Spotlight on diversity and inclusion in a time of crisis

At a time when many businesses are facing the worst trading environment in living memory and are facing financial threats on an unprecedented scale, you might reasonably assume that social and cultural concerns would slip down the agenda, eclipsed by a simple focus on financial health. So why is it that in this incredibly challenging year, issues of culture, and in particular diversity and inclusion have become such a key focus for business? And is the progress in this field established, sustainable and long term, or are these developments purely reactive and short term?

At the start of 2020, a platform for D&I had been established. The focus of corporate governance had shifted, perhaps best exemplified in the UK by the Corporate Governance Code which explicitly proposed a model where purpose, culture and values were presented as the key structural ingredients of good corporate governance, and the role of diversity and inclusion as board level issues was highlighted. The business case for diversity had been repeatedly and ably explained by clear data and supporting reasoning including the outstanding McKinsey reports of 2013 and 2018. A direction of travel had been set, and yet progress remained obstinately slow. In the field of gender equality, activity aimed at strengthening the talent pipeline still had not achieved even the aspirational target of 30% representation for women on boards. The Parker Review on ethnic minority representation in February 2020 made disappointing reading, with 37% of FTSE companies surveyed still having no ethnic minority representation on their board (admittedly down from 51% in 2017).

At that point the Covid-19 crisis hit. The experiences of lockdown, furlough and retraction of the job market had radically different impacts on different demographic groups. The necessary use of technology to work from home shattered long-standing myths about the difficulty of remote working; management became a very different task, where a manager would be judged as much by their soft skills to engage and motivate and understand their colleagues’ circumstances as by their professional abilities; and the need to balance caring responsibilities with work responsibilities became much more visible and open than ever before. The experiences of parents, of single people living alone, of older workers and of vulnerable groups became topics of conversation, to be shared, considered and addressed. In essence, each individual’s diversity became part of their work identity, rather than just a personal issue.

A few months later, when George Floyd was killed in Minnesota the business world reacted as it never had before to so many similar, terrible cases of racial injustice. Where previously businesses had perceived racial injustice as a political issue on which they did not comment, business leaders spoke in personal, and often very moving, ways. Those who chose not to speak out, or who spoke in hollow, corporate language, faced criticism from their employees, customers and investors. The race agenda suddenly became super-charged with leaders who had no particular diversity expertise needing to re-skill quickly to speak the language of diversity and begin to have those “courageous conversations” which were so long overdue.

Powerful statements of support create expectations and leaders making those statements inevitably created an accountability to deliver substantive change. Change will of course seem too slow for some and too fast for others, but what has actually changed in the field of race diversity this year?

There are some clear developments:

• Allyship, a cornerstone of LGBT equality, and more recently adopted in the gender field by campaigns such as HeforShe, has finally become a force in the world of race diversity, with white allies speaking up for, but not speaking over, the black communities to express solidarity. Similarly, the importance of mentors, champions and sponsors has become established.
• The recognition that there is a pipeline of ethnic minority talent to be recruited has also become more apparent. But finally, attention is also being paid to the steps beyond recruitment, with retention, performance assessment, reward and promotion all coming under the spotlight, and organisations starting to consider how they compensate for unconscious bias and ensure that decisions are scrutinised through a diversity lens.
• The hunger for diversity data is also readily apparent. Many companies are now seeking hard demographic data and seeking to track their minority cohorts through the business. The law is unhelpful here, as in many jurisdictions data privacy designed to protect employees simply does not consider the social value of allowing employers to track the progress of minority groups. In addition, diversity data is self-reported, so may not in fact yield quite the facts and figures that a business may think it wants. But there is a different way to measure progress, and companies are beginning to look at qualitative data gathering in order to establish not merely the number of employees in a given minority, but to actually consider how those people feel operating within the business. In other words, looking not just at diversity, but at inclusion data as well.
• Many businesses are developing Race Action Plans, setting a path for themselves and their aspirations in relation to race, and, crucially, setting out strategies for how they intend to realise those aspirations.
• Discussions around targets and quotas are firmly back on the table, with companies considering how they can use these tools within the existing legal frameworks in the countries in which they operate.

Change may still feel too slow for some, but all of these developments are a leap forward from the situation that the Parker Review identified in the UK in February 2020. And many of these changes do have the sense of a sustainable strategy, looking into long term progress for ethnic minority representation in business.

As the year closes, there is something of a shift back to governance issues, with the FRC in the UK reporting that businesses have not adequately responded to the new structure of corporate governance and that annual reports need to do more to address issues of purpose, culture and values, including their diversity reporting. In other jurisdictions, governance change is also afoot, with the PIRC introducing gender quotas at board level in Germany, and NASDAQ proposing diversity quotas for its companies too.

But diversity is a many-headed issue. While 2020 has seen race issues under the spotlight, and has witnessed significant changes in the way that we perform our work, for some areas of diversity the workforce has faced severe setbacks. The Covid crisis hit female workers severely, with women significantly more likely than men to have been furloughed and to have been made redundant. The reasons for this will be analysed over the next year, but it does raise serious concerns that the steps forward in female senior representation over recent years may not be matched by progress for women in the wider workforce. Similarly, younger workers have been disproportionately affected by the Covid crisis, and people at the start of their careers face a much bigger struggle to get started in a contracting job market. And of course, underlying all of the strands of diversity, we have the socio-economic inequalities in society which have been exaggerated this year, as desk-working professionals have been able to work from home on full pay and manual and face-to-face service workers have faced long periods without work or on reduced pay.

So, 2021 will be a year of challenge in the diversity space, but business will need its workforce in all its variety to be fully engaged to weather the economic crisis we are facing. The businesses that survive and thrive will have a cohesive, innovative, flexible and engaged workforce. Diversity and inclusion is a key business tool for encouraging and embedding those very qualities. Even in this incredibly challenging economic environment, diversity and inclusion has a vital, and growing, role to play.