July 2007The Business Impact of Equality and Diversity The International Evidence Professor Kathy Monks LInK Learning, Innovation and Knowledge CentreDublin City University Business School, Dublin 9First published July 2007 byThe Equality Authority2 Clonmel StreetDublin 2National Centre for Partnership & Performance16 Parnell SquareDublin 1 2007 Equality Authority and National Centre for Partnership & PerformanceISBN: 978-1-905628-62-9The 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.ContentsForeword 4Executive Summary 6Chapter 1 Equality and Diversity: Towards the Inclusive Workplace 10Chapter 2 Equality and Diversity in Context 15Chapter 3Equality, Diversity and Organisational Performance 24 Chapter 4Managing Equality and Diversity for Organisational Performance 43References 55Appendix 1 Measures of diversity programme implementation, outcomes and business benefits (CSES, 2005) 60Appendix 2 The Equity Continuum 68 ForewordThe 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 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 . 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.
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 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.
Lucy Fallon-Byrne DirectorNational Centre for Partnership and PerformanceNiall Crowley Chief Executive OfficerEquality AuthorityforewordExecutive Summary This review emerges from the work of the Forum on the Workplace of the Future that was set up by the National Centre for Partnership and Performance at the request of Government. The ??™s final report, Working to our Advantage: A National Workplace Strategy , 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, 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 organisational performanceThe 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 employeesChanges to organisational culture such as improved working relations and reductions in litigation.Managing equality and diversity for organisational performanceThere 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 diversityThe 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 needsOwnership 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 teamsFor 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.Business StrategyEquality & Diversity StrategyEquality & Diversity Policies & PracticesOrganisational ContextWork groupsLine managersTrade unionsOrganisation PerformanceAccess to new labour pools and marketsAttraction of high calibre applicantsEnhanced service levels & customer satisfaction;Enhanced corporate reputation.Employee PerformanceReductions in absenteeism & labour turnover;Improved employee relations;Innovation & creativity. Employee OutcomesCommitment;Motivation; Job satisfaction;Life satisfaction;Work-life balance;Reduced stress.
The Equality-Diversity Value Chainexecutive summarythe business impact of equality and diversityexecutive summary >Chapter 1Equality and Diversity: Towards the Inclusive Workplace This report assesses international research evidence on equality and diversity and its relationship to organ–isational performance. The review indicates that investment by organisations in initiatives that promote equality and foster diversity has substantial benefits for both employees and employers. However, the review also indicates that the success of equality and diversity initiatives may require a rethinking by organisations of the benefits that investment in equality and diversity initiatives can bring. It is apparent that many organisations still see the main driver for equality and diversity as a response to legal regulation, but a reactive response to equality and diversity is unlikely to harness the benefits that investment in these areas has to offer to both employers and employees. 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.
Such an approach is best described by Benschop (2001: 1179) from her research in an insurance-banking company in the Netherlands, as one where the organisation: ???sticks to the tried and tested HRM approach of ???add diversity and stir?????™ but in consequence ???misses out on the potential beneficial effects of diversity while it cannot escape the detrimental effects of diversity??™. Instead, the success of equality and diversity initiatives 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.While this report focuses on the bottom-line business benefits of investment in equality and diversity, there is evidence that many companies are now adopting these practices for ethical reasons. This decision reflects higher public expectations of how companies should do business in relation to a wide range of issues such as fair trade, environmental impact, human rights and social justice.
Policies and practices in relation to equality and diversity fit with an organisation??™s views on its corporate social responsibility and thus become embedded in the values underpinning the way in which the organisation does business. In consequence, they become part of the image portrayed to employees including prospective employees and the public at large. This chapter first of all describes the background to the report and sets it within the broader frame of a vision for the workplace of the future.
In order to contextualise and inform the review of the international evidence that is presented in the remainder of the report, current understandings of equality and diversity are examined. A broad overview is provided of the business case for investing in equality and diversity initiatives.1.1 The background to the reportThis report 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 report also reflects the strong commitment in the new social partnership agreement, to equality of opportunity and diversity within the workplace and to developing practical supports for workplaces. The NCPP??™s final report, (2005), sets out a vision of the workplace of the future. This workplace is envisioned as agile, customer-centred, knowledge-intensive, responsive to employee needs, networked, highly productive, involved and participatory, continually learning, and diverse. In order to accomplish this vision, strategic priorities were established in five critical action areas: commitment to workplace innovation, capacity for change, developing future skills, access to opportunities, and quality of working life. This report arises from the need to develop further the business case in the last two of these areas: improving access to opportunities and enhancing quality of working life. In line with this strategic focus, the aim of this report is to review the impact of a proactive approach to investment in equality and diversity and work-life balance on the bottom-line performance of organisations.This report builds on the substantial primary and secondary research that has already been undertaken by the NCPP and the Equality Authority in informing the direction of the strategic priorities. This includes the NCPP surveys of employers and employees views and experiences (NCPPESRI, 2005, a, b) as well as the reports that has been undertaken by the ESRI (O??™Connell and Russell, 2005) and (2004), which constituted the Equality Authority??™s submission to the Forum on the Workplace of the Future.
