Diversity policy makes business sense for manufacturers

Out-Law Analysis | 15 Nov 2018 | 3:16 pm | 5 min. read

ANALYSIS: For manufacturers looking to win the war for talent and tackle the industry-wide skills gap there is a compelling business case for meaningful engagement with diversity and inclusion. This has moved beyond compliance and is now a business critical issue.

Pinsent Masons, the law firm behind Out-Law.com, surveyed school leavers and students for a new report on tackling the skills gap in the automotive sector and found that 88% of them cited meaningful engagement with diversity and inclusion as very important in their choice of employer. Those same young people told us they were not interested in tokenism or employers paying lip service to these issues, for example use of diverse imagery in recruitment with very little substance behind it.

While many of the corporate respondents to our research told us that they understood the importance of diversity initiatives, or had new initiatives in the pipeline, there was a clear gap between what the manufacturing employees of the future are looking for and what their employees are actually doing. It was particularly surprising to find that nearly a quarter of medium-sized employers had no plans to use their inclusivity as a differentiator in their recruitment approach, despite the importance of this to school leavers and students and the wider benefits to organisations such as recruitment and retention of staff and diversity of thought within business.

So what is the business case for diversity and inclusion in manufacturing? And what can manufacturing businesses do to attract a diverse talent pool?

The business case for diversity and inclusion

The business case for diversity and inclusion is multi faceted. An obvious and immediate advantage for the manufacturing sector is securing the best mix of top talent. This leads to improved performance on both an organisational and personal level. To take two simple examples: employees who work in an environment free from prejudice will perform better; and business decisions which are analysed from different and diverse perspectives are usually the better for it. This in turn allows businesses to respond to external tends and enhance employee engagement. Employees who feel involved, included and respected are likely to be more motivated to deliver better results for the organisation. This in turn can lead to leveraging commercial opportunities better. At best, these advantages can become a virtuous circle.

It is no secret that the manufacturing sector has traditionally tended to attract more men than women. The sector's first gender pay gap reports, published this year, showed gender imbalance within the industry as a major cause of a median pay gap of around 10%, with men occupying the vast majority of senior, highly paid roles within the sector.

Businesses already tell us that they are struggling to recruit workers with the right skills – a struggle that will only be exacerbated if Brexit brings the anticipated shortage of skilled workers from the EU, no longer able to move freely from the continent. Training home-grown talent is potentially one way of addressing this, but we know from speaking to the sector that the apprenticeship levy and new apprenticeships in general have not really delivered skilled workers in the anticipated volume.

Against this backdrop, attracting women into the manufacturing industry, into jobs which may not have traditionally appealed, will become imperative. But firms also need to go beyond successful recruitment and look towards retention of talented female employees: evidence that emerged as part of the gender pay gap reporting process showed that, after maternity leave, the shift work that is common in the manufacturing industry becomes less attractive to those with childcare responsibilities. It is not just shift work which can lead to a drain of female talent. Inflexible working practices and a culture of 'presenteeism' can also contribute to making it difficult to balance work and family life.

Diversity and inclusion is not limited to supporting women in the workplace. Our young respondents were particularly keen to see their future employers introduce initiatives to support employees from black and minority ethnic (BAME) backgrounds and encourage them to progress – something that the UK government has now turned its attention to, following the success of the gender pay gap reporting regulations, with its consultation on ethnicity pay gap reporting and support for Business in the Community's Race at Work Charter. We found a similar picture in respect of initiatives to support lesbian, gay, bisexual, transgender and queer (LGBTQ+) employees. What tends to happen is that businesses who gain traction in one area of diversity, such as gender, develop a platform which makes it easier to then focus on another area. A step by step approach can be effective.

What initiatives have manufacturers adopted?

Many of the manufacturers we spoke to are already implementing a range of diversity and inclusion initiatives and related successful talent strategies. Many more said that they planned to introduce them over the next two years. For example, whilst just over half of the surveyed companies had a current initiative in place to support leadership diversity, over 90% plan to have one up and running in the next two years.

Firms included details of some of these initiatives with their gender pay gap information, as part of the action they were taking to tackle those gaps. Diageo is planning to identify roles that are suitable for flexible working, and has introduced an internal job share portal to assist employees who are interested in job sharing find potential job share partners. Unilever and others emphasised the importance of family friendly policies, while Cargill specifically mentioned the problem of 'presenteeism' that is sometimes seen as a barrier to career progression by employees, particularly women, with childcare commitments.

Other ideas include outreach work focused on promoting career opportunities, including funding STEM scholarships or introducing initiatives to recruit more women or people from diverse backgrounds. Only 24% of graduates in the STEM subjects – science, technology, engineering and maths – in 2017 were female, and only 14% of that 24% were in technology and engineering. This has an obvious knock-on effect on the recruitment process. Siemens, for example, has launched The Curiosity Project, a UK-wide engagement programme with the aim of inspiring young people to study STEM subjects.

Companies using only traditional recruiting methods and advertising may need to reconsider their tactics, and consider changing the emphasis of their messaging. Businesses can seek to put in place bias-free recruitment processes, such as 'blind' CVs, and provide unconscious bias training to hiring managers and HR. Companies including Coca-Cola and Tunnock's are now actively seeking gender-balanced shortlists to ensure diversity in the recruitment process.

As well as attracting new employees, companies must also focus on retaining talent. There is far less loyalty in the industry than there once was, and for the majority of businesses there is the real challenge that once trainees get the experience they need they will leave after three or four years. Talent retention is not just about pay and working conditions but also organisational purpose, opportunities for personal development, the ability to get involved in exciting and innovative projects, confidence in leadership, demonstrating social responsibility and the overall employee experience.

Put polices and procedures in place to support career progression by women and other employees from diverse backgrounds. Encourage visible role models, and provide mentoring and training to drive staff progression and increase diversity at a senior level. Look at your governance documents and internal structures, to make sure that they are framed around attracting diverse talent.

We would suggest it is crucial at an early stage to gain key stakeholder sponsorship. In an ideal world, diversity and inclusion should be woven into your business plan. At the start of a diversity and inclusion journey, easy wins should be identified. The organisations that perform best in this area see this as business critical; it has a highly positive impact on recruitment and internal culture and will reduce the risk of the impact of the skills shortage on business.

Rob Childe is a diversity and inclusion expert at Pinsent Masons, the law firm behind Out-Law.com.