How does an employer ensure equal treatment for all employees? How should they attract and retain ethnic minority talent? How can they build a culture of communication where speaking out is second nature, with no fear of reprimand?
All businesses need to tackle these challenging questions – but they are further compounded by the growing uncertainty around upcoming legal reporting obligations. So how can firms get ahead and close the ethnicity pay gap in the UK?
Where we currently stand in the UK
Five pivotal pieces of UK research highlight the opportunities and challenges for employers regarding workplace equality and the ethnicity pay gap:
- Baroness McGregor-Smith review of race in the workplace found that the economy could receive a £24bn boost if firms made the most of ethnic minority talent.
- McKinsey’s Diversity Matters report suggested diverse companies are 35% more likely to out-perform the national industry average.
- The Policy Exchange report, Bitter-Sweet Success, highlights the ‘snowy peaks’ at the top of FTSE 100, NHS, civil service, local government and academia leadership. Of the three most senior positions held in FTSE 100 companies (CEO, CFO and Chairman) just 11 out of 300 were held by non-white people and most of them were not British.
- The Middle Research identified the discomfort leaders face with discussing race in the workplace which causes avoidance. For example, it inhibits HR from performing their role of challenging unfair informal practices relating to work allocation, unconscious bias, and questionable outcomes in recruitment and promotion discussions.
- The BITC’s Race at Work Survey revealed that 1 in 4 BAME employees (25%) reported in 2018 that they had witnessed or experienced racist harassment or bullying from managers in the last two years.
All of this research points to the need to reform business practices and decision making, particularly when it comes to the attraction, retention and treatment of ethnic minorities in the workplace.
Consultation to Legislation
While not yet confirmed, employers should anticipate a legal requirement to report ethnicity pay gap data in the UK. It’s likely we’ll see a similar set of guidelines to those set out for gender pay reporting, highlighting the mean and median pay gap for ethnic minorities, supported by a narrative which explains the data and initiatives to reduce any gap.
What is not clear is how comparisons will be made; whether the categories should be based on several pay gap figures for different ethnic groups, one ethnic minority category or a new structure all together. The option of one single pay gap category has the advantage of simplicity but risks being tokenistic. The concept of one single ‘ethnic minority’ category does not fully reflect modern society and may be perceived by modern Britain as a disregard of its culturally diverse population.
Closing the Gap
In July, the Office of National Statistics issued its first official report on the pay gap showing significant disparities between the averages paid to white British workers and workers from other ethnic minority backgrounds, with the largest median hourly pay gap in London at 21.7%. It highlights the scale of the challenge firms face, so here are five recommendations to making headway on this issue:
- Get the Data
Knowing the diversity make-up of your workforce is critical to understanding your pay gap and reporting that data when required. It helps better identify the business areas that need most focus and the trends or themes that are of concern, which in turn will help you develop a substantive action plan.
- Establishing a Culture of Communication and Trust
To obtain this data, employers need employees to declare their ethnicity. It might not be difficult to get new employees to fill out a form when they start, but it can be more challenging to obtain this information from existing employees. You will need to explain why this information is required, how the information can help close any potential pay gap and imbed a culture of communication, transparency and fairness.
You could approach this matter in the form of a campaign – Declaration Day. And in the run up, you could host a series of focus groups followed by a video campaign and open discussions about why declaring one’s ethnicity is important.
If employees still refuse to declare using the ‘prefer not to say’ option, including a text field which employees must complete to give some insight as to why they prefer not to say is invaluable in your hunt for solutions – particularly if some of those reasons are connected to the trust and confidence they have around you handling this information.
- Strategic Initiatives
Until you understand the diversity of your workforce it is difficult to put in place initiatives that really help improve the culture, trust and retention among your diverse employees.
Partnering with employee resource groups – and ensuring that they are in the room when discussions or decisions around strategy are made for the diverse workforce – makes good business sense. An external expert will never truly understand what matters to colleagues more than the leaders of these groups who have their trust.
Internal leadership programmes designed to develop and support the internal progression of diverse talent will help improve retention and engagement internally – and ultimately help tackle your pay gap position too.
Unconscious bias training has been extensively deployed by employers across the UK. However, there is such variation in the quality and impact this training has on a workforce. Enlist support in creating a robust and routine training programme. You must consider this training as important as your annual compliance training, for example – and think about sending hiring and line managers on further, in person training each year, which also focuses on the language of culture and inclusion. Managers and HR professionals alike are often fearful of saying something which offends a diverse employee, but avoidance only perpetuates the issue.
Be mindful of how and when training is deployed – in a manner that is digestible and in a judgement-free environment where the pressure of the day to day business requirements are not looming.
Employers that lead from the front directly attribute contributions to diversity and inclusion to compensation. Other employers may view this approach as radical or impossible to formulate. But all businesses can build in accountability when it comes to hiring, promotion and pay practices. Senior leadership, with a supporting structure in place, should challenge managers who do not have a diverse slate of candidates when hiring for a role and better monitor hiring decisions. 360-degree performance reviews for managers should include questions around how they endorse and promote inclusive culture.
But they also need the appropriate tools and training. Managers tend to be hired either as a result of their technical ability or their relationship with the hiring manager, rarely because of their ability to manage and cultivate a high-performing diverse team. To close the ethnicity pay gap and, more broadly, improve workplace culture, managers must receive the right support.
Members can read more about how a strong BAME network can make a difference for their firms in My CBI's Ideas Forum.