Strengthen Your Business: Enhancing workforce diversity
Greater diversity, equity and inclusion (DE&I) in the workplace are of fundamental importance and are gaining greater prominence in society, including the commercial world. Here, Ruth Hassard looks at how greater diversity can benefit your business and how companies can improve their workforce.
Businesses are increasingly recognising the greater resilience and performance that comes with appropriate DE&I. As such, corporations are disclosing data on such matters at increasing rates whilst also facing growing pressure from investors customers and government, towards fairness at work. Regulations arising from the 2017 Equality Act, as well as recent directives from the FCA, have seen PLCs and large companies (with over 250 employees) obliged to be more transparent, for example, about their gender equality policies, practices and profiles.
What does this mean for small and medium-sized enterprises?
Although not regulated in the same manner as their larger counterparts, such companies are facing pressure to disclose similar information regarding diversity and inclusion, including the salaries they are paying to female and male employees.
Such transparency is not only becoming of paramount importance for the running of business, but also for business owners with ambitions either to seek investment or divest their assets; that is, those who need to make their company as attractive as possible to prospective investors or buyers.
How can greater transparency on DE&I benefit your business?
Breakdown of stereotypes
Companies that recognise a lack of gender diversity in their workforce and wish to work towards increasing the presence of women in senior roles, are those concerned to broaden ‘professional imagination’. This motivates actions directed at the breakdown of stereotypes, for example, over female leadership – meaning women are encouraged to seek roles they may otherwise not have considered. Employees often seek reflections of themselves within corporate leadership. Thus, if a board is male dominated, this may discourage female career aspirations to seek progression to board membership which undermines DE&I and weakens the leadership proposition.
Efforts to make your workforce more positively reflective of equality and inclusion should lead to a breakdown of the proverbial ‘glass ceiling’, which has often prevented women from applying for roles they perceive outside of their remit, despite sufficient abilities. Not only can transparency and an increased presence of women in senior roles serve to address imbalances within the workforce, but it can also stimulate culture change within your business and send a strong message to customers, investors and potential employees about core company values; which ultimately can make the business more attractive.
Improved investment and divestment prospects For any business seeking investment or divestment, it is imperative they are seen to make positive moves in respect of DE&I initiatives. Such efforts are particularly important due to the increased focus upon workforce diversity and retention data during the due diligence process, with investors and buyers looking at strong equity policies as an indicator of the robustness of a firm. This is because the business case for establishing a diverse workforce is increasingly clear, with studies suggesting equity and inclusion are linked to heightened productivity and efficiency.
Positive impact on employee retention rates
Another knock-on effect of DE&I initiatives is a positive impact on employee retention rates, with a business that appears culturally responsive and aware being more likely to attract and retain talent from a wide pool of candidates. This is essential for those seeking investment or else who are looking to sell their business, as a high labour turnover rate can raise a red-flag to the market. Particularly, it may ward off those looking to invest in organisations that are culturally diverse – with some investors being wary of businesses that may receive discrimination complaints or even claims.
So, as the level of diversity in corporations moves to the forefront of buyers’ and investors’ minds, small and medium-sized enterprises can make their companies more attractive by following in the footsteps of PLCs who record, analyse and report DE&I data.
Utilising the FCA’s ‘disclosure and transparency rules’ (published online) can ensure that levels of workforce diversity in your business can be measured, and targets put in place. Developing this approach can help, for example, to align culturally and ethically the DE&I values of your business with those of potential investors, thus making business integration easier.
Ultimately, efforts to ensure that your business has strong DE&I initiatives, and is therefore attractive to potential buyers, investors and employees, is not only ‘right thing to do’, it also makes clear business sense.
By Ruth Hassard