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The Business Impact
of Equality and Diversity
The International Evidence
Professor Kathy Monks
LInK – Learning, Innovation and Knowledge Centre
Dublin City University Business School, Dublin 9
First published July 2007 by
The Equality Authority
2 Clonmel Street
National Centre for
Partnership & Performance
16 Parnell Square
© 2007 Equality Authority and
National Centre for Partnership & Performance
The views expressed in this report are those of the authors and do not necessarily represent those of the Equality Authority or the National Disability Authority.
Executive Summary 6
Equality and Diversity:
Towards the Inclusive Workplace 10
Equality and Diversity in Context 15
Equality, Diversity and
Organisational Performance 24
Managing Equality and Diversity for
Organisational Performance 43
Appendix 1 – Measures of diversity
programme implementation, outcomes and
business benefits (CSES, 2005) 60
Appendix 2 – The Equity Continuum 68
The Business Impact of Equality and Diversity:
The International Evidence provides a valuable and accessible review of the research evidence on the relationship between workplace initiatives on equality and diversity and organisational performance. It builds a compelling business case for investment in workplace equality and diversity.
The National Centre for Partnership and Performance (NCPP) published Working to our Advantage: A National Workplace Strategy in 2005. This report emerged from a broad ranging consultative exercise through the Forum on the Workplace of the Future. The report establishes a vision for the workplace of the future and identifies a range of priority areas for action to achieve this vision.
The NCPP report identifies that this workplace of the future will be proactively diverse where equality and diversity are linked to both the quality of the employee’s working life and
organisational performance. Access to opportunities in the workplace is identified in the report as a priority area for action. The report highlights the need to develop policies and structures at national and organisational level to support the achievement of inclusive workplaces and a proactive approach to dealing with equality, diversity and flexibility as mainstream business issues.
The Equality Authority participated in the Forum on the Workplace of the Future and published its submission to the Forum under the title Building an Inclusive Workplace. This submission established three key characteristics for an inclusive workplace as being free from discrimination, valuing diversity and proactive in pursuit of equality. It identified workforce diversity as one key driver for change in the Irish workplace and set out the need for businesses to invest in equality.
The National Centre for Partnership and Performance and the Equality Authority share a perspective on equality and diversity as being central to building the workplace of the future. Both organisations also share a concern to further develop the business case for workplace equality and diversity. A well developed business case for action on equality and diversity will stimulate and secure the emergence of the workplace of the future.
The Business Impact of Equality and Diversity: The International Evidence is the first product from a programme of joint work being developed by the National Centre for Partnership and Performance and the Equality Authority to explore this business case for equality and diversity. Professor Kathy Monks, the author of this review, has served us well in this regard. She presents a thorough and accessible review of key research on this business case. She provides a thoughtful and insightful analysis of this research and presents an Equality-Diversity Value Chain that will serve as a framework for future work on this issue. It is clear from her work that business success requires equality and diversity to be mainstream business issues.
We would like to thank all of the people involved with this report. In particular Laurence Bond and Dr Larry O’Connell who managed the project throughout as well as Valerie Whelan and Julia Kelly for their work during the latter stages.
National Centre for Partnership and Performance
Chief Executive Officer
This review emerges from the work of
the Forum on the Workplace of the Future (2003) that was set up by the National Centre for Partnership and Performance (NCPP) at the request of Government. The NCPP’s final report, Working to our Advantage: A National Workplace Strategy (2005), sets out a vision of the workplace of the future. In order to accomplish this vision, strategic priorities were established in five critical areas.
This report arises from the need to develop further the business case in two of these areas: improving access to opportunities and enhancing quality of working life. It also reflects the strong commitment in the new social partnership agreement, Towards 2016, to equality of opportunity and diversity within the workplace and to developing practical supports for workplaces.
In line with this strategic focus, this report reviews the research evidence on equality
and diversity and considers its relationship to organisational performance. The review indicates that investment by organisations in initiatives that promote workplace equality and foster diversity has substantial benefits for both employees and employers. However, if equality and diversity initiatives are to be successful, they cannot be introduced as stand-alone policies and practices that are left to either a human resource department or line managers to implement. Their success depends on their integration into both the organisation’s strategy and its culture so that they shape the way in which business
is undertaken and the ways in which individuals work.
