Understanding the business benefits of diversity

Customers

The UK economy and population are changing and businesses that are able to meet the needs of different types of customers will significantly increase their profit margins. An appreciation of diversity can improve performance in existing markets as well as enabling access to new ones.

Although there are many different types of customers, when considering your products or services the more diverse your customer base, the more likely your business is to be successful.

How diverse are your customers?

Statistics show that businesses with good race diversity strategies are seeing their profits increase. In a recent study of around 100 firms they linked a total of £13bn profits to activities around race. More than 90% said diversity made good business sense for them (source: Race for Opportunity - the UK’s the leading race equality organisation).

Findings of the ‘Out Now 2005 Diva and Gay Times Readers Surveys’ reveal that British lesbians and gay men, on average, are very well-employed, well-paid and are out-spending their incomes on a range of lifestyle product categories. In short the gay market is big business.

There are approximately 10 million disabled people in the UK, and is a market with potential which is often overlooked. Inclusiveness in the way services are offered is increasingly being recognised as keys to opening up new markets. (source: Employers Forum on Disability).

Consumer research suggests that the spending habits of women are changing and traditionally male-dominated markets have seen an increase in the number of women customers (for example, the motor industry). (source: Research and Markets, 2004).

By appealing to a diverse range of ages, businesses have a greater range of options. Age-diverse businesses are placed in an excellent position to reach out to and capitalise on untapped markets - for instance the expanding grey market of retired people with large incomes. It also helps them identify profitable new products or services. (source: Employers Forum on Age 2002)

So what does this mean for your business?

Disposable Incomes – What is the monetary value of a diverse customer base?

• The estimated disposable income of ethnic minorities is £46.7billion. (source: Timesonline)
• Britain’s 3.6 million gay people earned over £70billion in 2005.  This income leads to higher gay disposable income an estimated £4,656,500,000.
• Those aged 55-65 have high disposable incomes, on average their weekly disposable income is 17% higher than the national average. (source: Annual Family Expenditure Survey)
• Over-55s are the most affluent age group, 80% of the country’s wealth is held by people aged 50 or over. (source: BBC)
• Women on average have a disposable monthly income of £228, of which £188 will be spent on ‘luxuries’. (Foundation Financial Planning, Moneyextra 2004)
• Disabled people in the UK have an annual disposable income of £80 billion. (source: Employers Forum on Disability)

Media – where do you advertise?

• Consider advertising in key ethnic minority media channels such as ‘The Voice’ newspaper, local newspapers (eg in area of high ethnic minority populations) and outdoor poster sites in key ethnic minority communities. 
• 150,000 read the Pink Paper each week and over 60,000 copies of Gay Times are sold through newsagents each month. Gay people are also most likely to source their product information from the internet (93%), followed by the TV (60%) and radio (26%). The combined internet/radio cross media sell reaches 79% of gay people (source GaytoZ)
• People with disabilities are users of the Internet like anyone else. In some cases, it may be more appropriate for them to use than other forms of service. The are a number of specialist journals and media e.g. Disability Now (a newspaper with an estimated readership of 70,000) or Disability Times which is on Teletext (Channel 4, p156) providing a 24 hour up-to-the minute news & information service to an audience of 16 million people.
• Over 55s are likely to be watching TV for up to 34 hours every week – that’s 8 hours more than the average – 26 hours, they are also heavy radio listeners; they listen to about 24 hours per week – 7% more than average. In addition more and more over 55s are going online; this represents over 20% of the online population. (source: BBC)

Just how many customers could you be missing out on?

• Almost 5 million people of ethnic minority backgrounds live in the UK. By 2010, ethnic minority people of working age will have grown twenty times faster than their white counterparts. In many urban areas across Britain, ethnic minority groups will make up the majority. (source: Ethnos, Research & Consultancy)
• Just over 6% of the UK population (around 3.6 million people) is lesbian or gay (source: Department of Trade & Industry). Gay consumers also are immensely brand loyal, with 72% saying once they find a brand they like they stick with it, compared to 65% of straight people (source GaytoZ)
• Around one in six adults has a disability (source: Employers Forum on Disability)
• More than a quarter of the population are over 55 (approx 15.5million).  In the future, this group will grow to just over a third of the population. (source: BBC)
• It is predicted that by 2014 the UK will have more people over 65 than under 16 years. (source: Chartered Institute of Personnel & Development)

Further advice and information can be obtained from the following sources:

Race for Opportunity
www.bitc.org.uk/programmes/programme_directory/race_for_opportunity
Telephone: 020 7566 8707

Employers Forum on Disability
www.employers-forum.co.uk
Telephone: 020 7089 2410

Employers Forum on Age
www.efa.org.uk
Telephone: 0845 456 2495

Stonewall (Equality & Justice for Lesbians, Gay Men and Bisexuals)
www.stonewall.org.uk
Telephone: 08000 50 20 20

Chartered Institute of Personnel and Development
www.cipd.co.uk
Telephone: 020 8612 6200

Employment

There is plenty of legislation to prevent discrimination both within the workplace and also in the service or supply of customers. However, away from the legal aspects, the area of diversity can provide a huge business advantage for your company. For example, a diverse workforce can help your company to become more productive and innovative by providing different perspectives, ideas or understanding of products provided and customer markets. If your company is made up of mainly of white middle class, middle aged men for instance, how can they honestly presume to understand and identify with the needs of customers who may be a diverse mix of ethnic origins, gender and age?

