1. The Business Case for Diversity: Good Practices in the Workplace, pp. 20-25, European Commission, (2005)

Whilst the aims and projected benefits of diversity policies and approaches vary considerably, companies tend to see improvements on a number of key fronts, including: effecting culture change; improving workforce diversity and cultural mix; enhancing market opportunities; external recognition and image. This is reflected in the functional areas that their diversity initiatives are targeted towards (Table 5).

  1. Effecting culture change and enhancing organisational capital

In line with the importance companies increasingly place on shared corporate values and philosophy, the efforts of many companies focus on achieving lasting culture change. In promoting organisational environments that respect diversity and practice anti-discrimination, businesses are very aware of the need to achieve active employee support for their equality initiatives.

The EBTP consultation highlighted discriminatory attitudes and behaviours in the workplace as a key obstacle in promoting diversity approaches and practices. For many companies therefore, strategies to raise awareness and understanding about diversity issues and policies is a fundamental part of the process of implementing equality initiatives. This desire to raise awareness and win 'hearts and minds' is evident in the titles and slogans of many company diversity programmes. Examples include: 'Everyone is Welcome at Tesco', 'Open Minds, Open Markets' (UBS), 'Getting Older, Thinking Younger' (Pfizer Deutschland), and 'Success Through Inclusion' (Barclays PLC). Diversity policies that contribute to the creation of environments that promote respect and inclusiveness are seen by many companies as essential to business success,

Table 5: Areas covered by diversity initiatives

helping to attract high quality recruits and reduce operating costs through lower staff turnover and absenteeism. Based on independent research into the consequences of bullying and harassment, Royal Mail (UK) for instance estimates that it has achieved a ?7m saving from the introduction of anti-bullying and harassment policies and procedures.

TNT, which has a global business network, has a worldwide diversity and inclusion strategy with many examples of good practice across its different businesses. TNT Austria, which has won a number of diversity awards, calculates that as a result of effective management of diversity and inclusion, it has seen a reduction of yearly staff turnover from 25% in 2000 to 10% in 2003, and a similar reduction in absenteeism. It has also saved ?15,000 in taxes from the employment of disabled employees.

Communication programmes and awareness raising campaigns aimed at staff and customers accompany many initiatives. Increasingly companies also conduct annual employee attitude surveys that seek to access the views and opinions of staff on equality and diversity issues, as well as to measure changes in staff perceptions/satisfaction with company policies and practices.

Changes in the wider society and in labour and product markets are often accompanied by increasing diversity, requiring companies to adapt. To achieve sustainable growth, it is imperative for businesses to become skilled at managing and harnessing the full potential that diversity can offer. One of the pioneers of comprehensive change management in the face of diversity is Royal Dutch Shell, which has a three-level diversity and inclusion management programme to facilitate its change process. The programme focuses on systematic change, and is underpinned by a belief that change must occur simultaneously at personal, interpersonal and organisational levels.

Some companies have found that initiatives to implement and embed diversity policy and practices have a wider knock-on effect and cultural impact, by improving communication and information-sharing channels across companies. Improved communication capabilities in turn enhance the ability to foster shared cultures, norms and values across companies and groups of companies.

Similarly, diversity and inclusion practices are credited with having a beneficial impact on improving managerial styles, skills and performance in areas such as communication, people management, goal setting and planning.

  1. Improving workforce diversity and cultural mix - human capital benefits

A highly skilled, innovative and diverse workforce is important for business success, as has been emphasised in earlier sections of the report. Indeed, resolving labour shortages and recruiting and retaining high quality staff from diverse backgrounds are key reasons for companies to implement diversity policies. More than 40% of all the companies in the EBTP survey gave this as the primary business benefit.

Achieving greater workforce diversity is a key aim for many companies. The EBTP consultation highlighted the fact that increasing access to a wider labour pool and developing the ability to attract and retain high quality employees from diverse backgrounds is one of the most important reasons for companies to adopt diversity policies and practices (Table 6). Some companies also suggest that increasing their recruitment efforts to target particular communities has resulted in an improved standing within those communities at a much wider level.

To achieve such changes in their staffing profiles, companies undertake a wide range of initiatives. These include specially targeted advertising to reach disadvantaged and socially excluded communities, and the establishment of partnerships with community and statutory agencies to enhance their recruitment efforts, as well as to support local/regional social and economic development goals. The previous section highlighted some of the targeted positive action strategies aimed specifically at under-represented groups such as ethnic minorities and disabled people adopted by many companies, including: supporting access to work experience, vocational skills training and access to higher education.