Equality and diversity in context
Ireland’s stated position as a player in the knowledge economy presents challenges in its need for a highly educated and skilled workforce to take on the types of roles that are required in such economies. This workforce is one that is becoming increasingly diverse with demographic changes that include: increased female labour market participation, a larger number of single parent households, a steadily rising older population, and increased immigration. In addition, diversity is exemplified in engagement with those with disabilities, those from diverse religious backgrounds
and sexual orientation as well as those
from different cultures, including the Traveller community.
Equality, diversity and
The notion of an Equality-Diversity Value Chain is utilised in the report to map the linkages between investment in equality and diversity initiatives and outcomes for both employees and employers.
The relationships between the various elements in the value chain can be summarised as follows:
At a strategic level, policies in relation to positive action and equality appear to enhance organisational performance. In addition, there is a relationship between diversity in top team membership and organisational performance.
There is a positive relationship between the adoption by organisations of equality policies and employee outcomes including commitment, job satisfaction, life satisfaction, work-life balance and reduced stress.
There are positive employee performance outcomes with reductions in absenteeism, labour turnover, improved employee relations and innovation and creativity arising from the introduction of equality and diversity initiatives. Yet, there appears to be an uneasy relationship between the investment by employers in initiatives such as flexible working arrangements and their take-up by employees, despite the evidence that there are benefits for both employers and employees in such arrangements. In many organisations the prevailing culture of presenteeism means that their take-up is limited by fears from employees that these will result in reduced career opportunities.
Line managers find themselves increasingly called upon to deliver equality and diversity strategies but there is little evidence that they are receiving the support or training needed to undertake these tasks. In such cases they are likely to view equality and diversity as marginal activities and to take a reactive stance, concentrating solely on minimal compliance rather than the positive outcomes that could accrue from a proactive approach.
There is evidence that diverse work groups can be a source of creativity and innovation within organisations. However, they require active management if they are to work successfully. In this regard,
the role played by line managers is once again crucial.
There is limited research evidence on the role that the trade unions might play in equality and diversity initiatives at an organisational level. Trade union reaction to diversity initiatives may depend on their previous experience of working with equal opportunities policies and the way in which these were managed within organisations.
The evidence regarding the relationship between equality and diversity initiatives and organisational performance suggests that organisations perceive performance outcomes from investment in such initiatives in four inter-related areas:
Human capital benefits such as the ability to resolve labour shortages and recruit and retain high calibre staff
Increased market opportunities with access to more diverse markets
Enhancement of organisational reputation to suppliers, customers and prospective and existing employees
Changes to organisational culture such as improved working relations and reductions in litigation.
Managing equality and diversity for organisational performance
There is a wide choice of tools that organisations might utilise in order to evaluate the impact of diversity initiatives on business performance. The evidence from studies of companies that are engaging in equality and diversity initiatives identifies the following factors as critical to their success:
Top management support and committed high profile leaders who will demonstrate the importance of equality and diversity
The incorporation of equality and diversity into an organisation’s vision and values and ensuring that it becomes a core activity
The integration of equality and diversity into business objectives through inclusion in objective setting, reward and recognition
The assessment of the specific needs of the organisation and the tailoring of the management of diversity to those needs
Ownership for equality and diversity is spread throughout the organisation rather than added to the portfolio of the human resource department. A separate equality and diversity function has been identified as a powerful element in some organisations, while others have found structures such as Equality / Diversity Councils valuable in spreading ownership. Those involved in the implementation of
equality and diversity must have the power and authority to initiate and influence organisational change.
Training is required:
To raise awareness and to develop
competence and skills in relation to equality and diversity
To gain staff understanding and support
for such initiatives
To support diverse teams
For line managers engaged in the delivery of equality and diversity initiatives.
The involvement of employees in the design and implementation of equality
and diversity policies and practices.
The use of hard measures that will
indicate the impact of equality and diversity with appropriate systems to collect and assess data.
Ensuring that equality and diversity is integrated with and complementary to
HR policies and practices.
The embedding of equality and diversity initiatives into organisational change programmes.
Research on the ways in which equality and diversity initiatives might be leveraged for organisational performance indicates that they need to be integrated into the culture and fabric of the organisation. This integration is likely to ensure that the potential benefits to be gained by investment in such initiatives are achieved and that possible problems are avoided.
& Diversity Strategy
& Diversity Policies & Practices
Access to new labour pools
of high calibre applicants
Enhanced corporate reputation.
Reductions in absenteeism & labour turnover;
Innovation & creativity.
The Equality-Diversity Value Chain
the business impact
of equality and diversity
Equality and Diversity:
Towards the Inclusive Workplace
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