Insurance Post

Diversity or die

Avoiding discrimination in the workplace is not just a legal obligation; it's also one of the best ways for a company to establish a competitive advantage, argues Zoe Campbell

Diversity has been a buzzword in many industries for a while now, yet some firms' strategies relating to the subject still appear to be embryonic. With legislative changes looming, it is imperative that this HR issue is not just addressed, but embraced. So - what exactly is the insurance industry doing about diversity?

Insurer Chubb has championed diversity as the way forward to remain ahead of the competition, as is the case with many US companies. Jenifer Rinehart, former chief diversity officer and now senior vice-president at Chubb Specialty, believes "a company that can attract and retain a broad and diverse employee base has a real competitive advantage in the marketplace".

Attitudes in the UK

UK businesses typically approach diversity for business reasons, whereas historically in the US it has been brought about by pressure from various human-rights groups. Yet the UK seems slow to recognise the benefits, which may reflect an element of island mentality. "Inertia is born out of a desire to hold onto tradition and a fear of change," according to Makbool Javaid, partner at law firm DLA and head of its employment practice.

But the reality is that we live in a global village - and for multinational corporations to service their customers effectively, their workforces need to represent this.

It is probably true to say that all HR departments are aware of the EU directives outlawing discrimination on the grounds of race, religion, beliefs, disability, sex and age. These are all either in force or imminent and should have an impact on diversity. But it's the challenge of implementing functioning strategies that is proving difficult. The majority of companies have specific diversity groups set up to focus on the issue, but these can be ineffectual due to a lack of leadership.

Strong example

"It has to start from the top of an organisation," says Ms Rinehart. "The CEO must make it a priority, be visible and vocal from the top, and hold people in the organisation accountable." Many senior executives and board members, however, are just not buying into diversity. Ian Dodds, managing director for Europe at The FutureWork Institute, maintains that "awareness still needs to be raised". Mr Javaid believes "the key ingredient is leadership and about being more competitive; ensuring you are always tuned into the market you are servicing".

Leadership will certainly help create cohesion for diversity policies.

Research carried out by Professor Ed Schein of Harvard Business School and Insead shows that 80% of the behaviour of people at work is influenced by that of their bosses. If the leadership is not there, then neither is the investment in training. This then reflects directly onto line managers, who do not have the knowledge or support to encourage diversity within their departments.

The greatest asset of any company is its workforce. Forward-thinking firms see their diversity policies as a way of growing and enhancing their profitability with the added benefit of being able to retain staff, and therefore their knowledge pool. Statistics from the Wharton Business School, at the University of Pennsylvania, show that companies nurturing a workforce reflective of society are more profitable.

"You get your intelligence through the workforce. A more diverse workforce leads to a greater understanding and more intelligence about your market," agrees Mr Dodds.

A report published last year by the London Central Learning and Skills Council and the London Human Resources Group, following a survey of 486 UK companies, also found that companies that put effort into diversity reported higher productivity. And if legal actions are brought against a company on the grounds of discrimination - something that is likely to increase as directives are implemented - reputation and brand will be damaged and the chances of recruiting from minority groups will decrease.

Related factors

Maintaining and retaining your workforce is imperative. There are calls for more flexible working hours - all part of diversity - in order to accommodate people aiming for a better work/life balance. For example, there is no point investing heavily in women, who then start a family, only to lose them because their working environment is not sympathetic to home-life needs. It is a waste of the initial investment. Expenditure on any other resource with the same resulting loss would be stamped out immediately, as it would impact on the bottom line.

Economics also have to be taken into consideration. With an ageing population comes the added strain on pensions. People are living longer, making the system of retirement at 60 and 65 somewhat outdated; yet companies are only just picking up on this point.

Barclays is one firm that is now positively encouraging employees to stay in work past retirement age, feeling that it benefits older client groups. When the age discrimination directive comes into force in 2006, contractual retirement will have to be justified. There is no basis to the belief that a younger person is more enthusiastic. Many people will be familiar with the term 'corporate memory loss'; so why make the elder members of a company redundant, when they probably have the most experience and knowledge?

London is the insurance capital of the world. To stay ahead of the game, a shift in attitude is imperative across the board, and a systemic change needs to happen. So, as Elvis would say, we need "a little less conversation, a little more action".

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