Emerging trends for diversity and inclusion in 2023

Emerging trends in 2023 can be put into three categories: trends that are mainly external, those that are mainly internal to an organisation, and those that are a mixture of both. Many of these trends overlap or are interconnected.

External trends

Socio-political drivers

Movements like Black Lives Matter (BLM) had a huge impact in 2020 and 2021, but as the world continues reverting to pre-pandemic norms, new campaigns could gain prominence. The so-called ‘anti-woke’ movement, a backlash against the current focus on racial and social justice issues, could crystallise into a resistance to D&I more broadly.

We have already seen the government in the UK and some organisations question the value and relevance of some aspects of D&I, including unconscious bias training. In December 2020, a report commissioned by the UK government concluded that there was “currently no evidence” that the training changes behaviour in the long term. It also stated that there is emerging evidence of “unintended negative consequences” from unconscious bias training. However, other research suggests that it can be effective in raising awareness and reducing, but not eliminating, bias, when properly delivered. The resulting headlines over this debate have often obscured the value of upskilling employees around D&I.

Regulatory oversight

Regulators are increasingly demanding that employers pay close attention to D&I and workplace culture, with a steady ratcheting up of legislation and regulations that include a requirement for published metrics. These can include detail on the gender pay gap and the ethnicity pay gap, as well as voluntary reporting of the LGBTQ+ pay gap. Regulators are shifting their preference from unpublished targets with no consequences, to published targets with fines for non-compliance.

Shareholder activism and procurement

Scepticism about companies ‘going through the motions’ on D&I is driving two ongoing trends: shareholder activism, and a shift in procurement priorities. Shareholder activism has long been an issue that has driven companies to work harder on D&I, and this trend is likely to continue in 2023 as greater progress is demanded by investors. Like clients, shareholders are now asking not just for information about D&I programmes and intentions, but hard evidence of the changes being implemented.

The procurement process has been a focus area for catalysing D&I improvements for some time. In recent years, Coca-Cola updated its procurement policies to insist that all of its suppliers must show evidence, not just intention, of D&I change. This will continue to rise in prominence in 2023, with many clients demanding data on diversity, and also information about culture, inclusion and wellbeing.

Environmental, Social and Governance

For many firms, D&I is somewhere in the environmental, social and governance (ESG) agenda. In many organisations D&I is now not just linked to, but actually driven from, ESG. As part of this, social value is likely to increase in relevance in 2023. There will be increasing demand to know what major organisations are doing to foster D&I through the work they do and the projects they deliver locally.

This work could include creating job opportunities for ethnic minorities or women, or addressing mental health and wellbeing in the large projects they deliver for government. Currently, the public sector is the main area of focus for social value, but this is starting to move into the private sector too.

Internal trends

Broader definitions of diversity

Organisations are increasingly adopting broader definitions of diversity that focus on additional areas such as neurodiversity, cognitive diversity, social mobility and socio-economic diversity. Employers are likely to find themselves being challenged by stakeholders to demonstrate that they are thinking beyond a limited set of protected characteristics.

Positive action initiatives

Positive action initiatives are not the same as positive discrimination or affirmative action, which are illegal in many places. Instead, they are actions that are legal and designed to create a level playing field for under-represented employees. There are, however, ongoing concerns that such actions go too far, and could threaten meritocracy in the workplace. Employers would benefit from expert advice if they are unsure of what they can legally do, and how to resolve concerns raised by sceptics.

Employee attitudes

Employee attitudes to D&I used to be quite passive; an organisation might commit to change and employees would largely leave the management to get on with the task – perhaps checking in with them every six to 12 months. Now, however, employees are increasingly proactive in how they follow up with bosses, and ask for evidence of change on an ongoing basis. Employees are no longer happy just to leave it to organisations to create change; they want to see it happening in real time, backed up by evidence.

Measuring inclusion

While organisations used to largely focus on measuring diversity, employers are now asking how to measure inclusion. This is more complex than measuring diversity alone, which is largely quantitative. Determining the level of inclusion, by contrast, requires qualitative analysis too. Having expert guidance on measuring inclusion can be helpful to demonstrate that change is happening.

Leadership accountability

A great deal of effort has been put into inclusive leadership in the last five or so years, but employers are finding this can lack teeth, with underling behaviour never fundamentally changing. There is now, however, an emerging emphasis on holding leaders to account.

That could look like increased responsibility for an area of D&I; a performance goal related to D&I or, in some cases, remuneration being affected by D&I performance. Because of this, measurement of performance is a key area of change too, since leaders are currently often measured solely on financial performance.

Mixed external and internal trends

Race for talent

There is a chronic shortage of skilled labour in many parts of the world, and employers are increasingly seeking out diverse candidates to add to their workforces. There is, however, a growing trend of employers being rejected by diverse candidates, and employers not knowing why. Often, more work is needed to track talent pipelines and understand what is happening in particular regions or locations. Employers need to try and identify any patterns and then step back and ask what is getting in the way, and how to deal with the barriers.

Talent integration

Employers often struggle to create a seamless experience for new employees, going all the way through from recruitment and onboarding to development and promotion. This can be hampered by budgets sitting across different centres, such as human resources (HR), learning and development (L&D) and talent. This might mean that each component of an employee’s journey is competing for resources separately. The task for employers is to join up these separate workstreams and offer under-represented talent a consistent experience.

Covid-19

Covid-19 had a bigger negative impact on certain groups, a fact that has impacted on employees. On average, for example, more women and mothers lost their jobs than men during the pandemic, with the lockdown’s greatest economic hardships falling on ethnic minorities. These disparities will continue to be felt in the workplace in the year ahead, so employers may have to rethink how they can bring more balance to the diversity of their workforces.

‘Two-tier’ workforce

An organisation might be described as having a two-tier workforce if some of its employees get to work remotely or flexibly, while others do not. Often it is employees from under-represented groups that do not have access to the flexibility. While this issue has always been present, Covid-19 brought it to the fore.

Attention is now being paid to the rationale behind the idea that some parts of a workforce are granted more flexibility, and whether employers are being as creative about that as they could be. For example, while some roles require in-person work, this does not equate to zero flexibility. There are often other options aside from the dichotomy of working from home vs working in the office.

Virtual reality

2023 will likely see the continued rise of D&I training using technology. This work is often especially targeted at activating empathy and experiencing the impact of microaggressions, because it can put a user in the shoes of others. Experts believe that the cognitive load is reduced when a user is placed in an immersive environment, meaning that they do not have to imagine irrelevant details and instead can concentrate on what they are experiencing.

The changing definition of employee

There is increasing regulatory and legal scrutiny of firms that rely on large numbers of gig economy workers, self-employed staff, and zero hours contracts to conduct their business, but maintain that they are not employers. This practice has raised ethical and legal concerns over workers’ rights and protections, and questions over what obligations such businesses have.

This ongoing debate is likely to gain pace in 2023, as courts across the world continue to grapple with the issue. EU courts, for example, have already heard arguments about which workplace protections should be extended to freelancers.

Engaging proactively

Faced with this range of emerging trends, employers may conclude that it is all too hard and that there are other priorities to focus on. But, wherever there is a challenge, there is also an opportunity. Canny employers who engage proactively with these trends can manage the risks they present and harvest the value they bring, while those who bury their heads in the sand might end up on the wrong side of history. Seeking advice from expert advisors is always a good option to consider to make the most of the trends in D&I in the coming year.