Despite much talk, diversity & inclusion efforts are falling short

12 October 2020 4 min. read

Well over 80% of large Australian businesses now report a focus on improving diversity & inclusion (D&I) in their workplace, although significant action-oriented steps still need to be taken. This is according to a new Mercer report.

Mercer’s survey examined a whole spectrum of inclusivity factors, spanning: engagement, accountability & leadership; organisational design and governance; pay equity commitments and analysis; talent practices & career development; organisational flexibility, and a range of others.

The goal was to paint a picture of how easy it is for women and minority groups to perform and thrive in the Australian workplace. What emerged is a gap between diversity & inclusion efforts and the end results. From an initiative perspective, Mercer found that businesses are checking all the right boxes. A workforce increasingly dominated by purpose-driven millennials means that organisations can’t be left behind.

The state of diversity & inclusion initiatives in Australia

Businesses have also realised the tangible benefits that come with gender parity. Indeed, experts suggest that a more equitable workforce could add billions in economic value. According to Mercer, this social and economic pressure has combined to spur businesses into action. In fact, 84% of businesses are now focused on diversity & inclusion enhancement. 

Testament to the importance being given to the issue, well over 70% of organisations report that their senior executives are involved in the diversity & inclusion improvement process. The end goal is obviously to have a truly equitable workplace, and Mercer found that current efforts remain superficial and ineffective to some extent.

For instance, despite more than 80% of businesses reporting efforts to improve diversity & inclusion, only half have actually put a medium to long term diversity & inclusion strategy on paper. And less than half have set clear quantitative targets of where they want to be in terms of gender parity and pay equity.

Shortfalls in diversity & inclusion efforts

Similarly, while many senior executives are involved as sponsors/ambassadors in diversity & inclusion initiatives, only 40% have staff devoted to managing and implementing these efforts. Meanwhile, less than a quarter of firms have a chief diversity or inclusion officer. Mercer points out that the absence of a strategy makes it hard to evaluate and strategise, while the absence of dedicated staff speaks to a lack of commitment.

And there are other areas where efforts are falling short. Much fewer than half of the surveyed businesses actually conduct a pay equity analysis. And, if pay inequity does come up on the radar, only half have a formalised remediation process in place, while more than 20% fail to take both base and variable pay into consideration when giving employees a pay increase. Add to this the lack of board oversight in diversity & inclusion efforts, and the shortfall becomes apparent.

According to Katelijne Pee, Talent & Capability Leader at Mercer, all these gaps translate into very real issues for women on a daily basis. “Across industries, women continue to face challenges — from unequal pay to the absence of support systems that help them and their partners balance work and family responsibilities and allow them to advance.

Gaps in equal opportunity

She highlights that the number of issues that still persist make the current scenario far from sustainable. “We have not seen the same increase in female representation at the executive level as we have at the board level. And, although the gender pay gap has shrunk, men still out-earn women by more than $26,000 on average, with pay gaps in every industry and occupation. Across the board, the pace of change is just too frustratingly slow to be acceptable.”

This lagging progress comes with a cost. According to researchers from the Bankwest Curtin Economics Centre, it has been proven that there is a clear correlation between companies with women in the boardroom and improved financial performance. While this had already been demonstrated internationally, the July 2020 study is notable for being the first of its kind in Australia.

Beyond female advancement, Australia lags behind the global average when it comes to factors such as equal access to advancement opportunities, equal access to movement within business units and geographies, or even equal access to people manager roles. Mercer suggests that the most “glaring gap” is the lack of tracking of gender equity initiatives, which makes it hard to develop more effective measures.