Out-Law / Your Daily Need-To-Know

Lack of D&I strategy in UK businesses, report shows

Out-Law News | 23 Sep 2021 | 11:36 am |

Helen Corden tells HRNews why effective data collection by employers is central to addressing diversity and inclusion failings

HR-News-Tile-1200x675pxV2

We're sorry, this video is not available in your location.

  • Transcript

    Almost a third of UK businesses do not have a strategic approach to inclusion and diversity, according to new research flagged up by the CIPD. The survey of more than 2,000 HR professionals and business leaders found that 31 per cent of UK respondents said their organisation did not take a strategic approach to inclusion and diversity, and had not taken any steps towards implementing one.

    The research by Workday has been reported in People Management. It reveals that more than half describe recording equity, diversity and inclusion as a “challenge”, and one in 10 UK businesses did not see the importance of diversity. 12 per cent believed it is “polarising”. A further 15 per cent of respondents to the survey said they believed inclusion and diversity were “trivialised”, with a focus on similarities rather than celebrating differences.

    Commenting on the findings, Sandra Kerr, race equality director at Business in the Community, said employers will need to rethink their policies. She said a lack of strategic action could cost them a significant contract or they could face negative media attention because something has gone seriously wrong in their organisation and they have no clear or transparent process in place to resolve it. 

    The findings come after the CIPD last week called for mandatory reporting of ethnicity pay gaps within the next two years following the revelation that just 13 FTSE 100 companies had so far reported their ethnicity pay gap data. The CIPD has urged the government to require businesses to provide a supporting narrative to explain the nature and causation of pay gaps, and an action plan of initiatives to reduce and remove any such gaps. Without this, it said, the reporting mechanism was unlikely to drive real change. The subject was debated in parliament on Monday and is first sign of progress since the government consultation in early 2019. 

    Separately, a report last month by Green Park found that just 11 ‘top tier’ roles – made up of chair, CEO and CFO – among FTSE 100 companies were held by people from an ethnic minority background. At the current rate of change based on Office for National Statistics data, the report said, it would take until the year 2237 for all boards across the FTSE 100 to be representative of the working-age population, of which 13 per cent is non-white. 

    So let’s get a view on all of this and consider what employers can do to improve, starting with Green Park’s research and the lack of ethnic diversity in the FTSE 100. Helen Corden joined me by video link from Birmingham to discuss the issues. I put it to Helen that this is startling research:

    Helen Corden: "I think this is startling research and what it does show is that organisations, companies, haven't grappled properly with this issue yet. It's clear that this issue of under representation of black people at board level, and even below board level, really needs to be grasped and organisations do something about it. An organisation isn't going to solve the problem at board level if they haven't also looked at the issue below board level because they need that pipeline of talent to be able to come through. In our experience I think one of the big blockers, and one of the big issues, that companies really need to address now is the collection of data. We know that there are a lot of companies out there who still aren't collecting the data around the ethnic breakdown of their workforce and without that data they can't analyse the data, they can't see what representation they have, and as a result they can't put in action plans to deal with any potential barriers to progression, whether that's to middle management or senior management and up to board level. So there are a number of reasons why organisations aren't collecting this data. Many are just putting it in the 'too difficult' box, they haven't got the HR systems in place yet to be able to gather that data, they're worried about data protection issues, they're worried about response rates from their employees, but really this is an issue that they need to grapple with, especially in light of the fact that there is increasing pressure on the government to introduce the ethnicity pay gap reporting regime which will, in some ways, mirror the gender pay gap reporting regime. With the introduction of ethnicity pay gap reporting companies will have to do this so they should be taking the initial steps now around the data gathering to ensure that they're in a good place once those regulations are introduced.”

    Joe Glavina: “What’s your best guess on the timing of any new law on ethnicity pay gap reporting and, secondly, will it be a 'copy and paste exercise' for HR given they already done this for their gender pay gap?"

    Helen Corden: “In terms of timing, the consultation in relation to the regulations closed in January 2019 and we still don't have any response to that consultation and we still don't have any draft regulations. We've obviously had the COVID pandemic that has impacted on the introduction of the regulations but pressure is increasing on the government to respond to the consultation and to produce draft regulations. If you ask me for my best guess as to when these regulations will be produced in any draft form or when employers may have to start reporting, it's probably likely that the earliest snapshot date that companies will have to look at would be April 2023 which is obviously another two years from now but there's a lot of work that organisations will need to do to get ready for the introduction of these regulations, not least putting in place the data collection exercise which we've already referred to. In relation to the regulations themselves, is there's going to simply be a copy and paste exercise from the gender pay gap regulations? In some respects yes, in some respects no. One of the biggest issues is in relation to how the pay gaps are calculated, what categories of data should be looked at? Obviously, with the gender pay gap regulations, it was quite straightforward, you were looking at the average pay of men versus the average pay of women. Here, should you be looking at the average pay of white people versus the average pay of those from a BAME background or should you be breaking down the categorization even further? This is one of the big issues which the government is grappling with because if you just do it white versus BAME then that can disguise many issues which are relevant in relation to particular categories of individuals. So for example, black people or Asian people, they have potentially different barriers in recruitment, in progression, and if you just use the capsule category of beam, those potential barriers would not be evident."

    On the subject of diversity in the FTSE 100, in case you missed it, on 7 September D&I specialist Kate Dodd talked to this programme about the pay disparity in light of research showing FTSE 100 directors earn on average 73% less than their male counterparts. That programme is called ‘Non-exec roles for females explains FTSE 100 pay disparity’ and is available now for viewing from the Outlaw website.

    LINKS

    - Link to report by Workday: ‘The state of equity, diversity and inclusion in Europe’.