individuals in the business are not on the same page. Without this, employees will lose trust, and the risk is that they will look elsewhere for work, so they can work in an organisation that upholds and exercises a continuous improvement approach to its diversity and inclusion strategy.”

Has woke culture had a damaging effect on the workplace?

To be woke means to be alert to injustice in society, especially racism. However, there have been many instances on social media where people described as woke have been criticised for policing what people say. We were interested to learn what effect, if any, woke culture is having in the workplace.

Rebecca Thornley-Gibson highlights that there can be challenges from employees who fear disciplinary action if they say the “wrong” thing, but ultimately, the employer is responsible for communicating what behaviour is expected in the workplace.

She says: “There can be challenges from employees that they are “scared” of saying the “wrong” thing and that they are fearful of disciplinary action if they act a certain way or make a comment that is not well received by a colleague.

“However, employers do need to accept that they are responsible for communicating expected standards of behaviour, and that may mean putting in place behavioural Codes of Conduct, ensuring all employees receive diversity and inclusion training and supporting employees to clarify what is expected from them.”

When we spoke to Pam Dosanjh Phillips about woke culture, she said we should avoid using buzz words when exploring what is having a damaging effect in the workplace and look to solve the real issues.

She comments: “Many people don’t know that the term refers to someone who is ‘aware, especially of social issues such as racism and inequality’. However, due to social media coverage the term has a negative pejorative.

“Promoting and cultivating a workplace culture which recognises and seeks to avoid judgement of the difference between individuals is likely to have a positive impact on employee engagement and staff retention.

“We should avoid using buzz words when assessing what is having a damaging effect in the workplace and look at solutions for the real issues at hand. Diverse management and HR teams which reflect their workforces can bring in a culture that business and their employees will benefit from.”

Is an independent review into diversity and inclusion in the workplace overdue?

Pam Dosanjh Phillips - Spencer West

Pam Dosanjh Phillips

An independent review into diversity and inclusion in the workplace could take an in-depth look at the success of diversity and inclusion measures and suggest steps that the government and businesses can take to ensure an equitable working experience for all.

As Pam Dosanjh Phillips highlights, an independent review would also benefit organisations that cannot afford to carry out their own reviews.

She comments: “Many businesses and organisations who do not have the resources to fund their own reviews would benefit from an independent review, and therefore, I believe it is much needed.”

“The best way to tackle the issues of diversity and inclusion is to firstly understand what the issues and concerns are. There are many complex layers. For example, disadvantages which arise in the education system follow individuals in the workplace, in turn limiting their potential and progression.”

In 2019, The Alison Rose Review of Female Entrepreneurship took place, and this looked at the disparity between male and female entrepreneurship in the UK. In 2017, we also saw the McGregor-Smith Review, which looked at the issues faced by businesses in developing Black and Minority Ethnic (BME) talent in the workplace.

Whilst a lot can change in three and five years, and these studies do not cover every branch of the diversity and inclusion tree, both studies concluded comprehensively that vast inequalities remain in the workplace.

Therefore, perhaps the issue is that the government and businesses need to take more positive action based on the recommendations of previous reviews and not that we need a new independent review into diversity and inclusion in the workplace.

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