1.2 Equal opportunities and diversity management: developing an equality systemWhile in some cases the terms ???equal opportunities??™ and ???diversity??™ are used to denote differing philosophical stances on the nature of individuals and organisations, in other cases they are used interchangeably. Rigid distinctions between equal opportunities and diversity, as Malvin and Girling (2000: 424) point out, fail to see the concepts as interdependent: ???managing diversity (valuing differences) and equal opportunities (valuing the differences groups can bring)??™. Focusing on distinctions between the two approaches may also mean that sight is lost of what is core to their common ground; both are based on notions of equality and how this might best be understood and achieved in order to further the interests of individuals and organisations.
Indeed, as Noon and Ogbonna (2001: 1) suggest: ???in both theory and practice it [managing diversity] offers a new challenge to both conceptualising and tackling the issues of equality, discrimination and injustice in employment??™. Thus, organisations that have already invested heavily in equal opportunities initiatives will have a solid base for extending and developing these policies and practices in order to embrace diversity initiatives. They will have already created a climate within their organisations that signals that a value is placed on equality. An example of the way in which this has been achieved is provided in a case study undertaken in the BBC in Scotland. Here it was found that in the case of a successful racial diversity initiative: ???managing diversity and equal opportunities are linked in practice, with a managing diversity initiative developing and complementing approaches to equal opportunities??™ (Maxwell, 2003: 199).In contrast, organisations that have previously simply complied reactively with equality legislation, but have no existing infrastructure to support equality initiatives, may find that pro-active diversity management initiatives fail. Such organisations are unlikely to have policies in place, or an appropriate climate within the organisation, that will ensure the acceptance required for diversity initiatives to take hold. This view is in line with the systems approach that views HRM as comprising integrated and coherent bundles of mutually reinforcing practices (Becker and Gerhart, 1995; MacDuffie, 1995).
Embedded in this approach is the notion that HR practices need to be combined appropriately if they are to work successfully. In this regard, Becker et al.??™s (1997) notion of ???powerful connections??™ is a useful way of considering the impact that equality and diversity initiatives may have when combined together and embedded in an equality strategy. In such cases, the practices will reinforce one another, with a synergistic effect and an impact that is greater than the sum of the parts.
In contrast, the introduction of diversity initiatives without a supporting infrastructure of equality could have the opposite effect of creating a ???deadly combination??™ (Becker et al., 1997). Here there will be negative consequences within the organisation that could include not simply the failure of the initiative itself to take root, but the creation of problems in the implementation of other HR practices and resistance to the introduction of future changes. Diversity management can be viewed as maximising employee potential, but the climate for such an understanding is best viewed against the backdrop of an equality agenda. Otherwise, in line with the ???deadly combination??™ notion, it may simply be perceived as yet another managerial initiative designed to obtain further efficiencies without regard for employee interests.Rather than seeing equality and diversity as separate entities, the term ???diversity management??™ used in this report follows the definition proposed by Gagnon and Cornelius (2002: 36) as an approach to workplace equality [that] draws its distinctiveness largely from its focus on equality through ???difference??™ rather than ???sameness??™. In their submission to the Forum on the Future of Work, the Equality Authority has laid out its vision of the ???inclusive workplace??™.
In this vision, ???diversity and the accommodation of diversity emerge as key dimensions to this pursuit of equality??™ (p. 13). The notion of equality embedded in the inclusive workplace translates into organisations that:Are free from discrimination, sexual harassment, and victimisation, and are taking steps to prevent such experiences for employers and customers.Acknowledge, value and accommodate diversity, making adjustments and providing facilities to take account of the practical implications of difference and, in particular, meeting their obligation to makes reasonable accommodation for employees and customers with disabilities.Are proactive in their pursuit of equality, seeking and realising tangible outcomes including through positive action as allowed under the legislation.The Equality Authority points out that the realisation of workplace equality will require the support of an infrastructure that includes: equality policies, equality and diversity training, equality officers and an equality committee. In addition, they set out the need for the active promotion of equality and the combating of discrimination through review of workplace policies and practices, and participation by those experiencing inequality in ???decision-making that shapes workplace organisation, practice and culture??™ (p.
14).1.3 The business case for investment in equality and diversity initiativesTable 1.2 provides an overview of the business case for investment in equality and diversity and some of the reasons why organisations are investing in these areas.1.4 Structure of the reportThe remainder of the report examines the business case in more detail by drawing on national and international research into workplace equality and diversity initiatives from Ireland, the UK, USA, Australia, New Zealand, Canada and Europe.Chapter 2 describes the context for workplace equality and diversity in the light of changes in Ireland??™s recent and projected demographic profile and the stated intention of Government to position Ireland as a lead player in a knowledge economy.Chapter 3 considers research that has examined the link between equality, diversity and organisational performance and presents a model of the Equality-Diversity Value Chain.
