How can firms make workplaces more diverse post-pandemic?

As the jobs market recovers, ensuring diversity is a core part of a business’s ESG strategy presents both challenges and opportunities, says Naeema Choudry

As the end of furlough approaches, the much-feared threat of a large increase in unemployment has slowly receded. A bigger concern now is not how many vacancies can be created, but whether there are enough workers to fill them. However, as employers seek to solve this immediate issue, the challenges and opportunities of building back with greater diversity in the workforce present themselves.

A shortage of talent tips the balance

Almost hand-in-hand with the start of the pandemic came warnings from economists and recruitment experts that unemployment could reach levels not seen since the 1930s. 

With businesses and workers both fearing the worst, an exodus of talent from the UK began. And with post-Brexit immigration laws, as well as the health crisis, the number of people in the UK born outside of Britain fell by up to 1.3 million, according to estimates by associates at Economic Statistics Centre of Excellence (ESCoE).

As a result, vacancies in industries that rely on overseas workers such as haulage and hospitality soared and employers began to experience widespread skills and labour shortages.

These shortages pose immediate difficulties for companies. In desperation to fill vacancies, coupled with the disparate impact that the coronavirus pandemic has had on people from ethnic minority groups, companies could face major diversity challenges in their workforce. However, it has also presented opportunities to progress diversity too.

Challenges and opportunities for diversity

In Q2 2021, Office for National Statistics (ONS) figures for employment by ethnicity show that labour force participation by workers of Pakistani, Bangladeshi, Chinese and Black African, Caribbean or Black British ethnicities have either reduced or stalled since mid-2020. 

Additionally, while the latest unemployment figures show that the rate and number of men and women in employment has increased, there are now almost 1.5 million more men employed than women. This is the largest gap between genders since June-August 2020.

However, the pandemic has made companies more open to flexible and remote working. Many have also seen that people don’t have to be in the office to be productive. Companies have been working hard to improve diversity and inclusion within their workforce for years and according to the CIPD, 24 per cent of organisations have improved diversity over the pandemic.

This is a sure sign that while some are finding their best laid plans being unravelled, there is a determination to see the opportunity within the challenge and keep up momentum, particularly given the pressure put on by organisations such as Black Lives Matter.

The importance of keeping a hold on diversity

McKinsey analysis from 2019 found that companies in the top quartile for gender diversity on executive teams were 25 per cent more likely to have above-average profitability than companies in the fourth quartile.

These figures were even more impressive for culturally and ethnically diverse executive teams. In 2019, top-quartile companies for ethnic diversity in executive teams were found to be 36 per cent more likely to see better-than-average profits than those in the fourth quartile. 

Additionally, Harvard Business Review has previously reported that companies with a more diverse workforce are 70 per cent more likely to capture a new market. 

Diversity is not only good for business, but should also form part of a business’s environmental, social, and governance (ESG) agenda. Pressure is increasingly being placed on businesses by investors to demonstrate their commitment to equality, diversity and inclusion. 

Potential solutions

Many companies looking to fill vacancies will have to look to train existing talent and supplement with technology, or seek to recruit from overseas.

However, the UK’s points-based immigration scheme gives priority to those with the highest skills and talents and includes a range of other specialist work routes to settlement status. This includes a global talent route for individuals in certain fields who can show they have exceptional talent or promise. 

As such, it is not always possible to recruit from overseas and employers will need to consider how they recruit, train, develop and engage talent that is already available in the domestic market.

A change to policy and processes is also needed to ensure that areas such as unconscious bias and representation are addressed. And capturing the right mixture of talent can be helped by offering more flexibility in location and hours, or reaching out to a wider range of applicants. These are the fundamentals that must be kept tightly in check and on track if we are to progress towards a more diverse workforce.

During the pandemic it may feel like diversity within organisations has stagnated. Setting the challenge of making up for lost ground will only serve to make companies more determined to meet the targets outlined before Covid-19 impacted businesses across the globe. 

The rewards for doing so will bring the creative and rich culture that we see across the UK every day more equally into the workplace.

Naeema Choudry is an employment partner at Eversheds Sutherland