Businesses with racial equity achieve 58% higher revenues

According to the wide-ranging report (the Equity Effect) of the effects of racism in UK businesses by HR, ethics and organisational specialists, companies that took positive action to achieve equity recorded an average revenue 58% higher than those that did not.

Researchers for Henley Business School at the University of Reading surveyed more than 500 business leaders and 1,000 employees, as well as carrying out qualitative interviews with 22 business leaders and employees from a broad range of industries. Further research was conducted to gather specific business performance and diversity data points from companies listed on the FTSE 350.

Despite revenues being higher in businesses encouraging equity, racial discrimination, said researchers, was still rife within UK business. Black employees were found to be worst off and were more than twice as likely to experience racial discrimination compared with Asians and mixed ethnic minorities (19% as opposed to 9% and 8%).

In terms of how discrimination revealed itself, the leading form cited by ethnic minorities was discrimination in work allocation (41%). Verbal abuse came second (33%), marginally higher than the inappropriate and unfair application of work policies or rules (29%).

Racial inequity was driven primarily by perceived cultural differences (cited by 56% of employees and 52% of business leaders) and a lack of diversity in leadership (33% of employees).

When it comes to barriers to achieving racial equity, 25% of white business leaders identified fears of being accused of positive discrimination and lack of understanding as key barriers. However, minority ethnic business leaders felt a lack of empathy was the most significant barrier (34%). Business leaders of large organisations said denial among the leadership teams was the primary challenge (43%). A significant number of business leaders of all backgrounds feared misusing terminology when discussing race issues.

Businesses which actively confronted inequity and racism with practical measures, said researchers, could expect to see an improvement in their employees’ job satisfaction, loyalty, creativity and, ultimately, value, achieving revenue 58% higher than those which did not.

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