Chapter 4 considers the factors critical to the success of equality and diversity initiatives and how these might be managed. It also examines the range of tools available to organisations to measure the impact of equality and diversity initiatives on organisational performance. equality and diversity: towards the inclusive workplacethe business impact of equality and diversityequality and diversity: towards the inclusive workplacethe business impact of equality and diversity1.
Based on: Rutherford and Ollerearnshaw (2002); Jayne and Dipboyne (2004); Konrad (2003); CSES (2003); Metcalf and Forth (2000); Robinson and Dechant (1997); Cox and Blake (1991); CIPD (2005); IBEC, 2002.Table 1.2 The business case for investment in equality and diversityThe ???War for Talent??™: increasing competition for the best talent, coupled with shrinking population pools from traditional sources, requires organisations to recruit from an increasingly diverse range of potential employees.The globalisation of markets brings contact with increasingly diverse customer bases which require understanding of diversity within and across cultures and leads to opportunities to increase market share. In addition, a diverse workforce can assist organisations in designing products that appeal to this diverse customer base. Organisational reputation and image as an inclusive employer leading to improvements in the recruitment and retention of high calibre employees as well as reductions in absenteeism levels, thus reducing costs.
Equality and diversity provides new sources of ideas leading to enhanced creativity and innovation and higher quality problem solving in teams.Equality and diversity initiatives can result in improved service delivery by altering work patterns and including more part-time and flexible work schedules.Equality and diversity become linked with corporate social responsibility, including notions of social justice and ethical behaviour, thus enhancing organisational reputation amongst shareholders, customers, and prospective employees.Equality and diversity initiatives enable employees to obtain a better work-life balance, resulting in greater levels of job satisfaction and commitment.The legal costs involved in employment equality claims will be avoided.Chapter 2Equality and Diversity in Context This chapter examines the economic, demographic and legal context in Ireland in which equality and diversity initiatives operate, particularly in the light of Government??™s stated intention to position Ireland as a knowledge economy.
It also examines evidence in relation to the ways in which Irish organisations are currently managing equality and diversity. 2.1 The knowledge economyIreland has positioned herself as a key player in the emerging knowledge economy and the growth of knowledge intensive work has been seen as ???one of the most important influences shaping work and workplaces in the coming years??™ . In such an economy organisations are highly reliant on the knowledge skills and abilities of their employees and on the new ideas that they generate.
This increasing reliance on knowledge and the implications for organisations are highlighted in the recent Enterprise Strategy Group Report :Knowledge creation and diffusion are at the core of economic activity. Knowledge is embodied in people, and it is the quality of human resources that will determine the success or otherwise of firms and economies in the years ahead. It is people who create new knowledge, and it is people who disseminate, adapt and use data, intuition and experience to create distinctive value. Although pace differs from country to country, most countries are becoming more knowledge intensive. The challenge for Ireland lies in ensuring that we are at the forefront of this transition.A recent appraisal of Ireland??™s position suggests that we face ???an unprecedented challenge to grow the high-paid jobs and knowledge intensive investment needed to sustain our performance in the future??™ (Forfs, ). Ongoing changes in the markets for goods and services, brought about by globalisation, rapid technological change, the development of new markets and the erosion of traditional ones, and changes in the way in which organisations operate, all point to an increasing level of diversity, the types of customers businesses wish to attract, the types of employees they require, and the ways in which these employees will work.
Competitive pressures require increased knowledge, skills and flexibility from all types of employees. They also require new approaches to managing from employers that include employee involvement initiatives, increased autonomy, enhanced and ongoing training and development, a proactive focus on equality and diversity, and new forms of working arrangements.2.2 Changing demographicsIreland??™s success in a knowledge economy will therefore depend on the knowledge, skills and abilities of the workforce. The last ten years have seen major changes in the size and composition of this workforce. These include steadily rising rates of female participation which increased from 42 per cent in to almost 58 per cent in with an additional married women entering the labour force in the last year (). This pattern reflects changing notions of the family and of the work-family relationship with an increase in the number of households that are headed by a single parent and an increase in the number of employees who were combining caring and employment commitments (Russell et al.
, ; Cullen et al., ).The proportion of older people in the Irish population is also rising although Ireland still has a relatively young population when compared to the EU average. It is expected that the proportion of those aged between 45 years and 64 years in the labour force will increase substantially. This will create both opportunities and challenges for employers, bringing with it an increased availability of labour but also the need to provide more flexible working and retirement schemes with attention to work-life balance issues (Equality Authority, 2002a; Russell and Fahey, 2004; WRC Social and Economic Consultants, 2003; Fine Davis et al., 2006). However, the negative attitudes to older workers that have been labelled as ageism will present a key challenge in managing this section of the workforce.Additional participation is also expected from those with disabilities as they remain a relatively untapped potential labour pool (Gannon and Nolan, 2004).
