Diversity seen as integral to business performance

07 August 2017 Consultancy.uk

Diversity is believed to be important to business performance by a majority of executives, with around 62% of businesses setting objectives to support cultural change in their organisations. Companies that value diversity meanwhile tend to be much more interested in leveraging developments in managing the issue from the wider changes in the best practice, according to a new study.

Over the past decade particularly, diversity has become an increasingly prominent issue in the business community, as the societal advances pushed through by movements for social change increasingly impact on business practice, ethically and economically speaking. Various studies now highlight a business case for improved gender diversity, while for the market as a whole, change in this regard could see $12 trillion added to the global economy. Many businesses and consulting firms have built targets into their corporate plans to boost diversity in their organisations as a result.

A new study from executive search firm Stanton Chase, titled ‘2017 Global Consumer Products and Services Survey’, surveyed 600 participants worldwide , of which 300 were executive or board level, about their current thoughts pertaining to diversity across their businesses.

How important is diversity and diversity objectives

Diversity was found to be important for business success over the coming 12 months, having been revealed by various studies to be ‘best practice’, with 61% of respondents here stating it was important to their plans. 28% were neutral to the proposition, while just 11% said it is not important.

In terms of responsibility for diversity efforts at the businesses, the board was found to most often be seen as the leader of diversity as a business objective. Human resources followed, at 20% of businesses surveyed, while the CEO came in third spot, cited by 11% of respondents as the driver of the business objective. 36%, however, said there was no area in the business responsible for the business objective.

Primary diversity initiatives

Respondents were further asked to identify the major focus of diversity related initiatives at their organisation. The recruitment process was found to be the primary driver at the largest cohort of respondents’ organisations, at 46%. Human resource processes followed, cited by 34% of respondents.

The firm did note some discrepancies however, between companies that placed high value in diversity and those that lacked such value. The difference appears to be that those that value diversity were much more willing to take aboard new and developing practices for cultural change in organisations, compared to those that are playing lip-service to diversity, which tend to utilise methods that have been shown to fail in the past.

Companies that place high value on diversity

The study also identified a correlation between companies that place a high value on diversity and a number of key leadership related outcomes and trends. For instance, for organisation with a high placement of value on diversity, 84% said that they will utilise an executive search within a year, compared to 63% at companies with a low value placed on diversity. In addition, companies that place a high value on diversity were much more satisfied with the innovation displayed by leadership, at 35% of the group vs. 21% companies with a low value placed on diversity.

Pay disparity remains a major hurdle for recruiting more diverse talent however. Female workers for example remain disadvantaged, with wage disparity in the UK standing at £85 billion in lost wages. Individual women are deprived an average of £6,100 per year by gendered salaries.

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Women remain underrepresented in UK's hospitality industry leadership

12 April 2019 Consultancy.uk

Female engagement at the top level of the UK hospitality industry is still lagging, with the vast majority of decision-making roles continue to be held by men. Only 7% of the industry’s FTSE 350 CEOs are women; however, the pay gap in hospitality and leisure is far better than in other industries, at a median of approximately 7%.

The hospitality, travel and leisure (HTL) sector is one of the UK’s largest employers, with 3.2 million people working in its segments. Despite a poor 2018 in terms of tightening consumer spending, the industry is still one of the top sectors in terms of economic activity, hitting £130 billion last year – besting the UK’s automotive, pharmaceutical and aeronautical sectors’ combined activities.

While the industry is one of the country’s largest employers, it still faces considerable issues around diversity at the top. New analysis from PwC has explored the matter, as well what initiatives the industry has engaged to open up its top ranks to a more diverse background.

Female representation at board level for UK companies and HTLs

According to a survey of CEOs, Chairs or HR Directors of over 100 of the most significant leisure businesses across the UK, the hospitality industry has a relatively male-dominated top level. This lags behind the FTSE 100, where companies have female board level representation at 32.2%. Meanwhile, the figure for the combined executive committee and direct reports stands at 28%. This is well above FTSE 250 levels, where female board level representation stands at 22.4% and executive committee & direct reports stand at 27.8%.

For the hospitality industry as a whole, board level representation came in at 23.6%, with FTSE 350 for the industry performing slightly better at 25.1%, while non-listed companies performed considerably worse at 18.2%. The firm notes that the figures hide that while some companies are making strides to improve equality, others are not moving forward – with the positive result reflecting more often the good work of some, while others are not taking the issue seriously in their agenda setting.

Blind spot

The study states, however, that while the overall numbers are relatively strong, the industry has a number of acute weaknesses. These include CEO numbers, with only 7% of HTL FTSE 350 companies helmed by women and 11% of non-listed companies led by female CEOs. Meanwhile, female chairs at FTSE 350 companies for the sector stand at zero. In terms of wider diversity representation, only 1 in 33 leaders at industry companies is from a BAME background.

Pay gap for HTL and hospitality

The report noted discrepancies between FTSE 100 companies and FTSE 250 in terms of improving the number of women at executive level. The majority have met the Hampton-Alexander Review target of 33% women at board level, up from around 25% in 2016. However, the remaining ~40% are not on target, and are unlikely to meet the target by 2020. A similar trend is noted when it comes to executive committee and direct reporting numbers.

Jon Terry, Diversity & Inclusion Consulting Leader at PwC, said, "To make real progress in diversity and inclusion, businesses need to elevate it onto the CEO’s agenda and align diversity & inclusion strategy to the fundamentals of the business."

Tracking progress FTSE 250 level

However, one area where hospitality travel and leisure companies are outperforming other companies in the wider UK economy, is the mean and median pay gap between men and women. PwC found that the median of the wider UK economy comes is approximately 14% – with upper quartile companies noted for a gap of low 20%, and lower quartile companies noted for differences of around 2%.

The median pay gap for HTL comes in at well below 7%, with the median close to parity. There are considerable differences, however, with hospitality at 7%, while travel comes in considerably higher, at 22%. The latter figure reflects fewer women in higher paid pilot and technical positions within the industry.