Hephzi Pemberton CEO, Equality Group The Importance of Diversity in Business

Diversity within UK businesses is continually being assessed with governmental reports consistently delving into what businesses need to do to increase diversity at every step of the professional ladder.

Within the UK alone, the gender pay gap is set to be closed in approximately 55 years; an abysmal reality that perfectly describes the UK’s professional arena’s ability to invoke social change.

While the topic of conversation often centres around gender equality, it is imperative expand the assessment of workplace diversity to understand ethnicity within business.

If only one in four companies have women on their board, you can expect the number of BAME (Black, Asian, Minority Ethnics) on the board to be signifcantly less.

We are living in an increasingly more diverse and connected world, where people are looking for organisations that refect the world they want to live in.

On the basis of this alone, the more diverse and inclusive businesses open themselves up to the benefts of diversity and will undoubtedly attract the best talent.

It is undeniable that broader diversity greatly benefts companies. The rewards include, but are not limited to, an increased probability of greater levels of innovation and creativity, and better professional decision making within the workplace.

This year’s McKinsey report, Delivering Through Diversity, found that companies in the top quartile for gender diversity on executive teams were 21 percent more likely to outperform on proftability and 27 percent more likely to have superior value creation.

The results were even more impressive for ethnic and cultural diversity; top-quartile companies were 33 percent more likely to have industry-leading proftability. The value of input from a workforce with a range of perspectives and experiences will undoubtedly increase the scope and colour of the work that is provided. Until UK businesses truly understand this, we are effectively working in grayscale. Yet, despite widespread awareness of the benefts of diversity, only 6% of 2017 FTSE 100 chairs were held by ethnic minority workers and in 2016, only 11% of jobs in the UK were occupied by black, Asian and minority ethnic people.

It is important however that businesses, when promoting diversity, do not entirely focus on improving opportunities for women.

There is a very prominent risk of UK businesses solely hiring “more women”which often just means privileged white women - that will limit the benefts of greater diversity.

Commendable as this is, there is more to diversity than hiring and promoting women, particularly if many of them come from the same privileged backgrounds as men.

Not only do teams miss out on other diverse perspectives (such as those from different ages, ethnicities, degrees of mobility, and sexualities), we also miss a broader point about diversity of thought.

This cognitive diversity describes ways of processing information. It is not predicted by inherent characteristics, such as gender or ethnicity. Instead, it is often established at quite a young age and developed through experience.

A study by Harvard Business School showed that cognitive diversity had a greater impact on the results of a team problem-solving test than inherent diversity traits.

In other words, a team that looks diverse on the outside might not think so diversely on the inside. There is, therefore, a need to measure cognitive diversity across teams, whilst also proactively hiring and developing diverse talent within them.

The Equality Group commissioned a nationally representative study that delved into UK ethnic minority citizens, their career aspirations, and the inequalities that still challenge the UK’s BAME community in the world of work.

The research was launched amidst industry data that shows only 84 of the 1,048 directors in the FTSE100, originate from an ethnic minority.

Contextualised by the fact that there are more directors called Dave or Steve within these 100 companies than there are women or ethnic minorities, this timely research unveils a damning insight and ever-present reality impeding almost 8 million ethnic minority Brits attempting to succeed in the UK’s professional arena.

Underpinned by an overwhelming drive to succeed in positions of seniority, the study commissioned by Equality Group - an organisation that helps companies attract, retain and develop diverse talent - unveiled majority sentiments of ambition, academic prowess and unwavering perseverance is propelling the UK’s ethnic minority workforce forward.

Whether this sentiment is met by an academic and/or professional infrastructure is questioned signifcantly in The Equality Group’s study, given that 46% -2.5 millionethnic minority citizens were encouraged to commence their career in a role that did not refect their career aspirations or academic credentials at that time.

As cited by the University of Leicester in 2017, students from ethnic minority groups have, academically, signifcantly improved over the last two decades and are achieving higher grades than the national average.

With this in mind, it is important to assess ethnic minority experience upon leaving education, in order to understand how such stark differences within the professional career ladder exists.

Half of ethnic minority respondents noted that they had no professional role models of their ethnic profle within the UK’s professional landscape.