Religious diversity is increasing in line with inward migration and there is also a changing awareness of sexual diversity, particularly following the introduction of civil partnership in many European countries. However, research on the employment of gay and lesbian people indicates that they may experience hostility and discrimination at work (Equality Authority, 2000b; Zappone, 2003). The Traveller community has remained largely excluded from mainstream employment opportunities to date and special measures will be needed to ensure their inclusion in future economic development (Pearn Kandola, 2003). Yet the traditional activities in which Travellers engage remain a potential source of entrepreneurial activity for the Irish economy (Equality Authority, 2004). The increasing rate of migration into Ireland over the last number of years has brought about further dramatic demographic change.
In part, this migration has comprised returning emigrants who have been attracted to return home by the booming economy. In addition, immigrants, who come from more than 100 countries, have entered Ireland, bringing with them their own traditions that have led to the development of a multi-cultural society. It is estimated that 271,300 foreign nationals aged 15 and over were living and working in Ireland in the first quarter of 2006, of whom 184,000 were in employment. Non-Irish nationals now account for almost one quarter of the total workforce in hotels and restaurants, and about 10 per cent of the workforce in the construction, financial/other business services, and other production industries. The biggest increase in non-Irish national workers has occurred in the financial/other business services sector, where an additional 10,000 non-Irish nationals were employed over the last year. The nationals of the new EU-10 accession States represent the fastest growing group as their participation in employment has almost doubled in the last year, rising to over 69,000 (CSO, 2006).
Ireland is fast becoming the preferred destination for highly skilled migrant employees from low and high-income countries both within and outside the EU (Minns, 2005). About half of the immigrants have a third-level educational qualification, compared to only 27 per cent of Irish nationals, but are not necessarily employed at a level that reflects their educational status (Expert Group on Future Skill Needs, 2005). The economic costs of the underutilisation of migrants??™ skills and knowledge are significant.
A recent report suggests that if all migrant workers were employed at a level reflecting their standard of education, it would contribute around 3.5 per cent to the country??™s GNP (Barrett et al., 2005).As a result of these rapid changes in society, by 2003 the percentage of foreign workers in the labour force was higher in Ireland than in France, the UK and the Netherlands. However, in contrast to the pattern in other countries, in Ireland this figure is heavily influenced by recent rather than historic migration patterns and thus represents a very rapid rate of change in the composition of the Irish workforce and one which presents particular challenges in its planning and management. A report on migrant workers carried out for the Equality Authority (Conroy and Brennan, 2002) found that there was only an haphazard support infrastructure for such workers and that many faced difficulties in participating fully in the labour force due to poor English language skills. A recent report on migration (NESC, 2006) suggests that Ireland has largely benefited from immigration to date. The increasingly culturally diverse workforce will need to be managed strategically if this benefit is to continue.
Whereas each of the changes outlined above has a significant impact in its own right on the composition of the labour force, when combined they present very dramatic changes indeed. An estimation of what the labour force of the future will look like has been provided in a recent analysis (Fitzgerald, 2006). In this analysis, it was pointed out that the labour force in 2015 will be a highly educated one where both partners work. The labour force as a whole will be much older and the 30-34 age group will dominate. Fitzgerald points out that these changes raise all sorts of issues in relation to the attraction and retention of both men and women in the labour force, the provision of childcare, flexible working arrangements and the management of immigration. He points in particular to the penalties imposed on women who, despite providing a highly valuable skill-set from their participation in third-level education, face severe restrictions in their careers if they decide to take time away from the workforce. In addition, there is evidence that problems of gender segregation still exist with women more likely to be working in lower level positions, to be paid less than their male counterparts, and under represented at senior management level in organisations (Russell and Gannon, 2002; Hughes, 2002).
2.3 The legal context of equality and diversityFostering diversity in the workplace cannot be viewed separately from ensuring the provision of equal employment opportunities since such provision underpins and shapes the ways in which diversity is managed. The Employment Equality Acts 1998-2004 and the Equal Status Acts 2000-2004 prohibit discrimination on nine discriminatory grounds: gender, marital status, family status, sexual orientation, religion, age, disability, race and membership of the Traveller community. Discrimination is prohibited in employ-ment, self employment, the provision of goods and services, educational establishments and accommodation (and there are separate provisions in relation to discriminatory clubs). Discrimination is defined to include indirect discrimination, discrimination by association or by imputation. Both Acts prohibit victimisation, sexual harassment and harassment, and require reasonable accommodation of people with disabilities. An employer is obliged to take appropriate measures to enable a person who has a disability to have access to employment, to participate or advance in employment and to undertake training unless the measures would impose a disproportionate burden on the employer. The prohibition on discrimination may require employers to take account of cultural and linguistic diversity.
