‘Diversity key to business and economic success’

Unless UK employers raise their game when it come to equality, diversity and inclusion, the public will pay the price in terms of lost growth, productivity, innovation and quality of public services, according to a new report.

The report, launched as part of Chartered Management Institute’s 75th anniversary and based on a survey of 2,066 UK employees who were not in managerial roles, argues that the UK is wasting a huge amount of talent just when it needs it most to reach its economic and social potential. It calls for the inclusivity agenda to be a central element of UK business, public services and Government strategies for growth and success, saying “we need to ‘level up’ across people, not just places”.

The report shows there are 560,000 missing female managers in the UK, and to equal the proportion of females in the UK population by 2026 an additional 800,000 female managers will be needed – an increase of 24% from 2021.

There are also 420,000 missing managers from lower socio-economic backgrounds and an almost 30 percentage point difference between the working age employment rate (81%) and the disability employment rate (57.2%). At management level, CMI’s analysis shows there are 290,000 missing disabled managers.

The report also says that  41% of employees said they had witnessed colleagues being negatively affected by their background at work. Over half (52%) of employees said they had at some point in their career been overlooked for a workplace opportunity because of their identity. Reports of discrimination were particularly high from those identifying as LGBTQ+ (64%) and those from Black backgrounds (63%).  A BITC report out yesterday for Windrush Day found that employees from a Caribbean background experience the largest ethnicity pay gap compared to their colleagues.

Nevertheless, the CMI report found over 80% of managers claimed their organisations were inclusive regardless of background or protected characteristics, although when it came to action including data collection and putting in place training and action plans, all of which are known to have an impact, only a minority of employers were following through. For example, 80% of respondents said their employers either did not capture the socio-economic background data of applicants during the recruitment process, or they did not know if their organisation collected this data.

Moreover, male managers (33%) were more than twice as likely as female managers (13%) to say that too much effort in UK organisations is being focused on ensuring a gender balanced workplace is achieved.

The report calls on the Government to pursue a more ambitious approach to policy in order to support EDI across the economy and public services, with better data being key to this. That includes a more permanent and compulsory form of pay gap reporting and mandatory action plans in order to encourage firms to move the dial on all areas of inclusivity.

Other recommendations call for the Government to move beyond a narrow legalistic and regulatory approach, to shine a light on good and bad practice and to use the persuasive power of policy and regulation to encourage innovation. The CMI says this means, choosing not to award lucrative contracts to companies that consistently fail to diversify their leadership teams or to demonstrate their commitment to recognising talent in all its forms including through equal pay; to ensure everyone can benefit from access to flexible working; boost effective management practice; and to hold leaders and companies to account when they fail to act on diversity and inclusion in all its forms.

When it comes to employers, the CMI says managers and leaders should ask challenging questions and pay attention to the answers; plan and track their progress; embrace flexible working; recognise the central role of all managers, not just EDI specialists; and be story-tellers and role models.

Ann Francke, CEO of the CMI, said: “This report is a wake-up call for companies to drive change, and invest deeply in all aspects of diversity, equality, and inclusion. A lack of diversity in the leadership of an organisation will only hamper business and public services. We now need all employers and the Government to step up and accelerate the pace of change especially as growth is faltering and thousands of employers see skills shortages.”

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