Only four CEOs of the FTSE 100 are Black, Asian or of another ethnic minority group. But can quotas and business networks help the diversity issue facing corporate Britain?
The recent McGregor-Smith Review makes a strong case for diversity. According to the study commissioned by the government, businesses can catalyse their growth by ensuring career progression of Black, Asian and minority ethnic (BAME) employees. It could also boost the UK economy by £24 billion.
However, the business case for diversity is often oversimplified for improving performance in organisations, according to Jonathan Ashong-Lamptey, a researcher at the London School of Economics Department of Management.
“The McGregor-Smith Review clearly makes a business case for diversity, but it’s one which is often oversimplified or misunderstood,” he explains. “There is no ‘one size fits all’ approach to managing diversity and inclusion, and this is what challenges organisations. Each needs to establish its own particular business case, instead of assuming that simply increasing diversity levels within their organisation will automatically transform their business performance.”
Only four CEOs of FTSE 100 companies are Black or Asian
Companies listed on the London stock exchange face a ‘diversity deficit’ at the very top of organisations, according to FTSE 100 data. While the BAME community makes up 14 per cent of the UK population, only 4 per cent of FTSE 100 companies have BAME CEOs at the top–a figure that has remained unchanged for over a year.
According to Suki Sandhu, the CEO and founder of OUTstanding, a membership organisation for global businesses behind a series of diversity and inclusion initiatives, diverse businesses which accurately reflect the communities they serve are going to be the most successful. “Role modelling is fundamental to ensuring equal opportunities and more inclusive cultures so we need anyone who proves ethnicity need not be a barrier to success to come forward to inspire the next generation of BAME leaders,” he says.
OUTstanding has launched a BAME-focused awards programme to drive empowerment of ethnic minority employees within corporate organisations. The programme was founded by OUTstanding’s Sandhu, along with LinkedIn managing director, EMEA, John Herlihy, BP’s head of diversity and inclusion EMEA, Peter Duff, and Slaughter and May senior partner, Steve Cook.
“Great ideas can come from anywhere – that’s why diversity really matters. Every organisation should aspire to build a team as diverse as the market it serves, in our case, more than 467 million people, in 200 countries around the world. It is great people working together with inclusion, and a sense of belonging, that creates the freedom to truly innovate,” says LinkedIn’s Herlihy.
Quotas, the controversial Q-word
The biggest threat to any diversity initiative is the introduction of quotas, the highly contentious Q-word, according to Warwick Business School’s Associate Professor of Organisation and HRM, Dulini Fernando. As an expert in the issues facing highly skilled migrant workers, she believes that in a bid to commit to diversity, businesses may decide to push for a quota-based strategy.
“The idea that diversity must reflect in companies pay and employment statistics has the word quota written all over it. When quotas are imposed, you always get a backlash and face unintended consequences,” she explains.
“The idea that minorities are entitled to special privileges due to their minority status is very dangerous. It has significant potential to increase prejudice towards minority groups at the workplace. I interviewed several ethnic minority professionals of South Asian origin in the finance and IT industry. The individuals I interviewed were firmly against being classified in terms of their cultural backgrounds. Instead, they sought assimilation, highlighting their British identity.”
For Fernando, if the government intends to promote ethnic diversity within companies, this should happen at the grassroots level. Organisations should take a bottom-up approach to raise awareness of explicit and implicit ethnicity-based prejudices and barriers.
“They should encourage individuals, team members and line managers to be open and reflective about these. I’ve found that a great majority of people are in denial about gender and ethnicity-based disadvantage in the workplace. In particular, in organisations that have sophisticated HR functions a number of people believe that the disadvantages encountered by minorities is a thing of the past. In my view, line managers and colleagues acknowledging the distinct challenges encountered by minority groups and responding to them at an individual and group level is a first step towards building a more equitable workplace.”
In the McGregor-Smith Review, Baroness Ruby McGregor-Smith cements the counter-productivity of enforcing quotas. “Some have suggested quotas to ensure that workforces mirror the working age demographic in the UK,” she writes. “However, I have heard from a significant number of employers and individuals during the review that quotas can cause resentment and, in some cases, lead to unintended consequences and unhelpful interventions.”
5 key principles in building a network for BAME employees
As a PhD candidate in LSE’s Department of Management, Ashong-Lamptey has spent the past three years investigating the experiences of BAME professionals and how they contribute to business success.
His own research, “An Examination of the Lived Experiences of Minority Racial and Ethnic Individuals in the Workplace” analyses the function of professional employee networks for BAME workers, and how these groups can enhance career progression while improving the business’s overall performance.
Ashong-Lamptey’s study reveals that although businesses have made great strides in implementing networks for minority employees, the mismanagement of these collectives can contribute to both professional and company stagnation.
On the surface, such groups show that a company has moved closer to recognising the diverse cultures that exist within their organisations, but many leaders often do not understand how to make the best use of these networks, says Ashong-Lamptey. As such, they remain disconnected from both common organisational goals, and the wider employee culture.
Ashong-Lamptey suggests five key principles that employers must introduce in order to better leverage minority networks in their organisations.
Though minority networks can provide members with shared experiences, friendships and a sense of inclusion, this does not extend throughout the wider organisation. Business leaders must take a greater stake within these groups and engage members in initiatives that promote wider engagement.
Sessions on how to navigate the organisation, how to negotiate with superiors and how to make the best use of their ideas in a wider context can help to improve performance, expand roles and enhance professional capabilities.
Such groups are used to give individuals a voice within an organisation, but well-functioning well-supported groups can also be used to give a voice to minority groups outside of the organisation, helping the company to improve its visibility in new networks and markets, enhance its reputation and become a recognised leader in equality.
Better connecting cultural identities to the wider workplace to improve business practice makes learning and engaging with minority staff more relevant for all employees and breaks down barriers whilst improving company cohesion and performance.
The natural skills and knowledge base of individuals in minority networks are an under-utilised resource which, when leveraged appropriately, can enable a company to engage with new markets and enter into business negotiations far more effectively. For example, enlisting BAME staff to meet and engage with promising new BAME recruits to provide insight and training, can improve employee relations and enable an organisation to tap into a new resource for new staff. Or working with minority staff to help transcend cultural barriers and new and emerging markets, enabling a company to extend its practices and customer base.
Ashong-Lamptey says the successful integration of minority networks can provide several quick wins for organisations that don’t know what to do and want to make progress in this area even before they want to publish data of their minority staff, as recommended in the McGregor-Smith Review. Those that cannot move beyond simple box-checking for their diversity stats will soon be left behind.