Is the End Nigh for DE&I?

The recent decision by UK regulators to drop proposed mandatory diversity, equity and inclusion (DE&I) disclosures has sparked some debate. Some see it as a setback for DE&I initiatives in line with wider global push back; others think it’s a welcome break from excessive regulation or ‘woke-ness’ gone mad.  But what if it’s something entirely different – an opportunity for a reset about what DE&I can really offer?  Martina Doherty discusses.

DE&I proposals initially set out by UK regulators the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in September 2023 suggested that financial firms would be required to report on characteristics such as age, ethnicity, gender, religion, and sexual orientation across their workforce. While tracking these numbers would appear to be useful and easy to collate, the concern was that companies would treat it as another box-ticking exercise, rather than actually improving workplace culture. The UK’s Treasury Select Committee made exactly this point, adding that while these policies often look good on paper they don’t always lead to real change – and quite rightly so.

A specific conversation that springs to my mind is from a roundtable hosted by ACI UK that I facilitated in November last year with young FX professionals. The majority of participants felt that organisations needed to rethink how they ‘do’ diversity, since what they had experienced felt like superficial tick-box initiatives that didn’t translate into meaningful change on the ‘shop floor’. The reality was that many of them had felt pressure early in their careers to work harder than many of their peers in an effort to prove that they were more than just a ‘diversity hire’.

A more recent and perhaps more shocking conversation was with an ex-colleague about his nephew who is at the early stage of his career. The young man in question had been applying for jobs and getting nowhere, so he decided to start disclosing that he was gay (even though he isn’t) because he felt that having no ‘minority characteristics’ was a disadvantage in the screening process. You have to admire his creativity, but it’s a sad state of affairs that someone looking for a first job feels it’s the only way to get on the job ladder.

Both cases are real-world examples of how an obsession with metrics and data has completely derailed DE&I’s original purpose and completely undermined the broader perception of fairness in the workplace. DE&I was born from the positive intention of widening the lens through which companies could spot talent. In doing so, they hoped to attract different types of employees with different perspectives and ways of thinking that would facilitate continuous innovation and improve bottom-line performance. In reality however, it has evolved to nothing more than a quota-based ‘carrot’ to leverage for marketing and PR purposes, or a ‘stick’ by which to name and shame organisations that fail to meet their quotas. 

In that context I believe that the regulators’ recent decision to scrap further quotas is to be applauded. For organisations who might view the decision as a mandate to scale back on or completely drop DE&I in line with current global sentiment however, I would say take a pause. Might you be missing a valuable opportunity to rethink how to ‘do’ DE&I in a way that can be more relevant for employees and could also benefit the business?

A good starting point for this is to understand the differences between demographic and cognitive diversity which I believe is where the majority of the current issues originated.

Winning organisations will always be those open to adapting and adjusting to change, that could mean de-emphasising metrics and refocusing efforts on what DE&I initially intended to achieve

There is a misguided belief that demographic diversity i.e. diversity of race, gender, religion etc is a good proxy for diversity of thought. They are in fact two distinctly different things.  Cognitive diversity stems from differences in the way that people think, generally shaped by their life experiences and perspectives. Gender or ethnic diversity does not necessarily bring new ideas to the table if those individuals share similar backgrounds, social and professional networks and ways of thinking. 

The best ideas and decisions will always come from robust debate among people who think differently. And for this to happen, an organisation’s culture must allow for different perspectives to be heard rather than a focus on people ‘fitting in’. In every organisation worldwide, the chances are that someone is sitting on a brilliant idea afraid to speak up, so in my view addressing this, is far more important than simply tracking demographic representation.

Without inclusivity, diversity in numbers is completely meaningless. In fact, creating groups for “diverse” employees can actually amplify a “them versus us” mentality and lead to the emergence of micro cultures that can conflict with the broader corporate culture.

So rather than celebrating the fact that extensive DE&I reporting is no longer a requirement from UK regulators, or lamenting the fact that DE&I progress appears to have taken a retrograde step, maybe see it as an opportunity for a complete rethink?

Winning organisations will always be those open to adapting and adjusting to change. That could mean de-emphasising metrics and refocusing efforts on what DE&I initially intended to achieve – an industry where talent is the key determinant of success and everyone has a fair chance to compete for the same rewards and recognition.

Martina Doherty is an independent business psychologist, coach and trainer, and founder of MD Consulting