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25 May, 2021updated 02 Nov 2021 15:03

Sofia Karadima

Opinion: Think socio-economic diversity in the workplace can be ignored? Think again.

Putting socio-economic diversity at the forefront of recruitment selection can be a game changer for multinational enterprises.

socio-economic-diversity-meeting

Companies that take stringent action on their socio-economic diversity tend to reap dividends in terms of their performance. (Photo by Rawpixel.com/Shutterstock)

The UK’s decision to launch an action plan to increase socio-economic diversity in the civil service needs to go further and inspire the private sector to follow suit and push for more representation of all backgrounds in the workplace, as well as implement more inclusive recruitment policies.

This action plan, announced on 20 May, was produced by the UK’s Social Mobility Commission. It includes a number of recommendations, such as using national benchmarks to assess progress with the aim of ensuring a representative civil service, as well as greater scrutiny and five-year targets to increase representation from those of a lower socio-economic backgrounds. Other recommendations include the reporting of socio-economic data within all departments by location, gender, ethnicity, disability and sexuality.

Sharing is caring

Reporting on socio-economic data is an important part of identifying the problems across different sectors and developing the measures needed to tackle them. This is also why there should be incentives for companies to collect and share relevant data, and pressure from the regulators or the governments to do this. Such sharing could have a wider positive impact on the sections of society under-represented in the workplace, which would then guide any measures used to bring about a fairer situation. Such practices could also work towards hitting the targets of the UN’s eighth Sustainable Development Goal, which is based upon ensuring sustainable economic growth and decent work for all.

Overlooking socio-economic diversity is no longer an option for investors.

An initiative such as this could involve launching taskforces in the private sector to monitor the diversity of workplaces and support talented people from all backgrounds in reaching their full potential. In fact, in a move to improve socio-economic diversity at senior levels in financial and professional services across the UK, a new taskforce was launched in November 2020.

This initiative was somewhat overdue, as the sector scores very low in terms of socio-economic diversity, according to research by Bridge Group, a non-profit consultancy that uses research to promote social equality.

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The research, carried out in 2020, shows that almost nine out of ten senior roles in financial services are held by people from higher socio-economic backgrounds, as defined by parental occupation, which compares with a figure of one-third of the UK working population across all sectors.

The research also states that “employees from lower socio-economic backgrounds took 25% longer to progress through grades. This progression gap increases to 32% when considering those from lower socio-economic backgrounds who also identify as black”.

Another interesting point revealed in the report is that “those from lower socio-economic backgrounds frequently expressed that they spend time and effort on assimilating to dominant higher socio-economic cultures. This is likely to have serious implications for individual and organisational productivity, and well-being”.

The findings of the report are alarming, and only serve to highlight how tough the task ahead will be for the newly established taskforce. This taskforce is looking to tackle the lack of diversity at all levels, and among its responsibilities is leading an industry consultation on how government, regulators and sector bodies can incentivise firms to take action to improve their socio-economic diversity. It has also been mandated to create a membership body for financial services, where employees can benchmark against each other and share best practice on delivering socio-economic diversity at senior levels. On top of that, the taskforce is responsible for producing an analysis to build the business case for increasing socio-economic diversity at senior levels in financial and professional services.

Social mobility is key for productivity

Although financial services is one of the most under-represented sectors in terms of socio-economic diversity, the outbreak of the Covid-19 pandemic has negatively affected several sectors, with workers from a lower socio-economic background often the worst affected. In some cases this has led to an increase in poverty and hunger. This has also negatively impacted social mobility, as employers have faced more challenges in terms of improving recruitment and progression practices that promote socio-economic diversity in the workplace.

The 2020 Social Mobility Index identifies several key areas that drive social mobility in employer practice, and organisations would be well advised to pay heed to them. Some of these areas include recruiting from universities outside the Russell Group and removing barriers that prevent individuals from lower socio-economic backgrounds progressing through selection processes, among others.

Poor levels of social mobility have been found to have a negative impact on productivity. A 2017 study by economic consultancy Oxera found that if British companies attained average levels of social mobility, the UK’s economy would grow by £170bn in total, or about £2,620 per person each year.

In short, overlooking socio-economic diversity is no longer an option for investors. However, even minimal levels of engagement are not enough. Investors should back initiatives that encourage gender equality and race diversity. By having a diverse team, companies can enjoy higher profitability, unearth previously untapped opportunities, and build back better given that their actions will promote both economic and equitable development.

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