Five Essential Steps to Closing the Ethnicity Pay Gap

Today the Government’s consultation on ethnicity pay reporting closes.

CMI has been calling for the publication of ethnicity pay and progression data since 2017, when we published our Delivering Diversity research into race and ethnicity in the management pipeline. The research showed that Black, Asian and minority ethnic (BAME) men and women face barriers in their professional careers that non-BAME workers do not. This is wholly unacceptable and is why we want the Government to introduce ethnicity pay reporting as soon as possible to shine a spotlight on the true scale and nature of the problem.

We know that there are many factors which contribute to the ethnicity pay gap – social, regional, economic, educational – and a range of policy interventions will be needed to address these. At CMI, however, we believe that building the pipeline of future BAME managers and leaders will be key to closing the ethnicity pay gap. Currently only around 6% of senior managers are from a BAME background, despite BAME people making up around 13% of the UK working age population. Tackling inequality and the under-representation of BAME people in senior roles is not only the right thing to do but makes economic sense: it has been calculated that full representation of BAME individuals across the labour market could be worth £24bn a year to the UK economy.

It is time for action to tackle the ethnicity pay gap and build the management pipeline of future BAME leaders. To achieve this, we believe there are five essential steps that organisations need to take.

1. Focus on Leadership

The role of senior leaders is key to delivering diversity. Leaders need to speak up and talk publicly about their organisation’s commitment to diversity. They need to develop and own action plans for increasing the representation of BAME employees and for closing the ethnicity pay gap. They should show personal leadership by seeking out talented BAME employees to mentor and sponsor, and get their senior managers and direct reports to do the same.

2. Use Data

Actions to close the pay gap should be data-driven and based on evidence. Improving the quality of data should be a priority. Delivering Diversity found that 83% of HR and diversity and inclusion leaders wanted better data to drive progress on race and ethnicity. We recognise there are challenges in collating data but we believe there are a number of ways employers can improve employee self-reporting and declaration rates. Some of these are set out in our Delivering Diversity research.

3. Set Targets

There needs to be accountability if people are to believe that delivering diversity is a business priority. This is why the best companies set targets for increasing the representation of BAME individuals and ensure transparency in monitoring and reporting on progress. Diversity and inclusion is part of performance management, and financial rewards and consequences should be linked to behaviours and to the delivery of targets.

4. Educate Managers

Line managers play a pivotal role in changing behaviour and creating balanced workplaces. Their actions are decisive in the success or failure of efforts to create balance: good managers champion change, bad managers block change. Without progress on the reality of line management behaviours, the rhetoric of senior leaders and policy makers falls flat.

The latest CMI research reveals that around a quarter of line managers have never been trained on managing diversity and inclusion in the workplace. Managers need to learn about the behaviours and practices that make a difference. They need to be empowered to call out bias and create change, while also being held to account for their impact.

5.  Encourage Employee Engagement

Finally, for change to be successful, employees across a business need to be engaged – in both the design of any change programme and in its delivery.

You can read the CMI response to the Government’s consultation on ethnicity pay reporting here.