Why diversity is the spice of working life

Diversity is not just a business buzzword. Matt Warner finds out why companies that pay attention to the benefits of diversity in the recruitment programmes are more likely to succeed

Hiring a diversity consultant might not be at the top of agendas for 2004. With IT consultants, brand consultants, marketing consultants and many others in the picture, the idea of using yet another consultancy may not be very appealing. Many in business don't have a clue what 'diversity' means, much less what such a consultant can do in this area. However, the clueless could be in for a nasty and expensive shock, and are missing out on the chance to run their businesses better.

Put simply, diversity refers to differences between individuals, their age, gender, race, sexual orientation, disability and social background. These differences will affect how people interact at work. 'Diversity is about managing people as individuals,' explains Sarah Churchman, head of diversity at PwC. 'It's about making people more self-aware so they better understand how they impact on others.'

Terms like 'self aware' may not sit happily with many managers, and diversity buzzwords - such as 'creating a rich corporate DNA' - may also make you shudder, with its heavy resonance of political correctness. But far from being the domain of the woolly liberal, diversity is about compliance issues and business benefits that have a direct impact on the bottom line.

December 2003 saw the introduction of new anti-discriminations laws based around EU legislation, which has bought the issue of diversity into sharp relief. The UK has had equal opportunities and race relations legislation since the 1970s, but these new laws have a much wider remit. The Employment Equality Regulations will make it illegal to discriminate against anyone because of their religion, belief or sexual orientation. Under the new regulations, heavy penalties will be meted out to businesses that have transgressed.

The UK's Department of Trade and Industry points out that in a decade's time there will be two million more jobs in the UK, 80% of which will be filled by women. Over the same period, the number of people of working age will increase by a million, of whom minority ethnic communities will account for half. In 2001 ethnic minorities made up 8% of the UK population; this figure continues to rise.

Companies must respond to such social changes if they are to keep their workforce. 'Diversity is about not letting anything get in the way of recruiting, developing and retaining talented people,' says Robin Schneider, MD of leading diversity consultants Schneider Ross. 'It doesn't force you to promote people who aren't up to the job, it just says put aside prejudices and look clearly at where the talent is.'

Employees who hope to be promoted as their career develops will lose motivation if they see that the senior staff is all drawn from one group. 'The benefit of being a liberal organisation is that you recruit from a richer vein of talent,' explains David Marshall, MD of diversity consultants Marshall ACM, 'and you keep good people who can see a quality of opportunity.' The lack of women on a board might lead talented individuals in a business to look elsewhere.

There is also the risk of litigation. Two top female city lawyers stand to win over £6m from their employer, Sinclair Roche and Temperley, after a tribunal found that they had been denied senior partnerships simply because they were female. Only one woman had been promoted to that level in the company's history. This is by no means a unique example of shortsighted behaviour.

Churchman recognises that one of the biggest challenges in diversity is getting staff to change sometimes very ingrained attitudes. 'First of all you must change a company's culture, itself a huge agenda,' she says. 'Diversity is easy to understand intellectually, but that understanding doesn't necessarily bring changes in behaviour. That attitude shift is quite a slog.' Churchman points out that, often, those most scared by diversity are those in senior positions, and it is this group that will need to be persuaded of the benefits diversity can bring to a business.

But diversity initiatives should be about more than just planning to avoid penalties - it has inherent benefits, such as opening up to new markets. A varied workforce of different ages, races and religions brings fresh approaches to problems and sees potential that might otherwise have been missed. Furthermore, a diverse workforce can improve the public image of a company and lead to an increase in business. Schneider consulted for a major bank that has a branch in Bradford, a city with a large Asian population. By changing the profile of the staff to reflect the community they served, the bank improved sales, profitability and customer satisfaction.

It is going to be easier for larger businesses with highly developed HR and legal functions to implement a diversity policy than for smaller companies. For SMEs, diversity might be put on the back-burner. Churchman says that 'the issue isn't on the radar screens of many employers, particularly SMEs'.

However, it is this sector that has most to gain from good diversity planning, as Schneider explains. 'If you only employ 50 people, you can't have passengers. There are no places to hide in an SME. The SMEs that are clued up are amongst the most powerful advocates of diversity.'

The 'clued up' may be leading the way, but it is still smaller enterprises that often find themselves in breach of the new legislation, usually through ignorance or confusion. The Federation of Small Businesses and the CBI support diversity initiatives but fear that managers won't understand differences between 'religion' and 'belief'. The UK Government plans eventually to bring all the various equal opportunity and race commissions into one body, which should help by providing a one-stop shop.

Increasingly litigious

There is also the fear of cynics using the legislation to bring claims against employers because they found a birthday card or Christmas card offensive. The DTI assures that each case will be judged on evidence and 'in context'; however, the huge rise in industrial tribunals - from 30,000 in 1990 to 130,000 in 2001 - indicates the increasingly litigious nature of the UK workforce. It is this that motivates many diversity plans, but this unfortunately often has negative effects.

Marshall has seen this. 'Companies come down hard on employees with short, sharp diversity training focused on corporate liability. If you introduce it through fear, there is a backlash among employees - people feel put upon.' Employees need to see how the programme links to their job and the actual business.

Consultants who have developed experience and expertise can help avoid alienating the workers. Often employees will be happier to talk to a stranger about sensitive issues regarding what they'd like from their companies. Churchman noted that PwC graduate recruits placed working for a socially responsible, modern employer high on their list of needs. Businesses that find themselves at tribunals defending sexism and racism claims will not appeal to these people. Marshall feels that businesses will soon be audited on diversity, and the results will interest an increasingly aware media and public.

Diversity isn't political correctness gone mad. The new legislation is simply catching up with society and contemporary mores. Times have changed, as Schneider explains. 'The mood is different out there. It's not a question of 'Should we do anything about diversity', it's a question of, if you're not, you look old-fashioned and fuddy-duddy. You're just not up to speed with the rest of the business world.' And who wants to look like that?

Matt Warner is a freelance journalist, specialising in business, accounting, and the IT industry.