Originally posted on the Financial Times
Lloyds Banking Group recently became the first major UK bank to reveal its Black pay gap.
Black staff at Lloyds are paid nearly 20% less than their colleagues, and Britain’s biggest high street lender said it was because of a lack of Black staff in senior positions that come with larger salaries and bigger bonuses.
Black employees make up 1.5% of Lloyds staff, but only 0.6% hold the top jobs. The bank has already been addressing this and pledged in July this year to increase the number of black staff in senior roles to 3% by 2024 – bringing it in line with the black population in England and Wales.
It’s progress and in recent years across all sectors of business, politics and society more diverse ethnic talent, as well as female talent, has been promoted, but obviously there’s still some way to go.
Fortunately, it’s a widely recognised issue and moving ever closer to the top of the agenda. However, the government’s Parker Review report published in 2020 showed that still 37% of the FTSE 100 have no board members from ethnic minority backgrounds and 69% of the FTSE 250.
The initial report in 2017 recommended that all FTSE 100 boards should have at least one director from an ethnic minority background by 2021 - which it will now be almost impossible to achieve - and every FTSE 250 board to have at least one ethnic minority director by 2024.
In October this year the CBI launched its Change the Race Ratio campaign with four commitments for businesses: to meet the recommendations of the Parker Review; to set and publish targets for minority representation at senior level; to be transparent about plans and targets, particularly around the ethnicity pay gap; and to create an inclusive workplace culture.
Embedded in this campaign is the belief that diversity unlocks growth, both in business and society. It’s always been desired, but now it’s needed. Really needed. Not only is diversity the key to unlocking the skills gap conundrum, especially in the tech industry, it is how the world will recover after the worst of the coronavirus pandemic abates and how, here in the UK, we will rise to the challenge of Brexit.
Chief Information Officers and Chief Technology Officers are playing an ever more prominent role in business, with technology increasingly vital to business success. Internet networking company, Cisco recently published the results of its CIO Impact and CIO Perspectives reports, concluding that the roles of CIOs and CTOs will need to have a greater impact in their organisations and across industries if digital transformation is to be properly effective.
With coronavirus-impacted budgets, that means more investment in tech talent which can help create a positive culture shift.
As we know that shift must happen at both the top of business and at the bottom. Board rooms and senior leadership teams need to be more representative right now to help inspire future generations of talent. To ensure they remain so they need immediately to be building in diversity from the ground up.
There are a number of different strategies employers can put in place to ensure they are offering equal opportunities for exciting young talent, regardless of who they are or where they have come from.
This can include sourcing talent from diverse educational institutions, rethinking essential requirements in job descriptions to avoid deterring applicants, and working with recruiters or talent sourcing companies that share their values when it comes to diversity.
Only by actively working to build a diverse junior tech talent pipeline will businesses naturally have diverse representation at board and senior level in years to come.
The business case for diversity is compelling. As McKinsey’s 2018 study Delivering Through Diversity showed, companies in the top-quartile for gender diversity on their executive teams were 21% more likely to have above-average profitability than companies in the fourth quartile. For ethnic and cultural diversity, top-quartile companies were 33% more likely to outperform on profitability.
This confirms that diversity is correlated to financial performance.
With it shown that companies with robust diversity and inclusion policies not only outperform their competitors financially, but also win the war for talent and enjoy a better image, there is really no reason for businesses not to embrace such practices at all levels.