At a recent conference on creating opportunities for diverse talent, chaired by the Financial Times, Tory peer Lord Shinkwin warned that “whatever the rhetoric, rejecting equality, diversity and inclusion as somehow part of the waking agenda is turning your face against equal opportunity”.
His remarks were weighed by Jonathan Geldart, chief executive of the Institute of Directors, who added that “in the face of economic uncertainty, there is a risk that the task of progress of recent years will be eroded”.
This threat seems very real as the UK approaches recession. The slow but some progress made in recent years in areas such as compensation for men and women and diverse representation on boards, as well as corporate governance and the environment, are now seen as under threat. .
The CBI, Britain’s largest business group, last week raised concerns among its members about backsliding policy progress on green issues, linked to a government seen by some as colder on climate change than the previous administrations.
Indeed, the government’s actions are under scrutiny. In September, Jacob Rees-Mogg shocked many in the business world when – during his brief stint as UK business secretary – he raised the prospect of cutting pay reports by gender. under the guise of removing onerous labor rights.
There were similar sentiments behind a recent letter from 40 MPs to Chancellor Jeremy Hunt demanding cuts to so-called ‘woke’ causes – as The Daily Telegraph reported – such as equality, diversity and inclusion, given the cost constraints faced by the public sector.
“Woke” in such a context is a politically charged slur, but it matters in the wider context of a weak UK government and spending crisis.
Positive words and actions from leaders, in parliament and in business, create the context and momentum that drive change, such as gender pay reports. Backtracking on these makes it more difficult to regain momentum in the future.
Many companies see the need to continue to focus on inclusion and ESG in the workplace, but the voices complaining about the resulting costs and time are growing louder.
A recent report by Tulchan Communications compiling the thoughts of FTSE chairmen was fraught with complaints that investors’ ‘ticking’ exercises risked company growth.
One president even said that “the public enterprise model is broken” because “70% of [board] the agenda is usually governance and regulation. . . directors need to consider whether their gender pay gap has increased or decreased and what that might mean, and what will be written about it in the Daily Express.
Given the anonymized responses in the report, we can assume that the interviewees are telling the truth. This particular chairman may be on the fringes of what most boards believe, but discussing the gender pay gap as part of a broader governance tirade feels like stepping back. about a decade.
Certainly what worries board members is probably not what worries many of their employees, who are likely to face pay increases below inflation. Women, along with people with disabilities and those from ethnic minorities or less affluent backgrounds, are often among the lowest paid on average, according to the Office for National Statistics and academics.
Companies that embrace the highest levels of diversity and inclusion also tend to have higher productivity and performance, which will be crucial in the difficult months ahead.
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According to McKinsey research, companies in the top quartile for gender diversity were 25% more likely to experience above-average profitability. In the case of ethnic and cultural diversity, he found that the most diverse companies outperformed the worst performers by a third in terms of profitability.
The Boston Consulting Group’s analysis showed a strong correlation between the diversity of management teams and overall innovation. Anthony Painter of the Chartered Management Institute says all of his “evidence shows that diverse organizations are best positioned to reap the benefits of higher productivity and better decision-making.”
The UK should consider extending reporting requirements to include mandatory reporting of the ethnicity and disability pay gap. Data is crucial for industry benchmarking, as well as showing problems that need to be addressed.
Many companies focus on these areas because they see the benefits. They don’t need government barriers when staff, customers and shareholders demand progress. But others might see a recession as an excuse to avoid taking action.
If government can’t lead by example in terms of making progress on diversity and inclusion measures that work, then businesses must.
Wise managers think about what their successors would like them to do for their future, not what they can do for short-term cash flow. The ‘anti-revival’ group of MPs are right to say that money will be tighter as the UK goes into recession. But it makes it more important to focus on areas where progress can easily be lost if businesses are to emerge more productively and equitably.
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