C2E: Speech by Janet Lakhani 09 May 2007
 

C2E Fair Employment Conference 9 May 2007
Janet Lakhani, C2E Chief Executive

Good Morning

I am going to talk to you about the scale of the equality challenge in the UK and how I believe it can be addressed. I have been working with businesses of all sizes and in all sectors over the last three years, with varying degrees of success, and learnt a huge amount about business attitude towards equality. What the drivers are that make a business want to “do” diversity, and what makes others sit on the fence, and there are a lot of fence sitters!

So let’s examine the scale of the challenge to get employers to employ fairly, and let’s start with the employment gaps.

The reason employment GAPS exist are varied – there’s tradition, there’s culture, lifestyle choices, and level of skill. However, the most significant factor is, employers failing to recruit, to select and to employ fairly.

I have recently seen estimates that suggest that between 1/3 to 1/2 of the current employment GAP is caused by employer practices, which either directly or indirectly discriminate against the individual. The challenge we face is getting employers to recognise the benefits of adopting good equality policy as a core function of their business, implementing good working practice and employing fairly.

Today you will see examples of how employing fairly leads to a reduction in the employment gaps, and see evidence of why employing fairly makes great business sense.

Lets look at the current gaps

Employment is at 74.5%

The Ethnic Employment Gap is 15%
The Disabled Employment Gap is 26%
And the Lone Parent Gap is 21%

The labour pool of those wanting to work is over 3.75 million people - that’s more than the combined population of Birmingham, Glasgow, Liverpool, Leeds, Sheffield and Manchester. – Just think about that figure – and these numbers have grown by 14%, since 2002, so that’s an additional 450,000 people in the last five years who would like to get a job. Each of these 3.75 million want to work - so why are the gaps static?

Let’s take a look at employers

The DTI/SBS found that large UK companies declare that they have robust equality policies; in fact 77% of them have little or no equality practice. Hiding behind a policy is just not good enough; they really do need to be able to demonstrate fair employment practice.

In fact 70% of employers have not asked for advice - either they think they are doing it right or they don’t see equality and diversity as a priority.

Where have I heard that before! 90% of employers actually think that they will “get away” with doing nothing. So there’s the scale of the challenge.

Last year 41,000 discrimination claims were filed with Employment Tribunals that was an increase of 41% in just one year. Over 250,000 discrimination claims have been raised over the last 8 years and there is evidence that a significant number of employers are discriminating over and over again – these employers are serial offenders, and they really do need more than a fine and a slap on the wrist! Even more outrageous than their behaviour is the fact that their fines are tax deductible”! What sort of a message does that give? I leave you to draw your own conclusions.

Discrimination cost business £320 Million in 2006, and an average claim is over £10,000. That’s - £200,000 wasted every working hour.

Tailored equality policy embedding good working practice is the key to helping employers operate within the law and avoid employment tribunal claims.

It becomes evident that the employment challenges which will lead to improved working practices in business are threefold:

• Attracting the best candidates available
• Selecting fairly
• Employing fairly

It’s a no-brainer that employers should employ the best available talent for the job.

Let me tell you a bit about my work and how Diversity Assured meets the challenges.

As an employer in Kingston upon Thames ten years ago, in a market of full employment I had no option but to employ people from a variety of backgrounds persuasions and religions to fill vacancies. In the space of just one year, I moved from what I can only describe as borderline prejudice and scepticism to total support for and commitment to the mixed and varied staff I employed. My personal experience of employing a diverse workforce, - made up of disabled people, ex-offenders, people from the Indian and African sub-continents, European nationals both male and female and of all age groups provided me with a willing loyal productive workforce who helped me to grow my business and make it a success far beyond my original expectations.

Consequently as a member of the ippr Race Task Force and a passionate advocate of developing a diverse workforce I resolved to help business embrace equality and diversity and to enlist the support of government. I started to develop c2e as a not for profit organisation three years ago and we are now for the first time able to measure the results of the Diversity Assured Accreditation and I can modestly say that these results are remarkable: for employers, for employees, and for job seeking individuals.

Don’t let anyone tell you that embedding equality and diversity into organisations is complicated because it isn’t; the key is to tailor policy and good working practice and to monitor up-take and progress.

As you would expect, Diversity Assured covers all strands of equality: age, disability, gender, religion, race and ethnic origin and sexual orientation, providing support in policy, planning, employment, recruitment, retention, promotion, with customers, with suppliers and with the community. And where appropriate with additional Sector Specific criteria.

Diversity Assured is used in organisations of every size and sector from Business Link to Bovis International.

Organisations’ needs are assessed on registration and through discussion with the c2e advisors taking into consideration the company’s resources, availability of HR professionals, size, complexity and number of employees. We find that each organisation is at a different stage of equality development, and so implementation of the c2e Diversity Assured programme reflects that status. It takes on average 3 hours a week of employer time over a six week period.

Then we signpost organisations for more in-depth training whether it be on diversity or other business needs, working through Businesslink, Acas and partners IODA and Birmingham Professional Divercity.

