UK businesses urged to disclose diversity action plans

Business minister Andrew Griffiths has written to the chief executives and chairs of FTSE 350-listed firms, asking them to disclose what action they are taking to improve diversity in their workplaces in line with the recommendations of the Hampton-Alexander review into gender diversity among executives and the Parker review into racial diversity in boardrooms. Firms have also been asked to encourage their employees to contribute to the government-backed Business in the Community (BITC) Race at Work survey.

The BITC survey is open until 18 May 2018. The survey seeks views on how employers handle issues such as black, Asian and minority ethnic (BAME) pay gap reporting, recruitment and bullying and how people talk about race in the workplace. The government plans to use the findings to assess whether further action is needed to improve the progression of people from BAME backgrounds at work.

Griffiths also urged FTSE 350 bosses to develop an internal talent pipeline to provide encouragement and mentoring opportunities to women and to people from BAME backgrounds, and to consider participating in industry-led initiatives such as the Future Boards Scheme and BITC's Best Employers for Race awards. Companies should also consider whether their recruitment processes are fair and transparent, and minimise the potential for unconscious bias, he said.

"We want to ensure that everybody has the same opportunities to progress in the workplace and achieve their true potential," said Griffiths.

"Transparency is a vital first step towards harnessing the power of a diverse workforce and that is why we urge companies to get their employees to report their experiences in the workplace to BITC. This will help us to determine what further action is needed to remove barriers to progression in the workplace," he said.

The Hampton-Alexander review, led by GlaxoSmithKline chair Sir Philip Hampton and former CBI president the late Dame Helen Alexander, was published in 2016 and proposed a 33% target for women in executive positions at FTSE 350 companies by 2020. The Parker review, published in 2017 and chaired by former Babcock International chief executive Sir John Parker, focused on BAME appointments at boardroom level and recommended that each FTSE 100 board appoint at least one director from an ethnic minority background by 2021 and that each FTSE 250 board do the same by 2024.

Griffiths also referenced a 2017 review by former Mitie Group chief executive Baroness McGregor-Smith, which considered the issues affecting people from BAME backgrounds in the workplace more broadly. McGregor-Smith called for companies to "collect, scrutinise and [be] transparent" with their workforce diversity data, including by publishing a breakdown of their workforce by race and pay band, drawing up five-year aspirational diversity targets and nominating a board member to deliver on those targets.

Last month, UK employers with 250 employees or more were required to publish breakdowns of their workforce by gender and pay band for the first time, as part of a broader gender pay gap reporting requirement. The government is also due to introduce new laws requiring listed companies to report the pay ratio between their chief executive and the average UK worker as part of its programme of corporate governance reform.

Griffiths' letter "builds on the success of recent interventions on women on boards and the gender pay gap, and widens the scope to focus on the important issue of BAME employees being seriously underrepresented at the top of our leading organisations", said diversity and inclusion expert Lesley Brook of Brook Graham, which is owned by Pinsent Masons, the law firm behind Out-Law.com.

"It's clear that businesses which work hard to foster diverse talent and create actively inclusive workplaces are more successful and sustainable, whilst at the same time being better workplaces for employees," she said.

"These efforts need to be led from the top: there is a real opportunity for leaders to make a difference by focusing on this issue, taking action and driving the necessary changes required. It's not a quick fix and often takes sustained effort over several years, but success comes about when this is regarded and treated as a fully integrated business priority," she said.