Is the lack of diversity in business intrinsically linked to the global skills shortage?

29 November 2019

 If you subscribe to the old adage ‘you have to see it to be it’ then you’ll struggle to understand Fiona Hill’s career trajectory.

Role models matter, especially for people who feel unrepresented. But for Hill, who grew up poor in the north-east of England, there was little to predict that she would go on to become a strategic advisor on Russia to three US presidents. Indeed, it says something about workplace diversity that we still marvel at the fact that a coal miner’s daughter could occupy such a senior position in the world’s most powerful government. According to Hill, her working-class background and accompanying accent would have impeded her career progression in her native UK. Of course, she was talking about a Britain from thirty years ago, but really, how much has changed?

Not much at all, according to the Social Mobility Commission. Its 2019 State of the Nation report described social mobility in the UK as ‘stagnant’. In fact, its research revealed that someone from an affluent background had an 80 per cent greater likelihood of securing a professional job, compared to someone from a working-class background. The picture is no brighter for other underrepresented groups. Among FTSE 100 companies, just 8 per cent of those in director-level roles are from a BAME background. Women now occupy 30 per cent of all board roles among the FTSE350, but dig further into that and you’ll find that there are only fourteen female chief executives across all of those companies.

Do you have a skills gap or a diversity gap?

Diversity and inclusion teams will strive to advance on those numbers, but in truth, they’ll struggle to do so because their talent pipeline doesn’t allow it. Simply put, you can’t recruit or promote workers that aren’t there. According to research by The Open University, 63 per cent of UK employers are experiencing a skills shortage, with it taking an average of two months longer to recruit the right candidate.

This isn’t unique to Britain. The World Economic Forum estimates that over half of workers worldwide will require reskilling by 2022. The global skills shortage has occurred for a myriad of reasons, not least education curriculums that have failed to keep up with the ‘fourth industrial revolution’, but it’s been made all the more acute by narrow selection criteria, bias and the exclusion of certain demographics from the labour market.

In spite of efforts at government and organisation level, many people remain locked out of a labour market that they want to be a part of – a labour market that now desperately needs their skillsets and talent. Save the Children estimate that there are 870,000 stay-at-home mothers in England alone who want to work but can’t because of childcare. Further research indicates that 17 per cent of women leave their jobs for the same reason. Our economy is haemorrhaging female talent at a time when it can least afford to do so.

It is a similar story for BAME graduates; numbers of BAME students at third-level have increased but crucially this isn’t necessarily translating into employment. Bangladeshi and Pakistani graduates are 12 per cent less likely to be employed upon graduation than their white, British counterparts. Black African graduates are two-and-a-half times more likely to work in low-paying occupations such as caring or sales than white graduates. Here again we have skilled, qualified workers who can’t gain access to employment, despite their educational attainment, and despite the need for them.

Diversity as a productivity driver

If there is any silver lining to the global skills shortage, it’s that it has caused organisations to re-evaluate their approach to diversity. The skills shortage has created an impetus and urgency around diversity that was once lacking. Loss of revenue tends to do that to a business. The same research by The Open University estimates that the UK skills shortage is costing employers £4.4 billion a year, including £900 million spent on increasing salaries at offer stage. Consider that increasing the number of women in the workplace could add £178 billion to the UK economy, and you’ve made the case for diversifying the workforce. No longer a ‘HR trend’, diversity and inclusion is now an essential strategy for any organisation looking to fill its skills shortage and prevent such financial losses.

What can be done?

As a society, we need to work at creating opportunity earlier in people’s lives via investment in education and training as well as modelled behaviour, but inevitably there is an onus on employers to facilitate greater access to the workplace.

The solution will be different for each demographic and will need to meet the challenges experienced by these groups. Returner programmes that provide confidence coaching and mentoring are a valuable way to support more mothers back into work. Increased flexible working at all levels of seniority and having senior executives modelling that, also helps, as does investment in childcare; clothing giant Patagonia reported a 25 per cent reduction in turnover of staff when they introduced on-site childcare for employees.

If organisations are going to meet the challenge of the global skills shortage, then initiatives like these are essential. Removing the obstacles and biases that side-line so many workers, whether through motherhood, class or ethnicity, is no longer just a social justice endeavour – it’s a business necessity.

If you are struggling to plug the skills gap and hire diverse talent, get in touch with our expert team at Audeliss Executive Search.