An employer will be liable for the sexual harassment or harassment of an employee unless the employer can prove that reasonably practicable steps were taken to prevent the persons harassing or sexually harassing the victim or (where relevant) prevent the employee from being treated differently in the workplace. An employer will be liable for anything done by an employee in the course of his or her employment unless the employer can prove that he or she took reasonably practicable steps to prevent the discrimination. It is therefore vital that employers have comprehensive anti-discrimination, sexual harassment and harassment policies and procedures in place and that these are properly applied and updated. In addition, both Acts allow broad positive action measures. Therefore employers can take steps with a view to ensuring full equality in practice between employees on all of the nine discriminatory grounds.Finally, there are a number of general and specific exemptions in the legislation.
Some apply to particular types of employment, some apply to all kinds of employment, some apply to particular grounds and some apply to provisions in other legislation. 2.4 Organisational responses to changeIt is evident that many Irish employers have responded to the alterations that have taken place in the composition of the workforce by introducing changes to the ways in which work is organised. In relation to cultural diversity, a wide range of initiatives are now taking place and the publication (Equality Authority, 2002c) gives many examples of the ways in which organisations, including Irish organisations, are engaging at the levels of policy and planning, recruitment and selection, culture and ethos, support for black and minority ethnic employees and links with the community. Other reports (McDonnell, 2004; Hegarty and McNally, 2002) list additional examples of HR strategies that are being utilised to promote equality in organisations across all nine grounds. Work-life balance programmes are now in place in many Irish organisations (see www.worklifebalance.ie).
Flexible work schedules have also become more widespread and a recent report (O??™Connell and Russell, 2005) found that almost one in four employees is involved in flexible working and one in five works part-time. However, flexible working varies considerably across economic sectors and organisations and tends to be used much more by women. In addition, despite dramatic increases in the proportion of women in employment, gender segregation is still very prevalent with women concentrated in a small number of occupations which tend to be lower paid (Russell and Gannon, 2002). Furthermore, there is evidence that many individuals suffer discrimination at work. A recent national level survey conducted by the Central Statistics Office (CSO, 2005) found that 12.5 per cent of the adult population 18 years and over had experienced discrimination over the last two years with 5.1 per cent experiencing work related discrimination and 8.
9 per cent experiencing discrimination more than once in the same period. The Equality Authority continues to deal with large numbers of cases in relation to discrimination and in 2005 it had 359 case files under the Employment Equality Acts, 142 of which were new. About a third of these were related to race discrimination with gender accounting for about 20 per cent, disability for 15 per cent, and age for 12.
5 per cent.2.4.1 Equality and diversity in Irish organisationsTable 2.1 shows the position of Ireland relative to some other EU member countries in relation to the adoption of diversity policies based on findings of a survey of European businesses (EBTP, 2005).
Despite the rapid changes in the workforce outlined earlier in this chapter, only about half of the Irish organisations surveyed in this study had diversity policies in place and in the majority of cases these were only recently implemented.Research carried out on behalf of the Equality Authority (Equality Authority, 2002d) in 300 private and 100 public sector Irish organisations confirms the European study. The research found that many policies and procedures to promote equality are in what is termed a ???formative??™ rather than ???advanced??™ state with less than half of the organisations surveyed having a formal written policy to deal with equality issues.
The survey also found little evidence of an infrastructure to promote equality, such as an individual dealing specifically with equality issues, or an equality committee. Equality awareness and training courses were held in only 36 per cent of organisations. Where equality and diversity initiatives were taking place, they tended to focus on disability, gender, race, family status and age and little attention was paid to the issues of religious belief, sexual orientation and membership of the Traveller community.While the overall picture within Ireland appears fairly underdeveloped, many companies are very actively engaged in equality and diversity initiatives. Table 2.2 sets out some equality and diversity statements from a range of Irish organisations. These statements are displayed on company websites and so in many cases represent the public face of workplace equality and diversity.
In some companies, reference to diversity is contained within the recruitment pages and/or within the pages that focus on the organisation??™s commitment and contribution to the external community. The majority of these companies were also included in the list of the 50 best companies to work for in Ireland for the year 2006 (see www.greatplacetowork.ie/best/index.php).
2.5 ConclusionsThis chapter has provided an overview of the Irish context for equality and diversity in the workplace. The recent, rapid changes in Ireland??™s economic and demographic situation have resulted in the emergence of a diverse labour force. It is evident that this diversity requires new approaches to the management of employees but many Irish organisations have not as yet considered these new approaches.
