How can managing diversity improve your bottom line?

Written by
Changeboard Team

04 Jun 2010

04 Jun 2010 • by Changeboard Team

Keep abreast of diversity issues in tough times

Managing diversity is about valuing people as individuals. Proactive management can result in the creation of a more committed and loyal workforce, as well as the provision of a better service to customers, clients and key stakeholders. However, particularly in testing economic times, organisations often have to be persuaded that spending time and resources on these issues can improve the bottom line.

As strange as it may sound, recession provides well-run businesses with opportunity. Because competitors are weaker, client loyalties loosen and customers will go in search of more cost-effective alternatives. Getting it wrong on diversity will not only manifest itself in employment tribunal proceedings - costly in terms of financial expense, management time and organisational reputation - but also in higher staff attrition rates and more difficulties when trying to hire the best people to take advantage of opportunities. 

Can diversity be linked to the bottom line?

The stumbling block to categorically proving that better diversity equals improved profits lies in the fact that much of the evidence to this effect is anecdotal. 

Those looking to make the case for better management of diversity issues might point to Stonewall research, which found that staff concealing their sexual orientation at work can reduce their personal work performance by up to 30%. Or to case studies which tend to show that organisations with policies around extended maternity leave and child-care provision have a better retention rate when it comes to maternity returners. Then there are studies which link the introduction of work-life balance policies with enhanced employee satisfaction rates.

Practical examples also exist, such as the car manufacturer which put in place an all-female engineering team and was swamped with innovative ideas never before suggested.  

Taken together, the accumulation of such evidence cannot be ignored. A few years ago, the CIPD released a report called Managing Diversity: Linking the Theory and Practice to Business Performance. It neatly summed up the position as follows: if it looks like a duck, smells like a duck, feels like a duck, tastes like a duck, and sounds like a duck, its a duck.

What are the steps to valuing diversity?

The steps employers can take to show diversity is valued must be driven from the top; leadership in body is useless unless backed by leadership in spirit. It should not just be about having the chief executive's name at the bottom of emails, or their photo on newsletters dealing with diversity best practice. Real leadership is about wanting to see Results, asking difficult questions and demanding answers.

The status quo must be Challenged. Policies and practices should be looked at not only from a legal compliance perspective. Perhaps the company sets targets which are difficult for a person with caring responsibilities to attain, or makes it difficult for a person of a particular religious belief to attend training sessions. Barriers to individuals fulfilling their potential should be identified and broken down, not only through policy amendment, but through establishing support structures such as mentoring programmes.  

Displaying commitment to diversity is also critical if a culture of openness and respect is to be created. This can take many forms. For larger organisations, network groups dedicated to, for example, black and minority ethnic workers, or lesbian, gay and bisexual workers, can help provide a supportive environment. Events could be held to celebrate occasions such as International Womens' Day (8 March), or Older Peoples Day (on or around 1 October). A multicultural calendar could be made available to staff, showing dates for all major faiths. 

The message can also be developed externally, with corporate social responsibility activities taking place in the local community.

What impact might the Equality Act 2010 have?

When getting to grips with diversity, it's important to recognise that the Equality Act 2010 will be a key driver in the years ahead. For the most part, the act is intended to simplify existing legislation, but will also extend the scope of certain discriminatory grounds. For example, age will become a ground for Challenge in the provision of goods and services, while the public sector equality duties - currently covering gender, race and disability - will be expanded to age, sexual orientation and religion or belief. 

Though the private sector is not directly affected by the equality duties, these inevitably have a knock-on effect where private companies are involved in public sector procurement processes. Organisations will increasingly be asked to produce evidence of their work on diversity. Those able to do so will gain an inevitable competitive advantage.

In such situations, evidence will be sought in the form of equal opportunities and dignity at work policies, training to implement these policies across all staff levels, monitoring of equal opportunities information and, perhaps, positive action initiatives.

How can employers promote positive action?

Often confused with positive discrimination - which is illegal - positive action can include promoting diversity by providing greater access to training, or encouraging under-represented groups to apply for particular jobs. 

The final report of the Equalities Review - a precursor to the act - found some inequalities are so entrenched that merely prohibiting discrimination is not enough and identified the need for much wider 'balancing measures' than are currently permitted.

So, aiming to rectify historic inequalities and achieve 'full equality in practice', the Equality Act will extend the ability of employers to use positive action measures, in ways which have been viewed by some as verging on positive discrimination. White men to face jobs ban ran one newspaper headline.

The truth of the matter is that the new provisions amount to a limited form of tie-break, enabling employers to use under-representation of a particular group as a factor when selecting between two equally-qualified candidates. However, automatic selection of the person in the under-represented group will be unlawful, as will choosing a less-qualified candidate who is in an under-represented group.   

What to consider when implementing positive action

Whichever form of positive action an employer considers, they should conduct an analysis of whether individuals with a particular protected characteristic suffer a disadvantage, have different needs or have lower participation rates than others without that protected characteristic. 

This does not mean it's necessary to carry out extensive research to support a view that positive action measures are required. Some evidence will be required, but this need not be sophisticated statistical data or research. For example, it's sufficient to look at the profiles of your workforce or make enquiries of other comparable employers. 

Consideration of the demographics of the area in which an organisation is based may also prove a useful exercise, not only from the point of view of assessing the need for positive action measures, but also to assess the needs of customers and clients.

Tackling stereotypes in the workplace

Harnessing diversity also means stereotypical assumptions must be tackled. Dual discrimination is a concept introduced in the Equality Act, to cover situations where the unique combination of two protected characteristics Results in discrimination, in such a way that they are completely inseparable. 

For example, a DIY company chooses not to shortlist a young woman for interview for a shop floor role. Their belief is that she is unlikely to give the impression of having the necessary skills and knowledge to advise and sell DIY goods to customers. Her treatment is on the grounds of age and sex combined.  

While this is not necessarily something employers will have to mention in policies, they must be aware they may face a new form of claim. Staff and management training should drill home the importance of not making stereotypical assumptions. 

How will employment tribunals be affected?

Employment tribunal remedies are also set to get tougher as a result of the act, in order to help drive proactive measures by employers. Currently, if a discrimination claim is proven, the tribunal can recommend the employer take steps to reduce the impact on the person who has been discriminated against. However, this only applies if the individual is still in employment with the same employer - often unlikely if someone has made a discrimination complaint. 

The act extends the power of tribunals to make recommendations which would benefit the workforce as a whole. Non-compliance will lead to a financial penalty for the employer and previous recommendations can to be taken into account in any future discrimination proceedings against them. 

Preparation for the Equality Act

As the post-election dust begins to settle and implementation dates for the Equality Act are firmed up, employers should get a clearer picture of what is expected of them in the months ahead.

Changes to polices, procedures and practices will be inevitable, so securing the commitment of management now will help deliver not only legal compliance, but also the kind of motivated, diverse workforce needed to succeed in tough times.