Equity pays: why pursuing workplace equality isn’t enough

While most busi­ness­es now recog­nise the cor­re­la­tion between hav­ing a diverse work­force and finan­cial per­for­mance, find­ing sol­id data on the link has been hard­er to come by. 

How­ev­er, new research by Hen­ley Busi­ness School shows exact­ly that: that busi­ness­es which treat their employ­ees equal­ly reap finan­cial ben­e­fits. More specif­i­cal­ly, it found that organ­i­sa­tions which imple­ment prac­ti­cal equi­ty mea­sures, par­tic­u­lar­ly with regards to race, report­ed up to 58% high­er income than organ­i­sa­tions which do not.

The report, The Equi­ty Effect, sur­veyed more than 500 busi­ness lead­ers and 1,000 employ­ees of all ages, gen­ders and eth­nic­i­ties, across all indus­tries. It also analysed busi­ness per­for­mance and diver­si­ty data from the top 100 com­pa­nies list­ed on the FTSE 350.

What it dis­cov­ered was a British work­force riv­en with dis­crep­an­cies between the lived expe­ri­ences of white employ­ees and those of their minor­i­ty eth­nic coun­ter­parts.

Racial inequity still rife in UK workforce

The study found that employ­ees of colour report­ed high­er lev­els of ver­bal abuse (33% ver­sus 31%), dis­crim­i­na­tion in work allo­ca­tion (41% ver­sus 25%) and sex­u­al harass­ment (14% ver­sus 11%). When it came to report­ing this and access­ing sup­port, the fear of being judged held all employ­ees back, but this was con­sid­er­ably high­er among eth­nic minori­ties (44% ver­sus 34%). These work­ers were also far more like­ly to say that both con­scious and uncon­scious bias were bar­ri­ers to sup­port. 

When asked what was stop­ping busi­ness­es from achiev­ing racial equi­ty, the most com­mon answer among white employ­ees was their fear of unin­ten­tion­al­ly caus­ing offense or dis­com­fort when attempt­ing to tack­le the issue. For eth­nic minori­ties, how­ev­er, 34% believed it was a lack of under­stand­ing of the root caus­es of racism, be that com­pa­ny poli­cies, prac­tices or cul­ture,   that was get­ting in the way. 

Per­haps most sig­nif­i­cant­ly, the find­ings show that a cru­cial first step — acknowl­edg­ing that inequity exists in the first place — is still being missed. Although 59% of busi­ness lead­ers report­ed hav­ing a “zero-tol­er­ance” pol­i­cy towards racism, only 18% of employ­ees claim their lead­ers have open­ly acknowl­edged exist­ing inequities. More impor­tant­ly, busi­ness lead­ers rat­ed achiev­ing racial equi­ty as the least impor­tant chal­lenge to over­come in the next 12 months. 

What this research shows, how­ev­er, is that those busi­ness­es that do not make achiev­ing equi­ty a pri­or­i­ty may well be miss­ing a trick. From the FTSE 350 data, Henley’s researchers found that organ­i­sa­tions which had clear, tar­get­ed racial equi­ty mea­sures in place enjoyed aver­age rev­enues £2.1bn larg­er than com­pa­nies with­out. Their mar­ket cap­i­tal­i­sa­tion was £4.3bn high­er. What’s more, they enjoyed supe­ri­or lev­els of cre­ativ­i­ty, loy­al­ty, and employ­ee engage­ment.

Equity vs equality: what’s the real difference?

What these suc­cess­ful busi­ness­es had in com­mon was an approach to diver­si­ty and inclu­sion (D&I) which embraced equi­ty, not equal­i­ty. Any busi­ness look­ing to dri­ve D&I for­ward needs to get to grips with the dis­tinc­tion. 

“Equal­i­ty is about access to oppor­tu­ni­ty. Mak­ing sure peo­ple know what is avail­able and giv­ing them access to that” explains San­dra Kerr, race direc­tor at Busi­ness in the Com­mu­ni­ty. “Equi­ty means recog­nis­ing that, because of dif­fer­ent start­ing points, some peo­ple might need addi­tion­al sup­port. That might be addi­tion­al expe­ri­ences, maybe extra train­ing, so that some­body can come up to that same lev­el and start­ing point.” 

Equi­ty, then, is about lev­el­ling the play­ing field, not mere­ly wel­com­ing every­one onto the pitch. Kerr, who received an OBE for ser­vices to Black and minor­i­ty eth­nic peo­ple in 2012, points to the exam­ple of the priv­i­lege walk. This social exper­i­ment, designed to give peo­ple a clear­er under­stand­ing of their own priv­i­lege, requires a group of peo­ple to stand on a start­ing line. For every advan­tage — Eng­lish being your first lan­guage, going to uni­ver­si­ty, not com­ing from a sin­gle-par­ent fam­i­ly — par­tic­i­pants take a step for­ward. It becomes appar­ent very quick­ly that mere­ly pro­vid­ing every­one with the same oppor­tu­ni­ties is not enough. 

That being said, busi­ness­es need to start some­where and, as Steve Ing­ham, CEO of recruit­ment com­pa­ny Page­Group, puts it: “I don’t think equal­i­ty is a bad place to start.”

