UK firms giving targeted support to staff of color record much higher revenue on average than firms that don’t, a new report says

• Top UK firms that give staff of color targeted support also report higher revenues, new research has found.
• Henley Business School's report said "targeted support" included training on racial equity and commitment to recruiting from underrepresented groups.
• Firms that offered this support recorded a mean average of 58% higher revenue than those that didn't, researchers found.
• See more stories on Insider's business page.

Top UK businesses that offer targeted support to employees of color to bring them onto an equal footing with their white colleagues report much higher revenues than other top firms, according to a report by Henley Business School.

The school surveyed 100 firms from the FTSE 350, which encompasses the UK's biggest companies. It categorized businesses into groups based on their market capitalization and industry, surveying a random sample of companies from each group to find out their revenue growth over a three-year period.

The survey found that firms that were giving staff of color targeted support recorded a mean average of 58% higher revenue than those that didn't. The researchers measured "targeted support" qualitatively and included measures such as training on racial equity, commitment to recruiting from underrepresented groups, and including racial equity measures in business objectives.

Rather than equal treatment, the report – called 'The Equity Effect" – defined racial equity as the fair treatment and value of all employees, irrespective of their race and culture. The school said "fair treatment and value" included eliminating policies, practices, attitudes, and cultural messages that foster racial discrimination, as well as offering extra support and services to balance out inequities, having open conversations about racial diversity and inclusion, and increasing empathy through workshops and discussions.

Leaders at firms the researchers said were actively confronting inequity and racism with practical measures said that more diverse and inclusive teams improved innovation, job satisfaction, loyalty, creativity, and value.

"It's about giving everyone a chance and the opportunity to build an incredible future," Hannah Gardiner, global talent lead at Austin Fraser, said in the report. "But equally, I think being able to build even more diverse and inclusive teams, things like the creativity, the ideas, the innovation and the way in which we work as a business is going to accelerate."

Black employees are over twice as likely to experience discrimination

Some British businesses have implemented affirmative action policies, but racial discrimination is still rife, with its negative repercussions hitting Black employees the hardest, the report said.

In a separate survey of 1,005 employees and 505 business leaders by Henley Business School, employees were asked if they had experienced discrimination in the form of less favorable treatment due to a protected characteristic including race, gender, ethnicity, religion, and sexual orientation.

Of the respondents, 70 were Black. This was to ensure the proportion of Black respondents in the survey corresponded to 2%, so it was as representative as possible of the UK population.

Black staff members were found to be more than twice as likely to experience racial discrimination compared with Asians and mixed ethnic minorities, the report said.

Discrimination in work allocation was the most common form of discrimination in relation to protected characteristics, the respondents said.

Verbal abuse was next, followed by inappropriate and unfair application of work policies or rules.

In the same survey of 1,005 employees and 505 business leaders, white business leaders were significantly less likely to have said their employees had reported experiencing discrimination or being treated less favourably in the workplace in the last two years - due to a protected characteristic including race, gender, ethnicity, religion and sexual orientation - compared to business leaders of color.

Racial equity and business success are intertwined

Just 28% of employees and 39% of business leaders surveyed in the report believed their organization would achieve racial equity in the next two years.

In the survey of 1,005 employees and 505 business leaders, Henley Business School also gave respondents a definition of racial equity and asked a multiple-choice question: "Which of these would you like to see in your organisation regarding racial equity within the next 2 years?"

From a list of options, two in five employees surveyed selected "People from all ethnic backgrounds [should be] treated fairly, which may mean people treated differently."

"Racial equity and business success should not be separate conversations," Dr. Naeema Pasha, lead researcher and director of Equity, Diversity and Inclusion at Henley Business School, said. "It is critical to any organization wanting to achieve its aims and ambitions in this challenging world of work.

"Of course, we all want to say that racism has no place in business, education, or society," she added. "But the experience of the pandemic and social movements like Black Lives Matter have shown us that we need to shift our organizational, cultural thinking to ensure we work on racial equity - not just because it is a good thing or seen as worthy, but because it is valuable and essential to organizational success."