For these organisations, changes to the ways in which employees are managed represent substantial costs. In the next chapter, the research evidence is evaluated in relation to whether these costs are justified in terms of performance outcomes.the business impact of equality and diversityequality and diversity in context the business impact of equality and diversityequality and diversity in context the business impact of equality and diversitySource: EBTP (2005)Table 2.1Percentage of companies with diversity policies and stages of implementation||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||equality and diversity in context the business impact of equality and diversityTable 2.2 ||||||||||||3400 employeeswww.
dublinbus.ie||||||||||||Excerpts from website diversity statements||||IBM Ireland||||Intel Ireland||||O2 Ireland||||Xerox Ireland||||||||equality and diversity in context Chapter 3Equality, Diversity and Organisational Performance This chapter considers the evidence on the relationship between equality, diversity and organisational performance. In considering this issue, it is useful to situate the discussion within the wider debate on the relationship between human resource management (HRM) and performance. It can be argued that pro-active equality/diversity management is one practice in the repertoire of HR practices that organisations may choose to adopt. Implicit in many of the studies of the HRM-performance relationship is the notion of a value chain starting with the organisational strategy from which a HR strategy and practices emerge. This then leads to HRM-related outcomes, such as changes in employee attitudes and behaviours, and culminates in improvements such as increased produc-tivity and performance or reduced absenteeism and labour turnover, as well as in financial performance.Figure 3.1 adapts the framework utilised in many studies of the HRM-performance relationship (e.
g. Becker et al., 1997; Boselie et al., 2005) to develop a model of the equality/diversity performance value chain.Organisation performanceEmployee PerformanceEmployee outcomesEquality & Diversity Policies & PracticesEquality & Diversity StrategyBusiness strategyOrganisational ContextFigure 3.1 The Equality-Diversity Value ChainWork groupsLine managersTrade unionsIn line with the HRM-performance models, the impact of these policies on both individuals and organisations is seen as affected by the way these are implemented and here the role of line managers has been perceived as particularly crucial (Purcell et al.
, 2003). Research evidence is then examined for:Links between business strategy, diversity and performanceThe link between equal opportunities policies and performanceThe impact of equality and diversity policies and practices on employee satisfaction and performance The role of line managers and trade unions in equality and diversity initiativesThe outcomes for organisations from investments in equality and diversity.3.1 Business strategy and equality / diversityA number of studies conducted in the USA have examined the relationship between elements of business strategy, equality/diversity and organisational performance (Table 3.1).Explanations offered by Wright et al. (1995) for their findings provide insights into the link between equality and diversity strategies and enhanced performance. Wright et al.
suggest that this may result from:Investors??™ realisation that such firms have lower costs than other firms because they have lower absenteeism, turnover and job dissatisfaction levels; orthese firms have a better reputation with their diverse customers; orthe firms have more creative cultures that make them more adaptable to environmental changes.It may also be the case that discriminatory firms are unlikely to have equal access to a diverse and talented human resources pool.In particular, minorities and talented people may be predisposed to avoid companies that discriminate. Ng and Burke (2005), support this argument with their research, again based in the USA, showing that women, ethnic minorities and high achievers consider organisations with diversity management practices more attractive as prospective employers. 3.1.
1 Top team diversity and organisational performanceInterwoven in the studies linking business strategy and organisational performance is research that has considered the composition of the top team within the organsation and its relationship to organisational performance. There is evidence from Europe, the USA and the UK of this linkage and some of the findings are outlined in Table 3.2. Explanations for these findings include: A diverse top team brings a broader information base for the decision making process and a wider range of possible solutions.There is less likelihood of ???group think??™, i.e.
there is less likely to be a blindness to considering alternative options or a fear of criticising the dominant idea.The overall calibre of the team is increased by the inclusion of minorities as such individuals may have to outperform their counterparts in order to achieve higher level positions.There may also be drawbacks to diversity in top teams as conflict can arise and must be managed and these factors may slow down the decision making process. Issues of strategic complexity and the time that the team has spent working together will also impact on how the team will perform (Carpenter, 2002). Despite the value that diversity might bring, evidence from the UK shows that women still find it extremely difficult to gain entry to board level positions and that a complex set of factors including work-life balance, behaviours, control, leadership and communication style are barriers to increasing female representation (CIPD, 2004). 3. 2 The impact of equality policies on performanceThe development of an equality agenda with a range of equality policies is a crucial component of an organisation??™s HRM system. Equal opportunities policies signal to employees that equality is a cornerstone of HR practices in key areas such as recruitment and selection, training and development, promotion, performance management, and rewards.
Such policies are therefore particularly important as organisations become increasingly diverse, as they present an image to both existing and prospective employees of fairness and equal treatment. In addition, organisations may find that the introduction of policies in relation to areas such as flexible working will simply not work unless supported by a pre-existing equality policy. O??™Connell and Russell (2005: 25) cite research (Bergmann, 1997; Lommerod and Vagstad, 1997) that showed that where family friendly policies are implemented without the supporting infrastructure of an equality policy, there is the danger of poorer career prospects for women availing of such policies. A study that compared Irish and French retail organisations (McGauran, 2001) also found that the success of equal opportunities policies was influenced by the ways in which these were implemented. Such research supports the notion already outlined in Chapter 1 that HR practices need to be mutually reinforcing and that an ad hoc approach to equality is unlikely to be successful.
