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Why diversity and inclusion should be influencing your reward strategy





Posted by Emer Bucukoglu on 17 December 2020

Emer Bucukoglu

Why diversity and inclusion should be influencing your reward strategy

Equal Pay | Reward Strategy | Diversity | Ethnicity Pay Reporting

It has been widely proven that improving diversity and inclusion within an organisation is not only a key competitive advantage; it is one of the most important drivers of sustained financial growth. A recent study by McKinsey showed that companies with diverse leadership teams can outperform their peers by as much as 20% to 30% on EBIT. This is in addition to other widely researched benefits which includes strength in attracting and keeping key talent alongside increased levels of employee engagement and innovation.

Whilst it is tempting during this period of uncertainty to invest less time in addressing diversity and inclusion initiatives, the consequences of placing them on the back burner are far reaching. In the current climate organisations are juggling between response mode, recovery mode and most importantly a more strategic view on how to renew post-Covid. Considerable energy is now being spent on the renewal of working models, how things can be done in the new world, what roles no longer fit and what new skills sets might be required to ensure the best chance of recovery. These renewal programs can have a real impact not only on the shape of the organisation but could also shift the representation of minorities in an organisation. Whilst this shift may be seen as an unintended consequence of an organisation’s response to reshape, it can quickly undo the progress achieved over many years toward diversity and inclusion goals. 

So how do you ensure you don’t take your eye off the ball, that your recruitment and reward strategies facilitate and reinforce the goal to attract and retain a diverse workforce whilst ensuring that sense of inclusivity? Here are a few pointers: 

Pay close attention to your demographics
By collecting data on the demographics of your organisation, you can determine a baseline breakdown of diversity. A good example of this is Gender Pay reporting, now in the fourth year, it is a well-trodden path with all organisations knowing their gender demographic. A less well-known but equally important lens is that of Ethnicity with many businesses struggling, for a myriad of reasons, to produce robust data samples to establish this baseline. Gathering this type of data is particularly important as you go through workforce change programs. The stronger your diversity data, the clearer your baseline becomes and if, because of workforce changes, it starts to diminish, steps can be taken via recruitment policies and progression strategies to tackle this.  

Compare to national averages
Keeping abreast of the trends nationwide will help give an indication as to whether you could be doing more to ensure an all-inclusive reward strategy. By understanding what other businesses are doing, particularly businesses that are achieving good levels of diversity and inclusion, you can explore new ways to progress your strategy.

Audit your recruitment and career progression activity
Maintaining good hiring records allows you to examine the profile of new joiners versus unsuccessful candidates. From this, you can take a view on whether there is an ‘ideal’ employee being routinely recruited and if so, challenge the status quo to improve its diversity outlook and engage in fair employment practices. The same strategy can be used to determine if there is any bias within the career progression, as it is important to remember that hiring with diversity and inclusivity in mind isn’t enough – new hires need to feel secure, respected, and that they can progress within the organisation.

Maintain your legal obligations
Already subject to an existing legal requirement, men and women should receive the same pay regarding their assigned role and experience. However, this applies not just to gender but age, race, and other protected characteristics. This also applies to progression opportunities, whether a specific demographic of employee tends to ascend more often than others. An Equal Pay Audit can establish any areas where your business may be lacking in this area and help protect you from potential litigation.

Ensure inclusivity in your benefits programmes
Benefits packages should be developed using an all-inclusive approach and constantly evolve based on the needs of employees. By using analytics to decide on what’s meaningful to employees (either via measuring uptake of benefits via your employee experience portal’s management system, or by using methods such as surveys), and tailoring your benefits offer to fit the needs of your workforce, you can ensure that inclusivity is at the forefront of the reward agenda. This is often achieved by using a flexible benefits scheme, whereby the same benefits are available to everyone, but employees can swap and choose benefits which suit their lifestyle; for example, younger members of the workforce may prefer schemes to help get them on the property ladder, whilst staff members from an older generation may prefer more generous pension contributions.

Conduct a discovery exercise
This focuses on exploratory tests that examine less obvious but often key blockers to achieving diversity and inclusion in the organisation.

  • Identify any likely barriers to promotion and progression for minority groups within the organisation. Examine the process for annual and in year promotional reviews ensuring it is being carried out in a fair and equitable manner. Are there areas for improvement in terms of managing promotions? Is there too much manager discretion?  
  • Audit career progression activity and exploring whether minority groups are being given equal opportunities to remain with the organisation and progress their careers, as well as their earning capacity. Are you comfortable with how many women or BAME employees were promoted within the past 2-3 years and does this compare favourably with your overall demographic?
  • Explore your hiring strategy. Are you doing enough to widen the talent pool? Are you encouraging flexible working, part time working, remote working?  
  • Examine your pay governance. This involves monitoring the management of pay through the whole employee lifecycle i.e. starting pay, average pay per level, promotional pay and ad hoc pay across your minority groups and comparing this to the rest of the organisation. 
  • Understand the extent of your grey economy i.e. any pay activity outside of the Annual Pay Review. 

If, having conducted these tests you uncover activity that undermines both your reward strategy and your diversity and inclusion objectives it is time to remedy the approach.

For more expert advice on ways to ensure your reward strategy is always inclusive for your staff, speak to one of our team of specialists on 020 3457 0894, or email me directly at

Have you registered for Pay Trends yet? Streaming live in the morning of 26th January 2021, we will be delivering your essential Pay and Reward update for the year ahead, analysing the year’s hot topics, helping you not only survive, but maximise the opportunities they provide. Whilst we are disappointed to not be able to meet with you face to face, we have so much to share! For Reward professionals interested in 2021’s top trends, this event offers a great return on your time investment. Find out more and book your ticket here.


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