Employers could face diversity quotas if BAME representation does not improve, says government advisor

Businesses have an opportunity to be more inclusive but need to take action soon, Baroness McGregor-Smith tells CIPD Annual Conference

Employers risk strict regulations on diversity – including the possible introduction of quotas – if they do not take firmer action to reduce the ethnicity pay gap and improve opportunities for BAME employees, a senior government advisor and industry figure has suggested.

Baroness Ruby McGregor-Smith (pictured), author of the government’s 2017 Race in the Workplace review and the first and only Asian woman to head a FTSE 100 company, said businesses had an opportunity to introduce positive changes.

But the former CEO of the Mitie Group added that she was “reluctantly” realising quotas might be necessary if representation for BAME people in businesses continued to remain stubbornly low.

Speaking at the CIPD Annual Conference in Manchester yesterday, McGregor-Smith, who now sits as a Conservative peer in the House of Lords, said businesses “absolutely know what we need to do” to improve diversity.

“We just have to get on and make the changes that we need to make. It’s in your hands and we can absolutely make those changes,” she said. But she continued: “If we don’t do it, I think we’re going to have some pretty depressing things happen. I think we’ll end up with quotas, I think we’ll end up having more enforced legal actions, and I don’t think that’s right.

“We’ve got an opportunity to do [one or the other]. I’ve never been a fan of quotas but even I am reluctantly coming to the conclusion that I really don’t want to stand up here for too many more years without seeing some great change happen, and we really need to help it happen quickly.”

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McGregor-Smith told delegates that all the recommendations for improving diversity in her report still held true today.

“Even two years on [from the report], the prejudices that many have faced in the workplace, of many backgrounds, haven’t changed, which stops them fulfilling their potential,” she said.

The changes included a call for legislation to introduce ethnicity pay reporting; greater transparency and fairness in reward and recognition; more openness about how career pathways work inside organisations; and for employers to overhaul their recruitment practices to eradicate biases.

The government has said it intends to introduce ethnicity pay reporting and it was expected this would come into force in 2020, but it has not yet formally tabled legislation.

McGregor-Smith added that senior individuals needed to sponsor BAME individuals through their businesses, not just mentor them, and that hiring managers sometimes needed to “take risks” on candidates.

“When I joined Mitie [as CFO] the biggest thing I found was my chairman and chief executive said, ‘We know you’ve not done a PLC role before. We’ll teach you, we’ll support you, we’ll show you how to do it.’ And it didn’t take that much – what it took was people to believe in me and support me.

“It’s really difficult to be promoted when you’re told you need prior experience, when you can’t get prior experience because of your background. So many get held back because they’re not sponsored or supported through organisations.”

McGregor-Smith acknowledged that it was still sometimes difficult to talk about race, but said there was both an ethical and business case to be made for improving diversity.

“We don’t really have a skills gap, we just don’t use the skills we have. And I think there is a big issue around actually recognising the potential and skills of those from different backgrounds.

“I don’t think it’s fair that so much talent is overlooked – it’s not fair, and it’s not going to be fair for our next generation,” she said.