This is extremely topical yet unsurprising given that the FTSE has just noted a drop in the number of ethnic minority Directors in the UKs largest 100 companies to only 84 out of 1,048. The underrepresentation of relevant role models and the subsequent lack of identifcation that ethnic minority citizens have with people in positions of authority, largely contributes to the underrepresentation of ethnic minority citizens on boards.

The report made it clear that ethnic minority students have strong support structures available to them throughout their educational careers. However, there seems to be a signifcant defcit upon entering the world of work.

The research indicated that young ethnic minority students have signifcant levels of professional aspiration, supported by an educational infrastructure, that should, in theory, enable them to excel within their chosen professional careers.

This is, however, far from the reality when assessing the UK’s BAME representation at senior management, board and director level. It is a shocking reality that in 2018, the workplace does not nurture and support BAME talent in a manner that refects the undeniable aspirations prominent in this community.

As a society of business leaders, decision-makers, professionals and commentators, we have an obligation to ensure that intention is met with action to ensure the UK’s workforce - in its entiretyhas access to a democratised career ladder that promotes inclusion for all at every level.

With this research and its startling outcomes in mind, diversity policies speak louder than words.

To nurture diversity, businesses need to recognise their role to do more than prevent discrimination by appealing to staff from a range of backgrounds.

Helpful measures might include fexible working hours and parenting leave, or the provision of pastoral care, mentoring and coaching, and data on pay gaps.

There is no simple formula. Much depends on the business, as well as the talent it aims to attract. These policies that support communities that may be unable to work without them, are vital in ensuring that diversity can be achieved.

This is increasingly important within executive and director level positions where women often have to pause their careers due to starting a family.

By simply asserting the option to work fexibly can completely change the demographic that will become available for employment positions and opportunities.

SMEs represent 98% of private sector business in the UK, a sector which provides £1.9trillion to the economy and accounts for around 16 million jobs.

Despite this, when it comes to diversity within business, the UK’s large corporations have a grave responsibility to society set a precedence for all smaller businesses in regard to equality within the workplace.

They should, in theory, have the diversity policies and structures in place to compliment all workers from all backgrounds.

There has been so much discussion around equality for women within the world of work, but we are yet to see notable change that is both sustainable and replicable by smaller entities.

Within the Hampton-Alexander Review of FTSE 350 companies, efforts to promote women to board level have been described as a ‘tokenistic gesture’ in the case of 75 companies; gender equality is not a tokenistic gesture, gender equality it is a right.

In conclusion, the problem that many companies have with promoting diversity is that their perception of diversity is fawed. Diversity within business is not a ‘nice to have’, it is a must have quality.

When diversity is seen as a competitive advantage and business necessity then you see incredible rates of change in the diversity of an organisation. When diversity is simply seen as either as a Corporate Social Responsibility or Public Relations exercise, then you see very little (if any) progress on the numbers and results. It is only after companies realise this, that they can amend their diversity policies and improve the overall health of their company.

It is time to stop questioning the importance of diversity within businesses, the evidence of it is benefts are glaring.

Instead UK businesses need to start assessing their own diversity policies, are they effcient, are they working, are they making your workforce diverse?

Equality Group harnesses the power of diverse leaders for Finance, Technology and Social Impact.

They change the business landscape by widening the range of exceptional candidates and offering them unique leadership opportunities.

Their consultancy service helps companies attract, retain and develop diverse talent, which our Executive Search service headhunts.

Founder & CEO – Equality Group

Hephzi is a business founder and angel investor, who believes in the power of good business to transform society. After completing an undergraduate degree at Oxford University, Hephzi began her career in Investment Banking at Lehman Brothers.

In 2009, she co-founded Kea Consultants, a fnancial headhunting frm that specialises in investment and high-growth organisations, which she quickly grew into a proftable and sustainable business.

Hephzi helped multiple investment frms, including KKR, Blackstone, Och Ziff and Elliott hire and retain high performing investment professionals. At the end of 2015, Hephzi exited Kea Consultants to pursue her next ventures.

In 2018, Hephzi founded Equality Group to harness the power of diverse leaders across the Finance, Technology and Social Impact sectors.