Adopting diversity policies offers clear benefits for companies and the workforce, such as resolving labour shortages, greater product innovation, enhanced marketing opportunities and a better corporate image. The findings of a recent study by the European Commission reveal additional positive business outcomes, such as improved communication processes and managerial styles, as well as reduced staff turnover and absenteeism.
Within the framework of the Community action programme to combat discrimination (2001-2006), the European Commission’s Directorate General for Employment, Social Affairs and Equal Opportunities commissioned a research project entitled ‘The business case for diversity - Good practices in the workplace’. The project aims to identify and analyse a selection of successful and innovative examples of good practice implemented by companies across Europe.
The work was carried out in the context of the racial equality directive (2000/43/EC) and the employment framework directive (2000/78/EC), which set out the principles of diversity and non-discrimination regarding ethnic and racial origin, disability, religion or belief, age and sexual orientation.
In October 2005, the European Commission published the final report on The business case for diversity (1.6Mb PDF), which examines the implementation and impact of good practices in workplaces across Europe (see press release).
Methodology
The data in the report originate from two surveys that were conducted in 2005 among companies in the 25 Member States of the EU:
- The first survey used questionnaires and in-depth interviews to identify, codify and analyse examples of good practice in diversity management. Case studies were selected based on criteria such as context, implementation, impact and focus in relation to discrimination. Policies focusing solely on gender issues were not considered for this study.
- The complementary European Business Test Panel (EBTP) survey consisted of an online questionnaire circulated to about 3,000 companies to investigate awareness and practices of companies; the survey covered companies with and without diversity policies and had a response rate of 26.6%, corresponding to 798 companies.
The business case for diversity project builds on a 2003 study on methods and indicators to measure the cost-effectiveness of diversity policies in enterprises (420Kb PDF).
Drivers of diversity policies
Motives for adopting diversity policies involve a combination of ethical, regulatory or economic reasons, with the primary driver being the ethical factor. Many companies make strong links between diversity and inclusion strategies, and are aware of the growing expectations that employees have regarding the need for ethical behaviour at the workplace.
Regulatory reasons range from legal compliance with EU directives and national legislation to the influence of industry standards and awards. The majority of companies emphasise that legal compliance is not a driver for implementation but rather the outcome of such policies.
The business case for diversity reflects the economic interests of companies that seek to attract new recruits in the context of shortages of skilled labour. Companies also aim to enhance their competitive position in the marketplace by offering appropriate services to customers from diverse backgrounds.
Implementation of diversity policies
The successful implementation of diversity policies and practices depends on a number of key organisational factors. The good practice companies approach diversity as a cultural change process and define diversity as a business-wide concern.
Implementation strategies build on experience of change processes and the lessons learnt about managing change to ensure success. This provides companies with an insight on how to: define a clear case for action; build active senior leadership commitment; engage managers at all levels; establish infrastructure to support implementation; and communicate diversity and inclusion principles to staff, customers and other stakeholders.
In all, three main types of policy and strategy focus can be distinguished:
• comprehensive diversity policies and initiatives;
• single initiatives concerning specific diversity strands;
• existing policies - such as gender policies - expanded to cover a broader range of diversity areas.
It is crucial to involve workers’ representatives in policy planning, implementation and monitoring. Companies also implement strategies aimed at raising awareness and understanding about diversity issues, including: anti-bullying policies; flexible working and home working policies; grievance, complaints and safety at work policies and procedures; recording and management information systems to measure progress against equality goals.
Measuring and monitoring the impact
The majority of companies with diversity policies do not have systematic measurement or review mechanisms in place. However, many companies set up a range of monitoring and feedback processes. Common performance indicators are, for example, the increased representation of women, disabled people and ethnic minorities, especially at senior level.
Benefits of diversity policies
The EBTP survey revealed that the vast majority (82%) of the 495 companies that had diversity policies are convinced of the business benefits. The case study companies were similarly confident about the positive business outcomes of their diversity policies and thus confirmed the EBTP survey assessment.
Companies cited the following aspects as representing the most important business benefits:
- access to a new labour pool and the likelihood of attracting and retaining high quality personnel from diverse backgrounds;
- resolving labour shortages;
- enhanced corporate image, reputation and standing in the local community;
- external recognition and validation by achieving awards;
- greater innovation and creativity leading to new products and services, and the opening up of potential new markets;
- enhanced marketing opportunities by accommodating more easily the demands of their diverse customer base, as well as improving customer services.
Further positive outcomes of diversity policies and practices at company level are:
• improved communication and information-sharing channels across companies;
• better managerial styles, skills and performance in areas such as communication, people management, goal setting and planning;
• reduced staff turnover and absenteeism due to the creation of working environments that promote respect and inclusiveness.
Key challenges
Some 17% of the companies covered by the EBTP emphasise discriminatory attitudes and behaviours as their biggest challenge in promoting diversity. A lack of awareness of diversity issues and practices - followed by a lack of understanding - represents a major obstacle in the way of implementing adequate diversity and equality policies at the workplace.
Employer organisations are the main source of information for almost 50% of the good practice companies; networks also play an important role in providing information on this topic.
The European year of equal opportunities for all in 2007 ( EU0606049I ) is seen as a good opportunity to raise awareness about promoting the adoption of diversity policies.
Anni Weiler, AWWW GmbH ArbeitsWelt - Working World