The recent report published by the Equality Authority, (O??™Connell and Russell, 2005) provides a comprehensive insight into adoption of equality policies and flexible working arrangements in Irish organisations. The data was gathered from a nationally representative sample of 5,000 employees in Ireland through research conducted by the ESRI for the National Centre for Partnership and Performance. The report indicates that about three quarters of individuals work in organisations in which there is a formal equal opportunities policy. Equality policies are more likely to be found in larger organisations, in organisations where a trade union is recognised and in the public sector. The research also indicated that the implementation of an equality policy was related to the availability of flexible working arrangements. Analysis of the workplace data by O??™Connell and Russell found that ???the presence of a formal equality policy impacts positively on employees??™ perceptions of workplace fairness, on workers??™ well-being and on their attitudes to jobs and employers??™ (p. 13). The existence of these policies was associated with lower levels of work stress and higher levels of job satisfaction and employee commitment.
Employees in organisations that have implemented equality policies are also more likely to view ???opportunities for recruitment, pay and conditions and opportunities for advancement and career development as fair and equal in their organisations ??™ (p. 13). These findings confirm research in the UK that has identified a link between equality policies and employee benefits and between the existence of equality policies and organisational performance. The evidence for these linkages is presented in Table 3.3.3.
3 The impact on employees of equality and diversity policies and practicesThis section deals with the impact on employees of equality and diversity policies by looking in depth at issues relating to flexible work arrangements and work-life balance.The provision of flexible work arrangements is a key element in an organisation??™s equality and diversity strategy as it is through this mechanism that a wider pool of potential employees may be attracted to gain access to employment, as well as enabling those within a workforce to find working arrangements that can fit with their lives outside work. A very large number of different types of working arrangements are now in existence. The Irish research found that almost one in four employees is involved in flexible working and one in five works part-time although only 8.4 per cent of employees work from home and 6.5 per cent job share (NCPPESRI, 2005, a).
Women are much more likely to utilise part-time working and job sharing and men to utilise working from home, a pattern also evident in another Irish study of work-life balance (Drew et al., 2003). Tables 3.
4 and 3.5 overleaf collate research that has explored the relationship between flexible working arrangements and employee outcomes. Table 3.4 highlights outcomes that relate to improvements in areas such as employee satisfaction, commitment and stress, while Table 3.5 highlights research that relates to aspects of employee performance such as absenteeism or labour turnover. In reality, these two aspects of employee outcomes are frequently intertwined with positive employee-level benefits, such as lower stress levels, having a beneficial impact for employers through reduced absenteeism or turnover.3.3.
1 Managing flexible working arrangements Although there are many positive outcomes for both employers and employees from the introduction of flexible working hours, there is evidence that these types of working arrangements need to be managed differently to traditional hours of work. A study carried out to identify the competencies of managers involved in managing flexible workers found that flexible working involves a shift in the culture within organisations from ???controlling??™ to ???trusting??™ and that measuring outcomes rather than inputs is the key to this change. As a consequence, good performance management systems are needed if flexible working arrangements are to work successfully. Communication, leadership and leading by example were the key managerial competencies identified in research carried out to explore whether different types of competencies were needed to manage flexible working arrangements (Henley Management College, 2005).The recent Irish study (O??™Connell and Russell, 2005) reports that there are some negative effects on work quality from part-time work and job sharing. They suggest that these findings may indicate that there is ???an underlying process of segregation in the types of jobs and organisations where these workers are located??™ (p. 16).
They also found that working from home was associated with greater levels of work pressure and stress, a factor that may point to that fact that ???attempts to integrate work and family commitments may lead to the erosion of boundaries between work and home to the detriment of family life??™ (p. 16). There also may be stark differences in many organisations between the rhetoric of flexibility and the reality of the types of hours that employees are expected to work if they wish to progress within an organisation. A study of work-life balance in Australia (De Cieri et al., 2005) found that employee take-up of work-life balance opportunities lagged behind the implementation of such strategies by organisations. However, the more work-life balance options there were in the organisation, the greater the take-up. The study suggests that the implementation of work-life balance strategies requires culture change to eliminate barriers and a focus on a track record of recent achievements to ensure management commitment to the work-life balance area. A study of work-life balance in Ireland, Denmark, France and Italy (Fine-Davis et al.
, 2005) found that respondents in Ireland and France reported pressure within their organisations to work longer hours if they wanted to get ahead and that this pressure was greatest on those in the higher occupational groups. Male respondents in Ireland also reported working the longest number of hours per week and had the longest commuting times; factors that militate against achieving a work-life balance.Similar findings are also reported by Drew et al. (2003) in another Irish study of work-life balance. This study also found that the language in which these arrangements are couched may have an impact on how they are perceived within the organisation. The notion of ???family-friendly??™ work arrangements may lead to resentment building among staff who are not eligible to avail of such arrangements and yet who may find themselves covering for colleagues who are availing. A study undertaken in one Irish organisation to gauge the likely success of strategies to improve gender balance diversity and leadership capacity in senior management (Drew and Murtagh, 2005) found that while the organisation had an excellent range of work-life balance policies in place, the organisational culture ran counter to the achievement of work-life balance at senior management level.
