Inclusive Workplaces: The engine of growth

We are currently witnessing a backlash against equality, diversity and inclusion (EDI) in sections of the media and political discourse. This backlash, alongside increasing financial pressures on businesses, is making some employers reluctant to prioritise EDI, seeing this as unimportant or even in conflict with their commercial success.

Yet attracting and retaining diverse talent is more important than ever if businesses are to thrive and futureproof their workforces. Employers continue to face persistent skills shortages, while workforce demographics are shifting in ways that present both challenges and opportunities.

Alongside these demographic shifts, major legislative changes will place new requirements on businesses, including the Employment Rights Bill and the introduction of mandatory ethnicity and disability pay gap reporting for large employers through the Equality Bill. These developments present a moment of opportunity to demonstrate value for those employers that view EDI as business critical. They know that fostering inclusive and diverse workplaces, led by well-trained and supportive managers and leaders, amounts to smart business strategy. This article explores and offers practical insights on how employers can foster and strengthen diversity and inclusion across their organisations, and why it’s worth their while.

Inclusive workplaces = good for business

Few questions have more impact for employers than how to get the most out of employees’ hard work and talents. What an organisation does to recognise and empower the diverse perspectives and skills within their workforce is crucial for success in a competitive economy.

HR leaders surveyed by the Chartered Management Institute (CMI) reported that when their workplaces view EDI as business critical, they:

• Meet most or all of their overall objectives (75% vs 47% of organisations who do not share this ‘business-critical’ view).
• Show better success rates in attracting talent (80% vs 52%).
• Show better retention of existing employees (76% vs 57%).
• Experience higher job satisfaction rates in workplaces (79% vs 52%).

A recent Rapid Evidence Assessment commissioned by Youth Futures Foundation and conducted by the Institute for Employment Studies (IES) also points to improved staff recruitment, retention, employee attitudes, and business performance when diversity and inclusion are meaningfully integrated into business practices. Diverse teams bring unique perspectives and foster creativity and innovation – all of which are needed for commercial success.

Conversely, allowing discriminatory and exclusionary behaviour to go unchecked has clear consequences for employers as well as employees. A survey of young people from ethnically diverse backgrounds published by Youth Futures found that nearly three-quarters of young people (73%) who had experienced discrimination were motivated to look for opportunities elsewhere.

Employers that fail to nurture diversity and inclusion in their organisations risk falling behind their competitors and losing out on a vast pool of talent, including the young people who will make up the future workforce. This becomes even more important as workforce demographics shift. By 2030, 47% of workers are projected to be over 50 years old, raising concerns about widening skills gaps. At the same time, younger cohorts are becoming more diverse, with almost a quarter of people under 25 in England now coming from ethnically diverse backgrounds.

Building an inclusive workplace culture

Our research points to several key enablers for building an inclusive workplace culture.

1. Leadership and management buy-in is essential… but power must be shared

Inclusive workplace culture starts from the top. Senior leaders, managers and even board members must actively champion inclusion and contribute to strategies and initiatives for these to be effective. This signals that inclusion is a priority and helps to ensure employee buy-in. Leaders and managers also have a clear role to play in challenging discriminatory and exclusionary behaviour. However, evidence points to a ‘say-do gap’ in this regard.

Research by the CMI found that while almost 8 in 10 (78%) HR leaders believe senior management identifies and deals with inappropriate behaviour in a timely manner, fewer than 6 in 10 (57%) employees say the same. Employees are more likely to consider resigning when they perceive their managers to be ineffective.

At the same time, a purely top-down approach to inclusion can reduce buy-in and even foster resentment. Leaders should actively seek and apply feedback on new initiatives to understand diverse perspectives and improve outcomes for under-represented groups. Employee resource groups and participatory decision-making processes can help to facilitate this and build a shared understanding around diversity and inclusion.

2. Managers must be equipped through management training

Efforts to build an inclusive workplace are often hampered by ‘knowledge deficits’, management and leadership gaps, and a failure to understand the strategic importance of diversity and inclusion. These barriers can be addressed through high-quality management training and development.

Diversity and inclusion is not a stand-alone issue, but an essential component of effective management and leadership. CMI’s research identifies having a supportive manager as the most influential factor in employees feeling supported and included at work, with 60% of respondents saying this. The same research identifies formal management training which incorporates EDI as essential to moving the dial on inclusivity. Employees whose managers had received training were significantly more likely to report feeling supported (87% vs 38%), fairly treated (90% vs 47%) and that they can be themselves at work (91% vs 55%). But CMI’s research found that 82% of managers who enter management positions have not had any formal management and leadership training – they are “accidental managers”.

Alongside formal training, research identifies informal peer learning, both within and across organisations, as successful for fostering knowledge of inclusive practices and sharing best practice. This might take the form of working groups or peer-to-peer learning sessions.

3. Effective data capture must be used to drive action

When it comes to building an inclusive workforce, knowledge is power. Yet many organisations do not capture sufficient diversity data, and struggle to know how to analyse this effectively. With new requirements for ethnicity and disability pay gap reporting on the horizon, capturing and actioning this data becomes an imperative. Large employers will soon be expected not to just gather and share this data, but to create targeted action plans to address any gaps.

When developing action plans, it is important to avoid ‘tick-box’ solutions, which can cause more harm than good by reducing employee buy-in and breaking down trust. An example is a stated policy to have balanced candidate lists for roles, or stated policies on inclusive hiring practices – but they do not translate into representation in the final workforce.

Instead, actions must be evidence-based and tailored to the specific problems they are trying to solve. Focusing purely on recruitment while neglecting progression and retention can also have unintended negative consequences, siloing employees from traditionally marginalised groups into lower-paid roles and failing to ensure that they feel valued and included.

CMI recommends collecting and analysing workforce data to identify gaps in metrics such as recruitment, retention, pay, and staff engagement. These insights should then be used to inform targeted and meaningful action plans. Progress against these plans should be assessed at regular intervals, including at board meetings, to track improvements and ensure accountability. Tying inclusion goals to organisational performance metrics is another way to ensure accountability and sustained commitment.

Closing remarks

The evidence we’ve highlighted shows that fostering an inclusive workplace culture isn’t just about meeting legal requirements – it’s a strategic advantage that drives innovation, performance, and overall business success. In order to achieve this, trained managers and leaders must lead from the front to demonstrate that diversity and inclusion are valued, while ensuring that all employees are bought in and share ownership. All of this is underpinned by a strong organisational culture, high quality management training, and effective data collection. Finally, inclusion must be authentic, and we must challenge the say-do gap in workplaces and avoid tick-boxing, which can feed the anti-EDI backlash and undermine trust.

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