• International Workplace
  • 14 March 2017

Racial equality in the workplace: a need for reporting legislation?

An independent review considering the issues around the employment of black and minority ethnic (BME) groups has attracted significant response from government and employment rights organisations, including disagreement over whether further legislation is necessary.

The report, Race in the workplace: The McGregor-Smith review, recognises that while there is obviously a moral case – every person, regardless of their ethnicity or background, should be able to fulfil their potential at work – there is also a business case for racial diversity: organisations that attract and develop individuals from the widest pool of talent consistently perform better.

“Businesses need to recognise the huge opportunity to harness the untapped potential of BME talent,” author Baroness McGregor-Smith says.

“Research by the Government on the business case for equality and diversity suggests that diversity of people brings diversity of skills and experience, which in turn can deliver richer creativity, better problem solving and greater flexibility to environmental changes. The potential benefit to the UK economy from full representation of BME individuals across the labour market, through improved participation and progression, is estimated to be £24bn a year, which represents 1.3% of GDP16. This is a real opportunity that businesses will want to grasp. Every employer in the UK should be seeking to obtain their share by making the changes identified in this report.”

As part of the review, a wide range of individuals were consulted with to understand the obstacles to progression and their impacts, as well as identify some of the best practice that is already in place. “There are many organisations that are doing really great things,” says McGregor-Smith. “But we found that the obstacles are both significant and varied.”

Now, she says,

“The time for talking is over. It is time to act. It will require concerted and sustained effort from all of us but the solutions are already there, if we only choose to apply them.”

The review’s conclusion features a list of 26 recommendations for employers and government, which include:

  • Published, aspirational targets:
    • Listed companies and all businesses and public bodies with more than 50 employees should publish five-year aspirational targets and report against these annually.
  • Publicly available data:
    • Listed companies and all businesses and public bodies with more than 50 employees should publish a breakdown of employees by race and pay band.
  • Executive sponsorship:
    • All businesses that employ more than 50 people should identify a Board-level sponsor for all diversity issues, including race. This individual should be held to account for the overall delivery of aspirational targets.
  • Diversity as a Key Performance Indicator:
    • Employers should include a clear diversity objective in all leaders’ annual appraisals to ensure that they take positive action seriously.
  • Diverse interview panels:
    • Larger employers should ensure that the selection and interview process is undertaken by more than one person, and should ideally include individuals from different backgrounds to help eliminate bias.
  • Mandatory unconscious bias training:
    • All organisations should ensure that all employees undertake unconscious bias training.
  • One year on review:
    • Government should assess the extent to which the recommendations in this review have been implemented, and take necessary action where required.

“By implementing these recommendations, we have a huge opportunity to both raise the aspirations and achievements of so many talented individuals and also to deliver an enormous boost to the long-term economic position of the UK,” says the report, which also recommends that Government should legislate to ensure that all listed companies and businesses employing more than 50 people publish workforce data broken down by race and pay band. But in its response to the recommendations the Government said:

“(Our) preferred approach here is to set out to all companies, and institutional investors, the value of employing a diverse workforce at all levels rather than moving now to legislate. This is the approach that we have taken in increasing the number of women on boards…

“Legislation already requires that companies use the strategic report to document information about the company’s employees, and social and community issues, and companies can choose to report information such as diversity of their employees as part of this...

“We believe that in the first instance, the best method is a business-led, voluntary approach and not legislation as a way of bringing about lasting change. We believe the case you have made in your report is compelling and expect businesses will want to comply. We therefore believe a non-legislative solution is the right approach for now, but will monitor progress and stand ready to act if sufficient progress is not delivered.”

The Government’s response is otherwise very positive, commenting that it generally welcomes the recommendations seeking to support employers in improving their diversity and inclusion approach:

“Businesses are best placed to know what support they need to improve diversity and inclusion and so we will work with them to ensure they have the resources they need to fully embed change within their organisations…

“As the proportion of British working age adults from BME backgrounds is increasing, it has never been more important for employers to harness the potential of this home-grown talent and influence positive behaviour change in the labour market. As with any significant change in working practices, success will only be delivered if everyone in an organisation takes ownership of the issue…

“We encourage employers to be open with their data and progress against targets. This is not about naming and shaming poor employers – it is about celebrating success together.

“Government will keep a close eye on how things develop over the next 12 months and take the necessary action where required (Recommendation 26).  The Government is committed to building an economy that works for everyone.”

The publication of the McGregor-Smith Review has also attracted response from the Equality and Human Rights Commission, which welcomes the report but considers much more work necessary by the Government. It comments:

“The colour of your skin or your race should never hold anyone back at work. Today’s review underlines the findings in our race report that entrenched inequality and unfairness still exists in our society.

“We welcome the plans set out by Baroness McGregor-Smith to drive change, but we are still of the view that the Government must produce a comprehensive race strategy to tackle all the interrelated issues that hold people back. Without such an approach, we are worried that divisions will continue to grow.

“It’s absolutely vital that business groups come together to promote the importance of diversity in the workplace and we look forward to being members of the new Business Diversity and Inclusion Group.”

TUC General Secretary, Frances O’Grady, agrees. He says:

“This report gives welcome guidance to businesses who want to unlock the talent of their black and minority ethnic workers. Unions stand ready to assist.

“But without government action, racist discrimination at work won’t simply disappear. Ministers must act on the report’s recommendations.

“Racism and discrimination at work won’t be eliminated by talk – it’s time for business and the government to act.”

Tar Tumber, HR Consultant at International Workplace, comments:

“As a BME employee myself, this is a topic close to my heart. Whilst I have been lucky never to (knowingly) experience racism in the workplace, or the feeling I have been treated differently, I know several people who have, including family. So I agree with the principles of this review and the recommendations that are made to employers.

“I believe that business as a whole can definitely benefit from the different experiences, ideas and ways of thinking that the BME population has to offer, but without some form of Government ‘push’ this will not be realised. For lots of organisations, it’s a case of ‘if it ain’t broke, don’t fix it’ so if they have always recruited or promoted the same ‘type’ of person and that has always produced satisfactory or good results, they won’t look to change the formula because it is working. But by not bringing in diverse people, they miss out on fresh approaches and new ideas, and the review reflects this.

“In addition, I understand the Government does not want to legislate around this – there is so much going on with gender reporting/audits etc at the moment which has taken an age to happen. However there will always be organisations that simply pay lip service to legislation with no intention of actually making that culture change to reduce the gender gap. My concern is that by not providing a framework to support these BME based recommendations, the Government will find that most organisations will have let this one pass, when they review in 12 months’ time.”