Why Diversity Matters
Updated: Sep 1, 2021
The issue of diversity has been on the ‘corporate agenda’ for many years and while some progress has been made to move the debate forward and translate awareness into tangible results, much more still needs to be done, says Lysander PR Senior Account Director Steve Colton.
It is an issue that is rightly grabbing the attention of stakeholders from employees themselves to shareholders, central banks, regulators and even rating agencies, and companies that choose to continue to fob it off are going to face a rude awakening in the form of increased scrutiny and calls to take - and prove - meaningful action.
There is no question that diversity makes good business sense but in order for there to be material and effective change, there is much more that companies can and should be doing. Businesses should proactively embrace diversity as it is widely recognised that well-managed, diverse workforces bring a number of competitive advantages to an organisation’s operational effectiveness.
There is clear evidence, for example, that the under-representation of women and ethnic minority groups in senior roles and at Board level impacts the performance, governance and reputation of companies as they fail to attract and retain the widest possible pool of talent.
Furthermore, we all want to invest in companies that are leaders in promoting diversity and inclusion. Businesses that fail to embrace diversity limit their ability to grow and, therefore, place their shareholders at a disadvantage.
Diversity at the core
External hiring and internal promotions based on merit, experience and achievement are, of course, central to successful organisations, and quotas are not the way to solve an organisation’s diversity goals. Instead, diversity should instinctively be at the cultural core of progressive organisations - a culture which offers a number of benefits, including:
Allowing organisations to tap into the widest available talent pool - until 100 per cent of the talent pool is accessed, companies are artificially capping the potential for growth and innovation.
Helping engender a culture of creativity, innovation, flexibility and more informed decision making.
Enabling companies to be more responsive to their market segments by aligning more closely and mirroring their diverse customer base.
It is widely recognised that companies with a strong diversity culture perform better - not purely from a financial perspective but also in areas such as brand and reputation management which are critical drivers of success.
Interestingly - but not surprisingly - the FCA, PRA and Bank of England have recently published a discussion paper seeking views on regulatory plans to improve diversity and inclusion in the financial services sector. This includes measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking pay to diversity and inclusion metrics, and using diversity targets.
The paper is also looking at the key issue of diversity and inclusion in non-financial misconduct, such as poor culture, bullying and sexual harassment cases. The paper is open until 30 September and the feedback received will be used to shape detailed proposals, with a joint consultation taking place in the first quarter of 2022.
It will be interesting to see how this unfolds and while quotas and measurement have a role to play, surely it has to be better for companies to grasp the nettle now and take the proactive, voluntary route to effect meaningful change.
The role companies can play
Companies that are successful in promoting and fostering diversity are those that have this issue at the core of their corporate culture. It must be part of a company’s DNA, not just something people talk about because they think it’s the right thing to do – it needs to be properly embedded and implemented, otherwise nothing will change. Examples include:
A clearly articulated and publicly available commitment by the Board and executive committee explaining not just the ‘what’ but also the ‘why’, the ‘how’, the ‘when’ and the ‘benefits’ for all stakeholders. Demonstrating their own personal values and buy-in to this issue will have a significant impact.
A strong and inclusive corporate culture, company values and mind-set are probably the single most important factors in supporting diversity objectives. Evidence clearly shows that effective diversity increases employee satisfaction and encourages positive workplace attitudes and behaviours.
Awareness-raising through effective communication - if the issue of diversity is not embedded in a company’s corporate culture and, therefore, not understood by staff, its chances of succeeding are significantly reduced.
Robust talent recruitment, talent management, mentoring, succession planning and performance management processes.
There is no doubt that attitudes are changing but it is a slow process and there is a long way to go, particularly in industries like financial services which have historically been white and male dominated.
There is a combination of societal and cultural issues at play – barriers which are gradually being broken down - but the stark reality is that women and ethnic minority groups in particular unfortunately still often have to work even harder to reach the top.
Taking personal responsibility
While companies can help, there are also a number of things that individuals can and should do to help manage their careers:
Thinking seriously about the career path they would like to pursue and how they plan to get there.
Being aware of motivations and stepping outside of their usual comfort zone to get the necessary experience. This may mean putting themselves out there, taking some risks and doing some self-promotion.
Organisational politics can play a big part in how far people progress in their roles - political astuteness and social awareness are very important as people learn how to self-promote in a positive and constructive way.
Networking is vital and building a good network of internal and external contacts will help to identify and open up opportunities.
People often find it difficult to promote themselves and mentors can help. Having a mix of internal colleagues and external contacts advocating their skills and achievements - as well as promoting them as an individual - is extremely powerful.
While we are nudging in the right direction as companies increasingly engage in and embrace diversity, there remains much more to do. The business case is not in question and ‘nudging’ the agenda along is simply not good enough - there needs to be a sustained effort to ensure that diversity remains a key priority for every organisation moving forward.