How UK employers can boost socio-economic diversity in the workplace

Out-Law Analysis | 24 Jan 2023 | 12:00 pm | 4 min. read

A new report highlighting the lack of socio-economic diversity at senior levels of the UK’s financial industry contains a number of lessons for boardrooms across all sectors.

The Socio-Economic Diversity taskforce study (62 pages / 507MB PDF), commissioned in 2020 and published last month, revealed that around half of all UK financial services employees are currently from non-professional backgrounds, defined as working class and intermediate backgrounds. According to the report, employees from these backgrounds tend to get paid up to £17,500 less per year than other peers, irrespective of their professional performance.

Employees from non-professional backgrounds tend to progress 25% slower than workers from other backgrounds, with just over a third (36%) securing senior or management positions during their careers. The so-called ‘class gap’ is now thought to be widening as a result of the Covid-19 pandemic, and the report made clear that improving socio-economic diversity in UK boardrooms would help boost growth.

Although the report focused on the financial services sector, the lack of social mobility is a concern across all industries and a number of firms have already sought expert advice to address the issue.

Data gathering

While social mobility is becoming an increasing area of interest for employers, most are still at the very early stages of addressing it. The key starting point is an effective data gathering exercise, which can help an employer truly understand the demographic of its workforce. It needs to think about how the data gathering exercise will work, including the categories of data the employer wants to collect, such as the type of education each individual received, the type of job occupied by their parents and their eligibility for free school meals.

Laura Starrett

Associate, Pinsent Masons

The so-called ‘class gap’ is now thought to be widening as a result of the Covid-19 pandemic, and the report made clear that improving socio-economic diversity in UK boardrooms would help boost growth

These categories of data are important because they help to measure economic disadvantage which can then play a part in which individuals secure roles within an organisation. That data also contains key indicators about how an individual will progress within the organisation that they work for. Once the data is collected, the next step is to develop a strategy to tackle any gaps identified, alongside clear targets. Such a strategy will vary from organisation to organisation.

Practical steps

There are lots of practical steps that employers can consider when implementing their strategies. They should consider their recruitment policy and think about ways to create diverse routes into the workplace. Doing so could involve, for example, using an apprenticeship with a formal progression structure attached to it in order to attract a more diverse range of candidates into the business. When examining how to retain talent, reviewing promotion and work allocation processes can ensure that these are as inclusive as possible.

Employers should also look at relationships outside of their organisation. Working with young people in schools, universities and further education colleges can help broaden individual horizons which, in time, opens up opportunities to recruit from a wider pool of talent. Such relationships require a sustained level of engagement to remain meaningful to both the individual and the business and contribute to an organisation's wider environmental, social and governance (ESG) strategy in the local community.

It can be hugely beneficial to have an employee network that is engaged in pushing forward social mobility issues. These networks help build a sense of community and play a critical role in helping to shape the diversity and inclusion (D&I) journey within organisations and also help ensure that long lasting change. Ultimately, they also act as a first port of call to reach out to for supporting initiatives both inside and outside the business.

Legal compliance

There are good reasons for collecting social mobility data to demonstrate diversity and inclusion within the organisation. However, there is currently no legal requirement to do so, which adds a layer of complexity. When tracking the data involved in helping an organisation assess social mobility, the business will be dealing with sensitive information which should be treated with great care from a data protection perspective if individuals can be identified from the data.

Organisations must ensure that they collect the data in line with data protection legislation and must have a lawful basis for collecting social mobility data. If any of the data which they do collect is classed as “special category data” under the GDPR, they must also show they have an additional processing condition for doing so. So, for example, they must be able to show that the collection and processing of the data is necessary to meet a legal obligation, for example, their employment law obligations. However, as there is often no legal requirement for employers to monitor this type of data unlike, for example, gender, it can be difficult to establish a lawful basis for processing.

Having said that, given that the data will help establish, for example, whether an employer's equality policy is effective in practice, alongside highlighting possible inequalities and ultimately will help feed into a wider equality strategy, employers may be able to demonstrate that they have a legitimate business interest in collecting social mobility data, though they should take care that if they can achieve their business goals through collecting anonymous data, they should do so. These reasons are usually relied upon to justify collecting and processing the data on an anonymous basis. Access to this data should also be restricted in the usual way, and stored safely too.

Communication

Communication is absolutely key when an employer is asking individuals to engage with providing data from a social mobility perspective. Individuals need to understand the wider context for collecting the data. If an employer has an effective communication strategy in place, it will be able to harness a much greater response from its workforce and, ultimately, develop a more effective and clearer D&I strategy in future.

Written by Laura Starrett of Pinsent Masons.

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