Figures released recently by the ONS show that the gender pay gap increased during the pandemic from 7% in 2020 to 7.9% in 2021. This comes as no great surprise – women were disproportionately impacted by the Covid-19 crisis with the burden of childcare and home schooling forcing many working mothers to request furlough, reduce hours, take unpaid leave or even leave the workforce completely. High numbers of women were also employed in industries which were hardest hit by the pandemic, such as Leisure, Hospitality and Retail, and were therefore more likely to have lost their jobs.
Statistics show that there is a marked increase in the gender pay gap between employees aged 40 and over compared to those under 40, which is a stark example of the “motherhood penalty” and the significant impact that taking time out of the workforce to have a child has on a woman’s career. Cultures of presenteeism, a lack of willingness to embrace flexible working, high childcare costs and unconscious bias in recruitment and promotion decisions all present obstacles to female career advancement.
But it is not just women who are affected - boards in many UK businesses are unfortunately not representative of society. The top jobs go disproportionately to those who are “pale and male” - white men who are often elite educated.
The reasons for this predominantly involve inequality of opportunity. Many white elite educated males are privileged to have opportunities through their social networks that simply do not exist for those in minority groups. Furthermore, it is a well known fact that people recruit and promote people that they relate to and identify with - people that remind them of themselves. If companies have a lack of diversity at management level, without education and training, they will continue to make the same hiring and promotion decisions, leading to a perpetual cycle of employing individuals in their own ilk - who they perceive to be “the cultural fit.”
But what if businesses were to think not of the “cultural fit,” but “the cultural add?” What can a diverse and inclusive workforce bring to the organisation? The benefits are numerous:-
1. Better business performance
Research shows that diverse teams drive performance. A greater variety of perspectives and backgrounds has been shown to result in better decision making and companies with diverse executive teams posted bigger profit margins than their less diverse competitors.
2. Improved recruitment, retention and engagement
Latest reports suggest that one in four employees are considering leaving their existing employer. With the current candidate-driven recruitment market, businesses must ensure that they appeal to a diverse talent pool. Increasingly, that talent pool will expect to see diverse role models in senior leadership. They will require information on an employer’s Diversity and Inclusion strategy and their gender pay statistics. In recent research, 61% of women stated that they would take into account an organisation’s gender pay gap when choosing who they wish to work for.
But it is not just about attracting that talent, retention is equally important. Organisations that understand and respect the unique needs, perspectives and potential of their team members are more likely to gain their employees long term commitment. Committed and engaged employees are more likely to be productive, achieve their goals and ultimately stay with an organisation. Creating an inclusive culture and a sense of belonging where everyone is valued is crucial in driving employee engagement.
3. Better business opportunities
Clients, customers and suppliers expect to see the diversity of society reflected in organisations, as it will be in theirs. Businesses that build balanced teams who can draw on their own perspectives across genders, generations, cultures, ethnicities and backgrounds will be better placed to make strong business connections and identify business opportunities within their current and potential client base. In addition, clients are interested in their suppliers Diversity and Inclusivity statistics and are frequently requesting this information in “Requests for Proposals” or tender information.
4. Essential to manage compliance and reduce legal risk
There is ever increasing regulation and legislation relating to Diversity and Inclusion. The Financial Conduct Authority is proposing to introduce quotas on representation of women on boards following similar provisions from NASDAQ in the US. Gender Pay Gap reporting legislation may well be extended in the future to include companies with less than 250 employees and mandatory ethnicity pay gap reporting has also been proposed. In the US, law suits have been brought against executives who are not taking action on Diversity and Inclusion, on the grounds that they are not meeting their fiduciary duties as directors.
Discrimination claims in the UK are also on the increase. Employers have a potential defence to these claims only if they provide frequent and up to date Diversity and Inclusion training to their employees. With the current fast moving diversity climate and the rise of social media, managers are increasingly concerned about what they can and cannot say in the workplace and businesses must equip their staff to deal with these issues.
Put simply, a Diversity and Inclusion strategy is no longer a “nice to have” - it is essential.
So what steps can businesses take to improve equality, diversity and inclusion?
1. Measure the Data
The first step is to analyse your organisation’s data because if it is not measured it cannot be managed. Undertake an analysis of your gender pay gap, review your leadership structure and diversity statistics. Obtain a snapshot of your workplace composition so you are aware of the areas that need addressing and can set targets to do so.
2. Challenge and educate your leaders
Challenge your leaders and encourage them to challenge themselves – this may be uncomfortable but businesses should aim for progress not perfection. Invest in inclusive leadership training to help educate and equip managers with the aim of removing barriers to diversity such as unconscious bias in hiring and promotion decisions
Educate hiring managers in what increased diversity can bring to the table – new ideas, new experiences and different skills. Progressive and dynamic leaders are those who will educate themselves in the challenges that diverse minorities face and take steps to ensure under-represented groups are championed and given a platform to reach their goals.
3. Give your Diversity and Inclusion Strategy the priority it deserves
Strong inclusive leadership is key. This must start with a personal commitment from the CEO/ Board and filter throughout the organisation. Diversity and Inclusion should not be simply limited to the remit of HR. Your organisation’s Diversity and Inclusion strategy should be aligned with business goals and given the same priority as any other business led strategy.
How we can help
We can assist you with all your Diversity and Inclusion needs from analysing your data and preparing your organisation’s gender pay gap report to working with you to develop a Diversity and Inclusion strategy which identifies and addresses any areas for improvement. Our experienced team can also provide training to your leaders and managers on equality and diversity and inclusive leadership.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.