Government reforms (1): Race in the workplace review & response

race in the workplace

What do we already know?

In 2016 the Government appointed Baroness McGregor-Smith to lead a review into race in the workplace. The review considered the issues and obstacles faced by businesses and individuals in developing black and minority ethnic (BME) talent, from entry into the workforce through to executive level.

What’s new?

The review has now been published and includes some interesting recommendations for employers.  The Government has also published its response to the review.  Both the review and response are available here.

What are the findings?

The review found that although overt discrimination is fairly infrequent, there was discrimination and bias “at every stage of an individual’s career, and even before it begins”. It found that there remains a structural bias favouring certain groups, as organisations and individuals tend to hire in their own image, whether consciously or not. There remains a lack of BME role models, and individuals responding to the call for evidence felt that the main barrier to their progression was the lack of connections to the “right people”.  It also notes that criteria for promotion and remuneration are often opaque meaning that employees do not understand how or why decisions are made. From a practical perspective, this may lead to employees being suspicious of such decisions and seeing them through a lens of discrimination, even where there are genuinely justified reasons behind them.

The review found that 1 in 8 of the working age population is from a BME background, yet BME individuals make up only 10% of the workforce and hold only 6% of top management positions (2015 figures). The employment rate of BME people is over 12% lower than the employment rate of white people. All BME groups are more likely to be overqualified than white ethnic groups, but white employees are more likely to be promoted.

What are the recommendations?

The review makes a total of 26 recommendations. Those of most interest to employers include that:

  • All employers should take a critical look at their processes and their notions of what makes an ideal employee and consider every stage of the employment life-cycle, from recruitment to career progression to identify any structural bias.
  • All employers with more than 50 employees should:
    • set aspirational targets to increase diversity and inclusion throughout their organisations. In particular, the review suggests that in setting those targets organisations should consider the make-up of the area in which they operate. This means that organisations, for example, in London, would need to consider these targets against a backdrop of over 40% of the working population in London being from a BME background.
    • publish a breakdown of employees by race and pay band. The review goes further and suggests that ‎the Government should legislate to make this a mandatory requirement; and
    • identify a board-level sponsor for all diversity issues, including race.

What does this mean for employers?

In its response to the review, the Government stated that it will not at this stage legislate to require employers to publish data on race, pay bands or targets. Instead the Government recommends a voluntary approach and also expects that investors can ask for diversity information to be included in companies’ strategic reports or disclosed at AGMs.

The Government is placing the emphasis on employers to consider the Review’s recommendations and take appropriate steps. The Government will, however, review developments over the next year and take any necessary action.

At the end of March, the Business Minister wrote to all FTSE 350 companies urging them to take up the report’s recommendations. There is an implicit suggestion that if the voluntary route is unsuccessful a mandatory route will follow; i.e. legislation.

Employers may also want to bear in mind that whilst the gender pay reporting obligations were originally voluntary, when they failed to make an impact the Government decided that legislation was then appropriate to make them mandatory. As such, should the race reporting obligations similarly fail to gain traction, there is a risk that legislation to make such reporting mandatory might follow.

In light of the above, all organisations may want to revisit their policies on this topic, but more importantly, what they are doing to embed those policies within their culture and to address any systemic barriers to participation and progression within their workplaces.

race in the workplace