Equality, diversity and inclusion and the in-house legal team

Here, we look at current and future requirements in inclusion and diversity for UK organisations, and the implications for in-house legal teams.

We also explore ways in which in-house lawyers can take the lead in maximising EDI in their organisation.

Inclusion and diversity (I&D) is an increasingly important and high profile issue for organisations, with implications for boards and senior management. There is increasing pressure to demonstrate I&D by reference to the number of women and people of ethnic and cultural diversity on boards and in senior management roles. Planning for this needs to begin now.

EDI is an increasingly important and high profile issue for organisations, with implications for boards and senior management. There is increasing pressure to demonstrate EDI by reference to the number of women and people of ethnic and cultural diversity on boards and in senior management roles.

Recent years have seen some improvement in the representation of women on the boards of major UK businesses. Look beneath the headline figures, however, and it’s clear that there is still some way to go.

The 2024 FTSE Women Leaders Review, for example, found that while women hold 42% of directorships in big firms (a record high), only ten FTSE 100 companies have a female Chief Executive. Among the top 350 FTSE companies, the figure rises to 21. That said, the UK fares well against international rivals with EDI quotas.

It’s also worth noting that women account for 25% of FTSE 100 Finance Directors/Chief Finance Officers and 27% of Chief Information Officers.

In 2022, the Financial Conduct Authority set three EDI-related rules for UK listed companies. They mandate that:

  • At least 40% of the board should be female;
  • At least one of the senior board positions (Chair, Chief Executive Officer, Chief Financial Officer or Senior Independent Director (SID) should be a woman; and
  • At least one member of the board should be from an ethnic minority background excluding white ethnic groups (as set out in categories used by the Office for National Statistics).

FTSE companies can claim success when it comes to the number of directors from ethnic minorities. In 2017, The Parker Review, set up in 2015 to encourage UK businesses to take advantage of the talents among ethnic minorities, challenged the FTSE 250 to have at least one ethnic minority director by the end of 2024. In its March 2024 update report, The Parker Review pointed out that 79% of those business had achieved that target.

The business case for EDI

There are powerful reasons putting EDI at the heart of your in-house legal function. It will, for example, enable you to:

  • Best reflect your internal clients
    Teams that mirror the diversity of their clients and the wider community demonstrate a deep understanding of the problems they are asked to advise on.
  • Boost innovation, creativity and collaboration
    A team with a multitude of perspectives and viewpoints is a team that can bring creativity to problem solving. This, in turn, engenders a positive working environment and maximises colleague engagement; and
  • Recruit great people
    When colleagues of all age groups, races, cultures, ethnicities, abilities and sexual orientations feel they belong in your organisation, word spreads. This helps you attract talent with the widest life experiences and the broadest insights into your team.

It’s not just about senior roles

While the focus of many reports and studies into EDI is on senior and board level positions, nurturing talent at all levels is crucial if your organisation is to develop the quality of leadership it needs and achieve its EDI goals.

It’s also worth mentioning the Gender Pay Gap Reporting Regulations. From 2018, private and voluntary sector employers with 250 or more employees have been required to publish gender pay gap information annually on a publicly accessible website.

The information that employers must report on includes differences in mean and median hourly pay and bonuses between men and women as well as the proportion of women in each pay quartile within the organisation.

So, if your organisation wants superior financial performance, higher levels of staff engagement, more innovation and improved client retention, EDI has a big role to play.

Optimise EDI in your organisation

You may be asking yourself what good EDI looks like or wondering where to start. If so, you’re not alone. Making progress on EDI can seem complex, especially at a time when there is so much volatility and uncertainty in the economic climate.

For some organisations, particularly those just starting to get to grips with EDI, it's tempting to jump straight in. They may convince themselves that by arranging a few events, setting up a women's network and maybe even a committee, the job is done and all the boxes are ticked. And in the immediate aftermath, this approach will certainly deliver a feelgood factor. However, to achieve something sustainable, a more structured approach is required.

Start with your organisation’s strategy and the current trends and developments in the sector you're working in. Listen to what your colleagues, suppliers and clients have to say about the issues and how they view your organisation in this context. This will give you a snapshot of where you are and where you think you should be going. It’ll also help to give people throughout your organisation a sense of ownership in your organisation’s EDI plans.

Next, decide who’s going to do the work. The legal department will have a stake and HR will play a central role. Involve others, too. In most organisations, there’s a rich mix of people to include, such as those who:

  • Are enthusiastic and have a vested interest in EDI;
  • Simply believe it’s the right thing to do; and
  • Are not fully committed (as they think the workplace allows everyone to succeed on their own merits as things are) but are willing to get involved as it looks good in the eyes of clients, so is good for sales.

Whatever their stance, getting all these people involved will help minimise the risk of group think (where a desire for harmony and unity suppresses independent thought) and subject ideas as to rigorous testing. Be ready to experiment a little: the author has participated in live drama sessions to learn about equality, diversity and inclusion. The ideas raised a few eyebrows at first, but once the early participants had given it a try and their feedback was acted on, we were able to roll the concept out across the whole organisation.

Measuring EDI

According to a popular saying, what gets measured gets done. So, in the spirit of diversity, a good balance of quantitative and qualitative metrics will give you a comprehensive evaluation of your progress. It’s important to know whether the proportion of your senior managers who are women is in line with labour market availability. However, it’s equally vital to know what your colleagues – introverts and extroverts alike - think and say about working in your organisation.

Conclusion

Major corporations and other organisations continue to demonstrate their success in hitting targets for the number of women and people of colour in senior and board positions. This will influence how organisations develop people at all levels and prepare them for the senior openings of the future.

To optimise EDI in your organisation, start by understanding its wider objectives and how it’s viewed in this context by staff, suppliers and clients. Involve people from all areas of the organisation and include individuals with wide-ranging attitudes to EDI. Develop a set of metrics so you can measure the effectiveness of your initiatives in quantitative and qualitative terms.