For the reputation of your company, it is essential that your employees and potential employees are not subject to any form of discrimination, and that your company complies with employment legislation.

The dangers of not complying with the law could be:

• High cost of management time dealing with employment issues
• Damaging publicity for you company affecting your reputation
• Possible compensation costs (which can be unlimited)
• High potential of legal fees to assist with dealing with issues
• Adverse effect on employee/industrial relations

The recruitment and selection stage may be a potential employee’s first contact with your company; therefore it is crucial to ensure that there is no discrimination and that potential employees are selected on their merit and suitability for the job. If not enough care is taken at this stage, an aggrieved candidate may have an opportunity to successfully claim discrimination.

There are several areas of legislation relating to discrimination in the workplace, and you should be aware of these for the benefit of your company.

The Sex Discrimination Act 1975 (SDA),
Race Relations Act 1976 (RRA)
Employment Equality (Sexual Orientation) Regulations 2003 (EESOR)
Employment Equality (Religion & Belief) Regulations 2003 (EERBR)
The Disability Discrimination Act 2005 (DDA 2005)
Employment Equality (Age) Regulations 2006

Under these Acts it is unlawful to discriminate in the advertising of vacancies, selection of candidates for interview, or in the offer of employment.

Definition of Discrimination

Direct discrimination

Direct discrimination is where a person is treated differently because of his/her race, sex, marital status, sexual orientation, religion or belief (or failure to follow a particular religion or belief) and such treatment is less favourable than he/she would otherwise have received.

Indirect Discrimination

Indirect discrimination occurs where an employer is deemed to have treated all employees the same, however, without sufficient justification, a practice or policy adversely affects one particular sex, race, a group of people of the same sexual orientation, or particular religion or belief more than another.

Victimisation

Victimisation occurs when an individual is discriminated against because they have exercised their rights under these Acts or the Equal Pay Act 1970.

Exceptions to discrimination protection

There are some areas of employment legislation where it is recognised that there may be specific circumstances to give favourable treatment to a particular gender. These areas are:

Positive Action

If it has been identified that one sex or race is under represented in a particular job role or area, and in the previous 12 months there has either been no individuals of that particular sex or race, or a small proportion carrying out the duties, the employer can then try to encourage applications by training or advertising, however at the point of the recruitment / selection process the decision making process should be fair and transparent, to avoid accusations of positive discrimination. Positive action is legal; positive discrimination is not!

Disability Discrimination

Under the Disability Discrimination Act 1995 (DDA) a person is protected by the legislation if he or she has:
“a physical or mental impairment which has a substantial and long-term adverse effect on his/her ability to carry out normal day-to-day activities.”

Unless there is good reason which can be justified under the legislation, it is discriminatory to treat a disabled person less favourably than someone else because of their disability. This applies to all areas of employment (including recruitment, training, promotion and dismissal).

In order to comply with the DDA, an employer has a duty to review what changes could be made to the workplace or to the way the work is done, and then make any changes which are reasonable in order to help a disabled person to do the job. The test of ‘what is reasonable’ depends on a number of factors including:

• How effective the adjustment is in preventing the disadvantage
• How practical the adjustment is
• The financial and other cost implications to the employer and the likely disruption
• The financial resources of the employer

Once all of these factors have been taken in account, an employer is still able to recruit or promote the best person for the job.

As an employer you are not expected to make any changes which would break health or safety laws.

Age Discrimination Act 2006

Age discrimination legislation is coming into force in October 2006. The Age Discrimination Act will be the final strand of equality legislation to be implemented and it will be enforced alongside the existing legislation on race, sex, disability, sexual orientation, religion or belief.

From October 2006 it will be illegal to discriminate on the basis of age unless there is a Genuine Occupational Requirement (GOR) e.g bar staff serving alcohol must be at least 18. or if there is an objective justification. The 'test of objective justification', means employers will have to show with evidence that they are pursuing a legitimate aim and that it is an appropriate and necessary (proportionate) means of achieving that aim.

However, in most cases these are likely to be difficult to prove.

This information provided is a snapshot of the legislative requirements that you need to be aware of.

Further advice and information can be obtained from the following sources:

Equal Opportunities Commission (EOC)
www.eoc.org.uk
Telephone advice helpline: 0845 601 5901

Commission for Racial Equality (CRE)
www.cre.gov.uk
CRE Information Services: 020 7939 0000

Disability Rights Commission (DRC)
www.drc-gb.org
Telephone advice helpline: 08457 622 633

ACAS (Advisory, Conciliation and Arbitration Service)
www.acas.org.uk
Telephone advice helpline: 08457 47 47 47

DTI (Department of Trade and Industry)
www.dti.gov.uk
Telephone advice helpline: 020 7215 5000

Equality Direct
www.equalitydirect.org.uk

This service is designed to give business managers easy access to authoritative and joined-up advice on a wide range of equality issues.
Telephone advice helpline: 0845 600 3444
    

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