Diversity at the top proven to boost business profitability
A recent report by management consultants Mckinsey, tellingly entitled ‘Diversity Wins’, has highlighted the financial risk businesses take when they ignore diversity at the top. Their research has found that companies with the most ethnically diverse boards outperformed those with the least diverse boards by 36%. Compelling evidence that diverse leadership directly boosts business success. And yet ethnic minority representation on boards fell to 7.4% in 2019 from 8.8% in 2018(Green Park report). This is clearly a problem, both ethically and financially, and is something the recruitment industry needs to be proactively helping to challenge and change by championing diversity.
There have been discussions around racial diversity in the workplace for years but the Black Lives Matter movement has intensified those and given urgency to an impetus for change. A Parker Review report has found that there are only 15 BAME directors in the FTSE 350 who are either a chair or CEO and over a third of FTSE 100 companies have no ethnic minority representation on their boards at all. The report recommends that each FTSE 100 company should have at least one director from an ethnic minority background by 2021, an initiative that the CBI, backed by the companies such as Microsoft, Deloitte and law firm Linklaters, recently announced as part of their Change the Race Ratio campaign.
Legal & General, one of the UK’s largest institutional investors, has gone as far as demanding that all FTSE 100 companies hire a BAME director by 2022, threatening to block the re-election of nomination committee chairmen of all those that don’t take action before the deadline. A powerful statement that shows the strength of feeling behind the movement to diversify business leadership. The truth is, research consistently shows that a diverse workforce boosts profitability. Diverse employees and leadership mean diverse thought, ideas, solutions, innovation.
Diversity also attracts more talent – companies that display diversity appeal to a far wider range of candidates. Not only will a more diverse spectrum of candidates be likely to apply, demonstrating that diversity is important to a company will also help signal that its values and culture are inclusive – an important consideration for candidates in 2020. In WaveTrackR’s annual report, we found that ‘diversity’ and ‘diversity inclusion’ were amongst the top keywords searched for by jobseekers.
How can recruiters help to ensure diversity is an essential consideration when hiring? Teams can undergo unconscious bias training to help them understand their impact on their recruiting processes, including in the wording of job adverts. Analytical tech tools such as WaveTrackR can help to ensure that job adverts are reaching a diverse talent pool by careful wording and inclusion of the right keywords. Anonymising CVs before sending them to clients will also help to avoid unconscious bias. Working with clients to ensure diversity is a key consideration at every stage of hiring is also important. Fostering diverse recruitment can only be achieved if recruiters work closely with clients, agreeing on an inclusive recruitment process and challenging strategies when necessary.
What is clear is that there needs to be more diversity in the workplace in general. By implementing diverse recruitment, we will be helping to ensure the diversity of future leaders, which is a further step towards getting BAME workers onto boards. Recruiters have supported the Hampton-Alexander Review’s aim to increase female board representation and as an industry, we can do the same again to strive to put forward a greater number of highly talented ethnic minority candidates. Diverse talent means diverse thinking and that can only be good for business and for society.