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30 Aug 2019
by Dawn Lewis

Research: the well-established case for diversity and inclusion

One of the top concerns for high-growth companies is inadequate diversity. This finding from Mercer not only demonstrates that diversity and inclusion (D&I) is high up the agenda, but there is also understanding that the lack of it has a detrimental impact on business.

 

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Mercer’s Global Talent Trends (2019) survey highlights that in an increasingly transparent world you can no longer get away with pockets of good practice. It argues that to attract and retain talent companies need to live and breathe the three Es – Ethics, Equity and Empathy.

As we have seen, diversity is a key workforce concern for executives. However, Mercer finds that actions lagged intentions, with only 22% of employees giving their organisation an ‘A’ grade in ensuring equity in pay and promotion decisions, while thriving employees are found to be four times more likely to work for a company that delivers equity (78% vs 18%).

PwC had similar results in its Diversity & Inclusion Benchmarking Survey, with 76% of organisations stating D&I is a value or priority area for them, but 39% feel that diversity is a barrier to employee progression.

Overall, the majority of organisations’ D&I strategies are still not fully matured and it is particularly apparent that leaders are not being challenged enough on D&I targets and measures. Just 10% of leaders have D&I goals that influence performance evaluation and compensation outcomes.

This lack of accountability for leaders is highlighted in the CIPD’s recent Executive pay in the FTSE 100 report. It argues that “rewarding CEOs for improving and managing workforce diversity, development, wellbeing and performance would ensure they are held more accountable, and prioritise more of their attention and company resources on these issues at the heart of sustainable business performance and corporate responsibility”.

D&I isn’t just relevant in terms of executive teams, pay and promotion opportunities. Businesses are increasingly recognising the need to ensure all aspects of their reward and benefits packages are aligned with their D&I objectives.

Insights from the 2019 Willis Towers Watson Emerging Trends in Health Care Survey: Inclusion and Diversity reveal that half of employers have taken action in the past three years to promote diversity and inclusion initiatives that are aligned with benefit programmes. A further 68% plan to take action on this in the next three years.

The top areas that employers are focusing on to support diversity and inclusion objectives are: financial planning, health, emergency savings, retirement (37%); core medical and/or pharmacy benefits (30%); maternity and family planning/infertility benefits (27%); and mental health and substance abuse treatment (27%).

The government is also becoming more heavily involved in ensuring D&I in workplaces, with ethnicity and disability pay gap reporting on the horizon. However, most recently it has published a roadmap for change on Gender equality at every stage.

This paper sets the tone of the government’s thinking around gender equality. It specifically refers to its intention to actively review gender pay gap reporting methods, as well as offer better balanced parental leave provisions, consider extra rights for working carers and look at financial stability for women in later life.

There is a raft of research demonstrating the importance and value a diverse workforce brings, such as Involve and CEBR’s The Value of Diversity report and McKinsey & Company’s Delivering through Diversity report.

What we’re really starting to see now is how employers are using their reward and benefit strategies to support their inclusion and diversity objectives.

The author is Dawn Lewis, content editor at REBA.