Appoint­ed CEO in 2006, Ing­ham has made D&I a pri­or­i­ty, for exam­ple by cre­at­ing a shad­ow board to ensure greater diver­si­ty at the very top of the organ­i­sa­tion. After a ski­ing acci­dent in 2019 left him per­ma­nent­ly in a wheel­chair, he has become an advo­cate for peo­ple with dis­abil­i­ties and has led Page­Group to win a num­ber of pres­ti­gious awards, includ­ing The Times Top 50 Employ­ers for Women 2020 and the World’s Most Social­ly Engaged Staffing Agency on LinkedIn.

“If the start­ing point is to say: there are all these dif­fer­ent cat­e­gories of peo­ple and we should rep­re­sent soci­ety by hav­ing a sim­i­lar num­ber of each with­in the busi­ness, then that’s fine,” Ing­ham con­tin­ues. “The prob­lem is that, if you don’t treat peo­ple with equi­ty, unfor­tu­nate­ly some are going to feel more moti­vat­ed, more loy­al, more com­fort­able than oth­ers. And that means some are going to feel more uncom­fort­able.” 

The impact on the bottom line

These feel­ings of dis­com­fort, dis­en­gage­ment and frus­tra­tion, are one of the core rea­sons why racial equi­ty mea­sures can make such a difference.“Racism is real­ly tir­ing” says Dr Naeema Pasha, direc­tor of careers and pro­fes­sion­al devel­op­ment at Hen­ley Busi­ness School, and leader of the study. “Any form of dis­crim­i­na­tion is wear­ing and you lose pro­duc­tiv­i­ty.” 

“We know when employ­ees feel sup­port­ed and embraced by equi­table and inclu­sive work­places, they’re going to feel more able to work to their poten­tial,” Pasha con­tin­ues. “Work­ing to poten­tial will influ­ence pro­duc­tiv­i­ty and that pro­duc­tiv­i­ty, pos­i­tiv­i­ty, engage­ment will lead to bet­ter busi­ness out­comes.”

By tack­ling the poli­cies, prac­tices, atti­tudes and cul­tur­al mes­sages that fos­ter racial dis­crim­i­na­tion, organ­i­sa­tions can effec­tive­ly elim­i­nate an ener­gy drain, free­ing up bound­less cre­ativ­i­ty and inven­tion. This is what can real­ly have an impact on the bot­tom line. 

Sat Sanghera, CEO of con­tact cen­tre spe­cial­ist IP Inte­gra­tion and par­tic­i­pant in the Hen­ley study, agrees. “If you have a diverse work­force in terms of skills and back­grounds, and have a safe cul­ture where peo­ple can turn up, be them­selves and express them­selves, it bodes well for the thing that real­ly push­es busi­ness­es for­ward, and that’s inno­va­tion. Dif­fer­ent expe­ri­ences and mind­sets are what inno­va­tion is built on.” 

Creating environments where great ideas can take hold

The under­stand­ing that dif­fer­ences in per­spec­tive gen­er­ate bet­ter ideas is not new. Kerr points to the oft-quot­ed McK­in­sey study from 2018, which linked diver­si­ty with rev­enue, and to research by the Roy­al Soci­ety (whose Diver­si­ty Com­mit­tee she sits on) that demon­strates how diverse groups make bet­ter deci­sions.

“It is about dif­fer­ent per­spec­tives and lived expe­ri­ences,” she says. “It forces indi­vid­u­als to slow down, to be more foren­sic, to test. And it works if peo­ple have a voice and are able to chal­lenge, rather than being dis­missed because they seem to be talk­ing in some lan­guage that peo­ple don’t under­stand.” 

But spaces must be cre­at­ed where rais­ing chal­lenges and objec­tions feel pos­si­ble, and this requires lead­ers to per­son­alise how they com­mu­ni­cate with employ­ees. “Some­times, cer­tain groups are more reserved, qui­eter, and don’t want to speak up,” Ing­ham notes. “It’s impor­tant as a leader to say, ‘what’s your view?’ and actu­al­ly make sure that every­body’s got the same voice, irre­spec­tive of who they are.”

“For me, the lit­mus test for hav­ing cre­at­ed that safe, equi­table envi­ron­ment is when you have peo­ple who are a bit more pas­sive, more timid and they find the con­fi­dence to speak out in meet­ings,” says Sanghera. “They’ll come up with some of the best ideas because they feel safe to do so, or they put their hands up for an oppor­tu­ni­ty that they don’t yet have the skills for, because they know that no one is going to laugh or judge.”

Cru­cial­ly, busi­ness lead­ers must move the con­ver­sa­tion away from diver­si­ty, equi­ty and inclu­sion ini­tia­tives sim­ply being a ‘good thing to do’. “If busi­ness­es want to sur­vive as glob­al organ­i­sa­tions, if they want to progress, then this isn’t some­thing that they do because it’s the decent thing,” says Pasha. “We all want to do good things, decent things, but this is real­ly about a 58% increase in rev­enue that can come by recruit­ing and nur­tur­ing the skills that dif­fer­ent peo­ple can bring.”   

It is no longer enough to have a diverse work­force. It is not even enough to offer addi­tion­al oppor­tu­ni­ties and sup­port to that work­force. Com­pa­nies who want to remain com­pet­i­tive have to start active­ly break­ing down bar­ri­ers to equi­ty and offer­ing tai­lored sup­port to those that need it. Those that do not are set to lose out.