The business case for diversity and equality – DTI
The business case for diversity and equality DTI – The DTI drives our ambition of ‘prosperity for all’ by working to create the best environment for business success in the UK. We help people and companies become more productive by promoting enterprise, innovation and creativity.
We champion UK business at home and abroad. We invest heavily in world-class science and technology. We protect the rights of working people and consumers. And we stand up for fair and open markets in the UK, Europe and the world.
Achieving best practice in your business is a key theme within DTI’s approach to business support solutions, providing ideas and insights into how you can improve performance across your business. By showing what works in other businesses, we can help you see what can help you, and then support you in implementation. This brochure focuses on these solutions.
This booklet puts forward the case for diversity: how all businesses can benefit by building a workplace that reflects the community outside their front doors. By employing more women, more older people and encouraging a wider ethnic mix, a business is able to identify more closely with its customer base, draw from a broader range of perspectives, and won’t be short of recruitment options.
This brochure is for: any business looking to expand or broaden its workforce. It covers: the benefits of employing a diverse workforce.
Today’s business environment is changing. The average age of the workforce is rising steadily and women now make up nearly half the workforce in the UK, double the numbers of 25 years ago. Projections show that in less than ten years’ time there will be two million more jobs in the economy – 80% of which will be filled by women.
But the workforce is also changing in other significant ways. A recent government report estimated that the working age population will increase by a million in the next ten years, and that minority ethnic communities will account for more than half that increase.
For business, the lesson is clear. The failure to use human potential to the full will become more damaging as labour markets become more competitive and mobile – and the need for employers to treat and reward all their staff fairly will become more and more difficult to resist. And the benefits are there to be reaped.
Benefits for customers
The UK has a diverse population. And every single person is a potential business customer. The 2001 census showed, for example, that the minority ethnic population now accounts for nearly 8% of the UK population, and that by 2014, there will be more people over 65 in the UK than under 16.
It stands to reason that businesses with a diverse workforce are likely to attract a wider customer base, have the ability to recognise new potential markets and to provide a better, more tailored service to meet individual needs.
The development of new technologies and the need to provide services seven days a week have put additional demands on business. Organisations that embrace diverse working patterns will be able to provide the greater flexibility demanded by customers.
The UK has a diverse population and every single person is a potential business customer.
Benefits for employers
In just seven years, only a third of the workforce will be male and under 45.1 Furthermore, the Employers Skill Survey 2002 found that 16% of all establishments with five or more employees had hard to fill vacancies.2 There are clearly competitive benefits to be gained by employers who take every step to ensure they recruit from the widest possible talent pool.
Employees want (and need) to be able to balance their work and home lives. And the costs for businesses that do not meet these needs are striking. According to the Confederation of British Industry, sickness absence costs UK employers about £10 billion a year and 30% of this absence may be related to stress.3 In a recent survey, over a fifth of senior women in UK organisations said they would change jobs for more flexible working arrangements.4 Typical recruitment costs of replacing an individual have been estimated at £4,000. Lloyds TSB, for example, estimates that it costs in the region of £50,000 to replace a senior woman manager.
But businesses benefit in other ways from taking action on diversity and equality, according to Government research,5 not just in terms of better recruitment and retention – but also better staff morale and performance. If discrimination and unfair treatment can be reduced, that can have a knock-on effect on grievances and relations in general within the organisation. That, in turn, can reduce absenteeism and labour turnover by enhancing employees’ attachment to the organisation and have a positive effect on labour productivity.
Action: The supermarket chain began to develop plans in 1986 to target older workers – almost 15% are now over the age of 50 and just over 1% over the age of 65.
It introduced a retirement plan and pension protection mechanisms, enabling members to draw partially on their pension to top up a reduced salary. Employees can reduce their hours without significantly decreasing their net income and they can continue to contribute to their pension up to the age of 75.
Age is not a factor in redundancy decisions. Anyone recruited up until their 65th birthday will receive full redundancy payments. Age has been removed from the application form and is requested for monitoring purposes only.
Benefits: The chain reports that their mixed-age workforce has led to improved customer satisfaction by more accurately reflecting the profile of their customers. It also thinks the new approach has contributed to a better-motivated workforce which feels more valued and, therefore, more willing to contribute to business success.
Action: As part of its work on diversity and being a good neighbour, B&Q is establishing 300 partnerships nationwide between its stores and local disability groups in order to develop its training on disability awareness and improve its service provision for disabled people. Inspired by establishing its first fully accessible superstore in Norwich, B&Q have moved to replicate the success of the programme by building on the massive local knowledge and skills of relevant groups. Internally, to motivate and inspire people it has taken the creative step of appointing staff disability ‘champions’ for each store and has already set up 60 partnerships.
Benefits: Although the company has established many beneficial links with local groups and national charities, the principle function of the partnerships is not charitable, although it is inspired by corporate values. Rather the purpose is to listen to the individuals concerned and work with them to create a better shopping environment for disabled customers. On this basis, B&Q argue that “if we get it right for disabled people, then we can get it right for most people”. In so doing, it increases sales to disabled people (a traditionally under-served group), can develop its own customer care service, increase overall employee satisfaction, retention and productivity rates and enhance its brand by linking it to its ‘good neighbour’ practice.
