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Has Britain's diversity drive backfired?

Sandy Jayaraj

03 Apr 2024

We have recently seen 'DEI' come under fire, particularly in North America, but also in Europe. "Britain's diversity drive has backfired?" was the headline of a recent Telegraph article that caught our eye via a LinkedIn post from Paul Sesay.

On 20 March 2024, an independent report on the Inclusion at Work Panel’s recommendations for improving diversity and inclusion (D&I) practice in the workplace was published. Commissioned by the Minister for Women and Equalities and Secretary of State for Business and Trade Kemi Badenoch, the report had three aims:

identify the interventions that increase fairness, inclusion, and diversity, explaining what works, why, and how; and develop and disseminating resources to promote this
make the most compelling arguments in favour of good practice, and against bad, with the best evidence and data available
develop a new Inclusion Confident Scheme, complementing other such kitemarks, embedded first in the Civil Service and public sector

In writing the report, the panel spoke with over 100 people representing 55 organisations, which themselves represent many thousands of people in the public, private and charity sectors. In addition they worked with, and studied the work of, "some leading academics in the fields of behavioural and occupational psychology, neuroscience, and employment law."

Interestingly Kemi Badenoch chose to publicise the report via an article in The Telegraph and her conclusion was that "the majority of spending on equality, diversity and inclusion (EDI) was a waste of money" and had "little or no tangible impact".

There were two things that we thought were interesting here. Before we dive into those, a quick reminder of what we mean by DEI:

D = Diversity: the presence of a wide range of people with differences, including gender, gender identity, age, race, nationality, religion, ethnicity, sexual orientation, socioeconomic status, physical ability, or even political perspective.
E = Equity: whilst diversity highlights how people differ, equity is about understanding that different groups of people face different challenges. Note that this differs from equality, which makes no assumptions about people's starting points. Equity is more focused on outcomes than inputs.
I = Inclusion: creating the right culture and environment so that everyone, regardless of their differences feels that they belong and are valued. They are not prevented from striving to reach their potential. There is also a strong social case for fostering an inclusive work environment. Providing jobs, particularly in leadership positions, to underrepresented people can create a virtuous circle where role models are created and the workforce becomes more diverse over time.

Firstly, the headline article was far more negative on DEI initiatives than the underlying report was. Of course there should be 'value for money' from such initiatives - which can be social and monetary. But there was clearly a spin put on it. There is also something in the language of the article that gives an underlying tone that 'DEI' itself is not a good thing, rather than some implementations of DEI - which in itself obscures what we are really talking about which is corporate culture. A case of throwing the baby out with the bathwater. Which leads me on to the second point.

We can see two key reasons why some DEI / EDI initiatives underdeliver.

Firstly a focus on basic definitions of demographic diversity only. One of the findings of the report was inconsistency in definition of what 'diversity' means.

Secondly, the order of the letters in the acronym. The emphasis is typically on the ‘D’ but the ‘I’ should really come first. Interestingly the panel assembled to produce the report is called the ‘Inclusion at work panel’.

You can create as much diversity as you want but without an inclusive culture where everyone’s contributions are valued you won’t get the desired benefits. There are also problems with target setting - focussing on a symptom of an inclusive culture as if it were the aim. Goodhart's Law: When a measure becomes a target, it ceases to be a good measure.

Equally even in a seemingly undiverse culture, a lack of inclusivity can still mean that you aren’t getting the best out of your people. That pervades through to the recruitment process too.

Badenoch adds: “No group should ever be worse off because of companies’ diversity policies – whether that be black women, or white men … Performative gestures such as compulsory pronouns and rainbow lanyards are often a sign that organisations are struggling to demonstrate how they are being inclusive.”

Whilst I disagree with Badenoch's overall tone, the last part of the above quote does resonate. Creating an inclusive culture is difficult and does take time. The best demonstration of it in my view is feedback from employees.

Edmans, Flammer and Glossner have written some insightful research on this. Here are our thoughts on that here 👉🏾 https://www.thesustainableinvestor.org.uk/diversity-target-setting-solution-or-distraction/

And of course it is well worth reading the full report from the panel.

This article featured in What Caught Our Eye, a weekly email featuring stories we found particularly interesting during the week and why. We also give our lateral thought on each one. What Caught our Eye is available to read in full by members.

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