The organisational climate encouraged long working hours by senior managers and viewed such behaviour as an indicator of management potential. As a result, there were no role models for flexible working at senior management level and there existed a fear of participating in flexible work schemes in case this adversely affected promotion and reward. Similar results are reported from the Second Work-Life Balance Survey in the UK (Stevens et al., 2004). Here a half of employees interviewed considered that working reduced hours such as part-time working would impact negatively on their careers. Other elements such as leaving work on time, taking leave to look after children, working different work patterns and working from home were also considered to impact negatively on careers. Men were more likely than women to express these views.
A study of women in the IT industry in the UK found that women there expressed anxiety that flexible working was not compatible with career development in the IT industry and that the culture of long, unsociable hours did not fit with family commitments. Perhaps unsurprisingly, the IT industry experiences major problems in retaining women and is currently losing more women than it recruits (DTI, 2005). Work-life balance policies need to be capable of translation into flexible practices, tailored to suit particular circumstances, and adapted as employees??™ needs change over the course of their careers.
A study of federal government employees in the USA indicated that the adoption of family-friendly policies in the absence of a supportive organisational culture may encounter resistance from both employees and management. In addition, the increasing diversity of family structures means that policies that improve work-family balance in one type of family situation may have little utility or even be counterproductive for employees who are experiencing very different types of family situations (Saltzstein et al., 2001). There is evidence that the notion of what constitutes flexible working will need to be extended. For example, increasing competition for staff means that more employees may need to be encouraged to retire later or to work on a part-time basis after their full-time careers have ended.
Irish studies suggest that there is a demand by some employees for these types of working arrangements (Fine-Davis et al., 2005; Russell and Fahey, 2004). Their introduction will require not simply accommodations to existing work patterns but also attention to the issue of ageism that is now prevalent in many organisations.3.
4 The role of line managers in equality and diversity initiatives Line managers have a particularly critical role to play in the success or failure of equality and diversity initiatives as they are frequently in a pivotal position in both interpreting and delivering equality and diversity policies and practices. The findings from interviews with 40 line managers carried out in the UK retail industry (Foster and Harris, 2005) provide insights into some of the issues that arise for line managers in managing diversity. Foster and Harris found that there was no common understanding amongst the line managers of ???managing diversity??™; that line managers were concerned mainly about legal compliance and potential litigation; and that they were confused by an agenda that ???appears to require them to deliver sameness of treatment on the one hand but to recognise and respond to individual differences on the other??™ (p. 13). As a result, ???for many operational managers managing diversity became whatever was deemed to be the expedient solution at the time??™ (p. 13). Findings from other studies shown in Table 3.6 present a similar picture.
The ambivalent attitude portrayed by line managers to the introduction of equality and diversity measures is not surprising when considered in the light of research into the role that they may play in such initiatives:Managers may perceive equality and diversity as a marginal activity, particularly where the organisation views diversity initiatives as simply a solution to a problem (Dass and Parker, 1999), and may fail to take action in relation to managing it (Creegan et al., 2003).The growth and increasing complexity in legislation governing equality and diversity may mean that line managers find themselves lacking in expertise in this area (Foster and Harris, 2005).Employers may utilise diversity as way of exploiting disadvantaged groups within the workplace in order to provide a ready source of cheap labour and line managers may find themselves managing this process (Dickens, 2005).There is evidence that line managers may receive very little training in equality and diversity or may be required to fund it themselves from devolved budgets (Creegan et al., 2003) and, where it has been delivered, this may concentrate on reactive legal com-pliance rather than on the positive outcomes of proactive management (Foster and Harris, 2005; CIPD, 2005).
Yet training has been identified as important to the success of diversity initiatives (Wentling, 2004).3.4.
1 The management of diverse workgroupsOne particularly critical element in organisational performance may lie in the ways in which line managers deal with diverse work groups and teams. Observable differences such as age, colour, gender or some forms of disability are perhaps the ones which are most apparent when considering the composition of a work group. Other differences such as sexual orientation, religion or membership of the Traveller community may be less visible. While, under current equality legislation, these are grounds that are commonly used to group individuals, it is also the case that differences across any of these grounds may encompass less easily detectable attributes such as values, experience or background. Such attributes represent individuals??™ very different perspectives on issues or problems and these have a major impact on the ways in which individuals interact with others, particularly if these interactions are team-based. There have been a number of reviews of the impact of work group diversity. Millikens and Martins (1996) review of studies of diversity in work groups undertaken between 1989 and 1994 identifies the wide range of both short and long-term consequences that diversity may have for individuals, work groups and organisations.
Their review concludes that diversity has important positive consequences, in particular in relation to innovation and the generation of new ideas, but that there are also co-ordination and turnover costs arising from the conflict and poor communication that may arise within a group. Both the Milliken and Martins (1996) review and a later CIPD report (Anderson and Metcalf, 2003) highlight the difficulties involved in trying to find a direct linka