Benefits for shareholders and the business as a whole
Businesses that take a positive approach to diversity generally are also likely to do better than their competitors. Research has also shown that organisations with high quality Human Resources or Personnel systems – in which equality plays its part – deliver better products and services and ultimately better shareholder value.
A diverse team will also bring different talents to the workplace – these enhance the ability of a business to innovate and thus maintain a competitive edge. A recent survey of financial analysts by Ernst and Young showed that innovation was rated one of the top ten (non-financial) variables crucial to the success of a business.
In this communications age, where information spreads quickly, it has become increasingly apparent just how damaging a negative public image can be to a business. Clearly a business that is well known to be putting the principles of equality and diversity into practice, both in the workforce and in the products and services it offers to customers, is more likely to project a positive public image in the community. And one that will act as a driver to success.
Nationwide Building Society
Action: Nationwide Building Society is one of the founder members of the Employers for Work-Life Balance Alliance and has for some considerable time acknowledged the business benefits of providing employee choice to enable employees to balance home and work lives. The company has introduced a wide range of policies, practices and procedures, including a range of flexible working options (part-time job share, homeworking, annualised hours, compressed working week) and leave policies that benefit men and women who may have different responsibilities at different life stages.
- Nationwide’s external statisticians tell them that for every 3% increase in employee satisfaction, there is a 1% increase in member satisfaction. Flexible working practices were introduced in 1995. Since 1996, there has been a 14% increase in employee satisfaction.
- Nationwide’s current maternity return rate is 91.5%; this represents a 30% increase over the last ten years, resulting in a saving of over £3 million.
- Employee turnover is one of the lowest in the industry at 9.8%, compared with the financial services sector average of 24%. The company has estimated that to move to the average, it would need to have recruited an additional 2000 employees last year at a cost of £10 million in recruitment and training.
Action: Since 1999 BAE Systems has developed an equal opportunities information pack for all employees and a website to provide all staff with information on equality and diversity issues. BAE’s Respect at Work programme promotes good behaviour in the workplace and includes guidelines and procedures for all managers. Respect at Work contacts and senior harassment investigators have been trained.
BAE believes the cultural change engendered by their equal opportunities and diversity programmes is directly linked to overall improvements in morale and productivity and has contributed to record order book levels and profits. Furthermore, in 2000, 22% of the graduate intake were women and two BAE Systems women engineers took first and second places in the Young Woman Engineer of the Year competition, a testimony to the quality of BAE recruits.
1 Office of National Statistics British Labour Market Projections 1998
3 Health and Safety Executive
4 Breaking the Barriers: Women in Senior Management in the UK, Opportunity Now 2000
5 The Business of Diversity by Sarah Rutherford and Sue Ollerearnshaw, 2002
6 Dex and Scheibl, Business Performance and Family Friendly Policies, Journal of Management,
Vol 24 1999 and The HR Scorecard, Becker, Huselid, Urlich 2001 7 Lowe and Siesfield, Measures that matter, Ernst and Young, 1998
Further help and advice
Achieving best practice in your business is a key theme within DTI’s approach to business support, providing ideas and insights into how to improve performance across your business. By showing that works in other businesses, we can help you see which approaches can help you, and then support you in implementation.
ACHIEVING BEST PRACTICE IN YOUR BUSINESS
To access free information and publications on best practice:
• visit our website at www.dti.gov.uk/bestpractice
• call the DTI Publications Orderline on 0870 150 2500 or visit www.dti.gov.uk/publications
SUPPORT TO IMPLEMENT BEST BUSINESS PRACTICE
To get help bringing best practice to your business, contact Business Link – the national business advice service. Backed by the DTI, Business Link is an easy-to-use business support and information service, which can put you in touch with one of its network of experienced business advisers.
• Visit the Business Link website at www.businesslink.gov.uk
• Call Business Link on 0845 600 9 006
For information and advice on a wide range of equality issues, contact Equality Direct (a telephone advice service for employers run by Acas) on 0845 600 3444.
USEFUL WEB LINKS
Examples of business both small and large that have introduced policies based on the principle of age diversity and the effects it had on their business.
Key points from the Advancing Women in the Workplace Conference and good practice handbook.
The Employers Forum on Age has case studies of employers who have adopted approaches based on the principles of age diversity.
The case studies examine how businesses worked with Equality Direct to successfully implement equal opportunities policies in their business.
Case studies on business involvement in the community.
GENERAL BUSINESS ADVICE
You can also get a range of general business advice from the following organisations:
• Call Business Link on 0845 600 9006
• Visit the website at www.businesslink.gov.uk
• Call Business Gateway on 0845 609 6611
• Visit the website at www.bgateway.com
• Call Business Eye/Llygad Busnes on 08457 96 97 98
• Visit the website at www.businesseye.org.uk
• Call Invest Northern Ireland on 028 9023 9090
• Visit the website at www.investni.com
Examples of products and companies included in this leaflet do not in any way imply endorsement or recommendation by DTI. Bear in mind that prices quoted are indicative at the time it was published.
Published by the Department of Trade and Industry. www.dti.gov.uk © Crown Copyright. URN 04/804; 04/04