Why should organisations collect diversity data?

Section 1

Why should organisations collect diversity data?

The Importance of Collecting Diversity Data

Pauline Hawkes-Bunyan, Director, Business: Risk, Culture & Resilience, The Investment Association

The Black Lives Matter movement and the coronavirus ('COVID-19') pandemic have increased societal focus on equality and fairness generally and race and ethnicity specifically. At the same time, companies that fully embrace diversity will be better equipped to foresee and act on risks and opportunities, make better long-term decisions, nurture talent and command the trust of the consumers they serve.

Accordingly, key stakeholders including regulators and clients are expecting more transparency and greater commitments from organisations in respect of diversity. Building a diverse and inclusive workplace is therefore more of a business imperative than ever before and the first step to achieving meaningful change in this space is by collecting data.

Key business drivers for collecting diversity data

Regulators - Governments and regulators have been increasingly focused on diversity in the workplace, for example there has been an ongoing discussion around introducing mandatory ethnicity pay gap reporting in the UK. Within financial services, the Financial Conduct Authority (‘FCA’) include in their supervisory principles a focus on culture, and have explicitly called out diversity as a topic they will review in order to hold organisations to account.

Employees - Your approach to D&I can have a significant impact on both current employee engagement and the attraction of new and future talent. Prospective employees, particularly those at the beginning of their professional career, are actively seeking employment from organisations whose purpose align with their personal values. Furthermore, seeing diversity in senior leadership can also motivate and retain emerging talent throughout your organisation.

Investors - Some organisations are facing increasing pressure from investors on their D&I policies and practices. This year, the IA's

Institutional Voting Information Service (IVIS) is highlighting companies that do not meet certain gender and ethnicity criteria as having a significant issue to shareholders ahead of voting at the company's AGM.

Other stakeholders - Increasing numbers of customers, suppliers and clients are making business decisions based on performance against D&I metrics e.g. by introducing diversity clauses in contracts and request for proposal documentation.

ESG agenda - An organisation’s approach to Environmental, Social, and Corporate Governance (ESG) issues is increasingly understood as contributing to both its economic wellbeing and its purpose. Many organisations are now focusing and reporting on non-financial metrics covering D&I alongside other areas such as emissions, health and safety.

Transparency & accountability - Being transparent about the diversity of your workforce is an important step towards making meaningful change. Transparency not only demonstrates a strong commitment to diversity,

but it also strengthens accountability for addressing the causes of inequality.

Better understand your workforce - Collecting data on the diversity of your workforce will enable you to understand your people, your workforce composition and the lived experiences of individuals. Collecting diversity data can help you identify the issues, gaps and biases that may be present and help you work towards rectifying them.

Identifying actions that will drive change and embed fairness - By completing further analysis on diversity data, you can also help to ensure fairness is embedded across decisions such as those related to pay and progression, identifying the D&I focus areas and determining positive actions that would have the biggest impact. It is important to scrutinise the entire employee lifecycle with a diversity lens to ensure fairness and inclusivity in all areas such as recruitment, retention, progression, performance ratings and pay.

Legal & General Investment Management (LGIM)

Michelle Scrimgeour, CEO

We at LGIM have consistently been a champion of D&I and take the issue of gender equality very seriously, both in our own organisation and in the companies in which we invest. The social inequalities that lead to the pay gap have once again been laid bare by the COVID-19 crisis and its economic impact to which we have responded with a range of financial and non-financial support for our employees.

We are expanding our family-friendly, agile working practices, our apprenticeship programmes and investment in training for line managers and leaders. Since 2019, we’ve been taking a more data-driven approach to understanding our people and tackling the underlying drivers of imbalance in our business. We have actively and deliberately targeted how we reward our people, particularly those who may be in lower-grade roles, which we know are more female-dominated. This is just one step in our commitment to create a more inclusive workplace for everyone.

I have long spoken of the importance of being a leader of a firm that seeks equality; that is one of the reasons why I am so proud to work with a leadership team at LGIM which is strongly gender balanced. However, as in most investment management firms, we have more to do and that’s why we will continue to focus on actions with long term impact, centred around our ambition to create a diverse workforce and an inclusive workplace for everyone.