Businesses still ‘in denial’ about racial barriers at work

28 Feb 2017 By Annie Makoff

Government review urges organisations to publish detailed figures on ethnicity and pay, but experts advise caution on quotas

The UK economy could enjoy an annual £24bn boost if staff with black, minority and ethnic (BME) backgrounds enjoyed the same career progression opportunities as their white colleagues, according to figures from an independent government-backed review.

The newly published Baroness McGregor-Smith review found that BME employees are still being ‘held back’ from workplace opportunities because of the colour of their skin, resulting in a loss to the economy equivalent to 1.3 per cent of GDP.

But proposals to encourage businesses to publish detailed figures on race, and work towards diversity ‘targets’ – which McGregor-Smith said could eventually become mandatory – were treated with caution by experts. They suggested wider cultural issues, including ‘denial’ among many companies about the extent of race-based barriers to progression, were the real problem.

The review found that employment rates among BME individuals were 12 per cent lower than those with white backgrounds, and the data indicated they were also more likely to work in lower-paid and lower-skilled roles.

Among the proposals put forward by the review, large employers are being urged to publish a breakdown of their workforce by race and pay band, in addition to implementing five-year aspirational diversity targets.

A new Business Diversity and Inclusion Group has been announced to ensure that the government and employers work together to improve BME representation, inclusiveness and opportunity in the workplace.

The review was broadly welcomed by experts including Business in the Community (BITC), which insisted that harnessing “the very best” of BME talent was a “moral case” as well as a business one.

Kate Headley, director of HR and diversity consultancy The Clear Company, said: “There is no doubt that employer brand is intrinsically linked to consumer brand, and it’s no secret that to better understand – and communicate with – all stakeholders, organisations must reflect the customer base that they serve.”

But Dr Jonathan Ashong-Lamptey at the London School of Economics’ department of management told People Management that although the review makes a strong business case, the issue is often “oversimplified and misunderstood”, particularly as there is “no one size fits all” approach to managing diversity and inclusion.

He said: “For example, consumer-facing organisations that better reflect their consumer base are expected to perform better because they use an access and legitimacy business case approach. This means that they attempt to improve the diversity of the workforce to be recognised as legitimate participants in the market and therefore gain access to market opportunities. This works for tech companies like Google and Apple… but it may not work in a widget factory.”

Rajiv Nathwani, director of private finance consultancy Quivira Capital, warned against positive discrimination measures to ensure a certain proportion of staff come from BME backgrounds. He said: “Businesses should be made up of the people who are worthiest of the roles available, regardless of ethnicity. There are more than enough qualified and able candidates from the BME communities, but the access to these roles is tougher. The way forward for me isn’t to ensure that a percentage are BME, but to ensure that everyone has an equal shot at applying and being considered for roles.”

This point was echoed by Dr Dulini Fernando, associate professor of organisation and HRM at Warwick Business School, who said: “When quotas are imposed, you always get a backlash and face unintended consequences.” Most people, he added, were “in denial about gender and ethnicity-based disadvantage in the workplace.

"In particular, in organisations that have sophisticated HR functions, a number of people believe that the disadvantages encountered by minorities are a thing of the past.

"In my view, line managers and colleagues acknowledging the distinct challenges encountered by minority groups and responding to them at an individual and group level is a first step towards building a more equitable workplace."   

But Dr Omar Khan Director of the Runnymede Trust, who described the report as the latest in 50 years of evidence around racial inequality in the labour market, cited a previous study by BITC that showed one in three people from ethnic minorities were a victim of racially motivated bullying and harassment at work.

Responding to figures in the McGregor-Smith review that revealed just 6 per cent of BME individuals reach senior management positions, Khan said the glass ceiling was showing “no sign of cracking” and called on all employers to link pay and progress to how well they progress and line-manage ethnic minority staff.

He said: “There is much evidence on the barriers faced by ethnic minorities in employment. What we need now is a serious commitment from the government and a greater monitoring of recruitment, retention and promotion by ethnicity. Ethnic minorities need and deserve fair outcomes in employment, and this requires further government action now.”

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