Big companies under pressure to increase diversity

Business meeting

Major UK companies are now pushing for others to follow efforts to hit diversity targets. This comes after increased pressure from the Government to build inclusive workplaces.

In a bid to improve their workforces, major UK boards are taking a greater interest in promoting diversity targets. As these goals are key priorities, companies are keen to ask suppliers or fellow businesses about their own workplaces.

In this way, they hope to improve their own diversity, after increasing pressure from the Government.

For example, Iain Anderson, Co-Founder of Cicero Group recounted to Bloomberg a pitch he was involved with in November 2017. He had to pitch for a business project with a Wall Street firm. Yet he learned 15% of its scorecard was based on how Cicero Group focused on diversity and inclusion.

He told the publication: “It was the hardest measure I have so far seen. We would never have seen something like that quantified in such a way, even five years ago.”

In recent years, the Government has increased its efforts in ensuring companies reflect our multicultural society. In the past, we have seen various reports detail how workplaces still have low levels of diversity.

As a result, they have created new targets for companies, particularly their boards, to involve more female and ethnic employees. With this new commitment, these businesses now want to learn more about the diversity of their financial advisors, bankers, lawyers and more.

Recent scandals, such as the sexual abuse allegations made against Harvey Weinstein, have called this even more into question. Whether boards are truly investing in gender and ethnic diversity.

However, it appears action is still needed. On 23rd January 2018, Financial Times reported how a men-only fundraiser resulted in hostesses allegedly being groped and harassed. Since then, the club which formed the dinner disbanded. Companies also disassociated themselves from the club.

Professor Laura Empson from Cass Business School says this case highlights how attitudes are changing. She said:

“What’s going on in business is part of a general shift in the way we think and talk about gender and gender relations. The rhetoric is shifting very fast, attitudes are slower to change, and behaviours even slower.”

There are some signs of progress. The Hampton Alexander Review found that the share of female directors in FTSE 100 companies has risen from 17.3% in 2013 to now 27.7%. There are hopes this will grow a third by 2020.

The Parker Review also set up targets that every board should have at least one member from an ethnic background by 2021.

In addition, a new initiative called Women in Finance Charter has been created by the Government. Aiming to inspire women to join the financial industry, several major companies have signed up in a bid to improve their diversity, with 160 firms joining by November 2017.

This includes Virgin Money Holding UK, whose board contains four female members and at least one who is from an ethnic minority. Other businesses expected to join the government-backed initiative are Goldman Sachs and JPMorgan Chase & Co.

The government are also calling upon for published data on companies’ pay ratios by gender. With the deadline scheduled on 4th April 2018, some have already released this information. Keen to show they are tackling any pay gender gaps.

Businesses are even implementing new policies within their systems. For example, Aviva has introduced equal paternal leave. The insurer believes this will promote good practice and contacted their suppliers with the message of improving diversity and inclusion.

Aviva staff talking

An Aviva spokeswoman said: “We believe that having an inclusive culture and a diverse workforce makes good business sense. We also believe it is the right thing to do.”

As we know from the McGregor-Smith review, diversity holds an array of profitable benefits for employers. It’s encouraging to see then that many businesses are now promoting the ethos of creating a diverse workplace.

However, some believe it will still take time before a true impact is made. Iain Anderson said: “Things are changing rapidly. But is diversity moving the dial in terms of decisions? That’s not yet clear.”

It seems companies will need to continue with their efforts. Raising the importance of diversity and creating inclusive workplaces within.

Image courtesy of Johnson and Johnson, and Aviva.