As I said before - the results achieved by Diversity Assured organisations are remarkable.

Our first one year on monitoring sample shows more recruits from ethnic minorities - up from 4% to 12%, more women recruited, an increase in the average age employed of 8%, but one disappointment was that we saw no reported impact on disabled recruitment in this particular sample. The Diversity Assured programme outputs include the ability to measure and to identify and report trends and improvements by location, organisation, size and sector

Every year there are over 3.5 million vacancies filled and there are currently 29 million people in work, which is an increase of 2.5 million jobs in the last 10 years. As we know the profile of the workforce is changing now, it is getting older, there are fewer traditional males, and there are more women in work. Entrants to the labour market have a more diverse background.

But still the employment gaps are static that tells us that poor practice persists.

Employers who don’t react to these labour market changes will be “labour poor” and less profitable. Forward thinking businesses recognise that equality and diversity are business imperatives. Diversity Assured helps employers to step out of their comfort zone and to consider the best-qualified people for the job.

In addition to CSR, protecting the business from ET claims and demographic imperatives, we talk confidently to organisations about the diversity payback and business benefits.

On average we calculate the gain in profit (after costs) is worth between £600 -£700 per annum per employee to organisations that employ diversely. These gains come from sales; lower employment/recruitment costs and improved operating benefits.

From my own same experience and the experience of businesses we work with, an increased labour pool leads to a reduced labour turnover. The UK average labour turnover is 13% per annum but for some businesses it is as high as 100% pa – by employing diversely and reducing the labour turnover rate a business saves £3,000 on average for every employee it retains. (That’s £3000 from retention alone).

A business earns on average £4,000 profit per employee per year – 10 X more if you are a bank (RBS £39,000) (TESCO make £5,000, even though many employees are part time) (Cadbury Schweppes £13,500) (Severn Trent £8,500). The point is, to sustain profitability business must recruit, employ and retain the best people available, and demographics are rapidly changing.

We are able to demonstrate that C2e Diversity Assured businesses profit from better business processes and productivity.

They profit from Lower risk of Bad Practice costs for discrimination.

They experience reduced compliance and paper work if they are organisations tendering with public authorities.

And they profit from better relations in the workplace.

They enjoy higher profits and increased business worth from employing fairly.

And let’s not forget higher profits increase the market value of a business.

And show me a business owner who doesn’t want at some point to sell his business profitably and retire to the sun, or play golf….!

Doug Freeman has been calculating the bottom line benefits of diversity in the USA and he will share his experiences with us in a few moments.

Diversity Assured confirms that the business case is strong and well and that: Prosperity and Equality go hand in hand.

Interestingly enough, the private sector is not fazed by the equality and diversity agenda, indeed in the private sector there is a growing consensus that suppliers should be able to demonstrate that they recruit, select and employ fairly, as we have seen from KPMG’s example.

This consensus is reflected by local authorities who recognise the influence they have as purchasers. Some of them make equality and diversity a condition of contract. However, from our survey of local authorities which we carried out last year, it is evident that they are resource poor and do not have the means to monitor their suppliers are confirm that they actually are employing fairly.

Central Government already expect it’s suppliers to meet their legal obligations and employ fairly and is currently considering procurement as a lever to move the agenda forward, but the jury is out on that at the moment.

Let’s be clear about this, businesses do not object to government requiring them, if they are suppliers, to confirm that they promote equality in the workplace. What they do have concerns about is if every public body or local authority manages their requirements in a different way, making it confusing for suppliers and generating unnecessary extra paperwork.

Diversity Assured Accreditation solves the problem - it provides a national common standard enabling businesses to demonstrate a commitment to diversity, confirms that their practices have been appraised, and shows that they are employing fairly.

So who is getting it right?

The Recruitment and Employment Confederation is addressing the challenge and recognises the opportunity it presents.

REC member organisations, of which there are 8,000 representing about 80% of all employment agencies in the UK are required to meet the REC Diversity Assured standard.

For the first time, employment agencies can now demonstrate that they have good equality practice and of equal significance, they are supporting their clients to recruit fairly.

This is the most significant employer initiative in equality and diversity this decade - employing fairly starts with recruiting fairly. Organisations that use accredited REC member employment agencies can rely on being presented with the very best qualified candidates available.

The professional sector in the UK accounts for 23% of GDP, it’s the most profitable, is the fastest growing, and has the youngest age profile and the highest qualification profile of all of the sectors. The competition for the best-qualified candidates available is already being felt in this sector. The best candidates expect more from employers.

And so the professional sector has most to gain and most to lose – it is in their interest to be employers of choice and its commitment is an example to other employers of how to get it right.

The challenges are tough but not insurmountable, Diversity Assured has a great track record in helping businesses to employ fairly, and my aim is to Diversity Assure 60,000 business across the UK over the coming three years. Influence at this level will lead to the step change in equality attitudes and practice that we all want and I look to you here today to support c2e to achieve this.

Thank you