Review of race in the workplace makes economic as well as moral case for more diverse workforces

Helping black and minority ethnic (BME) people to progress in their careers at the same rate as their white counterparts could add £24bn to UK economy each year, a government-backed review has found.

The report into race in the workplace found recruitment processes, a tendency by managers to promote people similar to themselves and, in some cases, outright discrimination had all held back workers from BME backgrounds.

The report’s author, businesswoman Ruby McGregor-Smith, called on employers to come clean about their lack of diversity by publishing a breakdown of their workforce by race and pay band. She urged the government to make such reporting law if employers do not do it voluntarily.

“We don’t need to write another report in a year’s time. We just need to do it, or legislate,” she said before the review’s publication on Tuesday.



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“The time for talk on race in the workplace is over, it’s time to act. No one should feel unable to reach the top of any organisation because of their race.”

McGregor-Smith, a Conservative peer and former chief executive of the facilities management company Mitie, was asked to conduct her review by the former business secretary Sajid Javid.

Her findings lay bare the scale of the challenge if the government and employers are to help workers from minority backgrounds have the same opportunities as their white counterparts. It found the employment rate for ethnic minorities workers was only 62.8% compared with 75.6% for white workers of 75.6%.

While 14% of the working age population were from a BME background, they made up only 10% of the workforce and held only 6% of top management positions. People from BME backgrounds were also more likely to work in lower paid and lower skilled jobs despite being more likely to have a degree, the report found.

McGregor-Smith, who became the first Asian woman to run a FTSE 250 company when she took over at Mitie in 2007, said her own experience had shown there was little diversity at the top of British business but she was still surprised by the extent of both conscious and unconscious bias uncovered by her report.



Employees reporting that they have been overlooked for promotion Employees reporting that they have been overlooked for promotion

She said there were some organisations that stood out as promoting more inclusive workplaces with schemes such as mentoring and training courses that help tackle bias and she called for those to be highlighted in an annual best 100 employers list. But there was no one sector that was ahead on tackling a lack racial diversity.

“It’s everywhere. I’ll go to a big business event and I realise there’s not anyone who looks like me,” said McGregor-Smith.

Her review seeks to make an economic case for more diverse workforces, estimating that GDP would be 1.3% higher – equivalent to about £24bn a year – if BME individuals were immediately fully represented across the workforce in the same proportions as white individuals.

She emphasised that there was also a moral case for more inclusive workplaces but said that making the business case would spur employers into action. The report also highlighted research showing that companies with more racial diversity were more likely to enjoy higher-than-average financial returns.

One of her key recommendations is for the government to provide free online training to help people recognise and change any biased attitudes they might have – often without realising it.



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“Overt racism that we associate with the 1970s does still disgracefully occur, but unconscious bias is much more pervasive and potentially more insidious because of the difficulty in identifying it or calling it out,” her report says.

“Race, gender or background should be irrelevant when choosing the right person for a role – few now would disagree with this. But organisations and individuals tend to hire in their own image, whether consciously or not.”

She also called on the public sector to set good examples on hiring, mentoring and promotion and to ensure that when government contracts are awarded they go to bidders who show a commitment to diversity.

In its response to the review, the government said it would not move straight away to legislate on the reporting of racial diversity and instead preferred a voluntary system. But it did not rule out laws in the future.

“We ... believe a non-legislative solution is the right approach for now, but will monitor progress and stand ready to act if sufficient progress is not delivered,” the business minister Margot James wrote to McGregor-Smith.

The review’s key recommendations

• Employers with more than 50 staff members should publish five-year targets on diversity, nominate a board member to deliver them and report against the targets annually.

• If employers do not act voluntarily, government should legislate to force organisations with more than 50 employees to publish a breakdown of their workforce by race and pay band.

• Government should provide free, online unconscious bias training courses to help people identify where they might be behaving and thinking in ways that act as a barrier to a more inclusive workplace.

• All organisations should ensure all employees have unconscious bias training.

• Employers should ensure proportional representation on long and short lists for jobs, and reject lists that do not reflect the local working age population. The report notes the proportion of working age people from a BME background in London and Birmingham is already more than 40%, with Manchester not far behind, and says that workforces in those cities should reflect that.

• Job specifications should be drafted in plain English and provide an accurate reflection of essential and desirable skills to ensure applications from a wider set of individuals.

• Larger employers should ensure the selection and interview process is done by more than one person, and should ideally include individuals from different backgrounds.

• The charity Business in the Community should publish a list of the top 100 BME employers.