Internal human resources policies that support recruitment aimed at increasing workforce diversity often complement such outward facing activities. In some companies person specifications have been changed to try to actively welcome and attract diversity, for instance, by requiring applicants to have an open outlook, the

Table 6: Perceived benefits of diversity

ability to speak more than one language, cross cultural experience, ecological sensitivity, commitment to equal opportunities, etc.

Some companies in countries or sectors facing severe labour shortages have signed trade agreements with foreign and local labour departments to hire and train specific numbers of workers from abroad. Grupo Vips (Spain) for example has such arrangements with countries including Romania, Bulgaria, Morocco, Ecuador, Columbia and the Dominican Republic. It supports such recruitment efforts with preparatory training for potential employees, often done in their countries of origin, and which includes teaching Spanish. The company stresses that once recruited, these foreign workers are guaranteed equal opportunities in all aspects of their employment and further development.

Some employment companies, like Manpower, Randstad and Adecco also play an important role in supporting their business customers efforts to increase workforce diversity and address the under-representation of disadvantaged groups. They all have innovative and proactive initiatives to address social exclusion, enhance skills development and bridge the gap between employers and diverse communities. For example, Randstad, which has consistently been rated as one of the best employers in Belgium for the past three years, has a special Diversity Division that encourages employers to apply the principles of equality in their recruitment procedures, as well as helping companies to realise the potential benefits of diversity.

Multinational companies in particular are seeking to enhance their global management capacity through initiatives to ensure they attract and retain a diverse and culturally competent workforce able to work across national, linguistic and cultural boundaries. They are also seeking to recruit employees representing local communities and country contexts at all levels of operations and management.

As well as improving workforce diversity, companies also need the skills to effectively manage it and create environments that ensure respect and equity for all. Companies have responded to this need by implementing a range of Human Resource policies and programmes aimed at enhancing the work environment and experience of staff. These include: anti-bullying policies, flexible working and home working policies, grievance, complaints and safety at work policies and procedures, together with recording and management information systems to measure progress against equality goals.

A large number of programmes are also aimed at employee development and awareness raising to cover a broad spectrum of staff development needs. These include: diversity awareness training, cross cultural competence and exchange programmes, legislative and compliance issues, building leadership/managerial commitment and skills, language and integration programmes for migrant workers, fair recruitment, selection and appraisals processes, and change management programmes. Many companies also provide managers with a series of performance planning frameworks, diversity checklists and toolkits to support them in policy implementation.

A diverse workforce with high quality people skills also helps companies to more easily accommodate the demands of their diverse customer base, improving customer service. It also provides additional resources for accessing new markets and market intelligence. Many companies currently support a range of special interest employee resource groups to improve two-way communication processes, and to assist companies in their consultation and information seeking strategies.

  1. Enhancing market opportunities

Diversity strategies to enhance market-related benefits aim to achieve better market segmentation and improved customer satisfaction. They also aim for an increase in repeat business and referrals to potential new customers through existing satisfied clients and customers.

Companies committed to diversity see many opportunities for expansion of their services and products. Research for the Compendium uncovered a range of examples of targeted marketing and product developments aimed at increasing revenue by catering for new market segments and traditionally excluded groups. Some of these developments aim to enable more people to access existing products and services. For socially progressive companies, such initiatives are not driven solely by the desire to increase revenue, but with a commitment to tackling social exclusion and disadvantage faced by particular groups. They also contribute to enhancing the company's image and making them more attractive to society in general.

Examples include the design and marketing of products for visually impaired customers, such as the Internet Driver's License (IBM Germany) and voice texting (BT). The Internet Driver's License is a talking web browser that helps overcome barriers to accessing particular technologies by enabling people with visual impairments to surf the Internet and communicate electronically by e-mail. Similarly, the BT product enables them to access the text function on mobile phones by allowing them to send and receive SMS (text) messages in voice format.

Some companies like Bertelsmann have initiated and developed unique practical working and living aids to benefit people with disabilities in their working environment. These aids are also made available to society in general. Another such example is BT's Big Button Telephone. Originally designed by an employee who had arthritis, it has found a wider customer base, attracted to its ease of use as compared to the increasingly smaller alternatives available in the marketplace. Similarly, a Volvo car designed by women has had wide cross-over appeal because of its many user-friendly features, originally designed with women drivers in mind. These companies see such inclusive thinking and approaches simply as a matter of good design that makes it possible for everyone to use a product.

Depending on their sector of business, good practice companies also contributed a wide range of examples of targeted marketing campaigns with strong diversity and inclusion messages, to promote uptake of their products and services by particular groups such as the elderly, women, gays and lesbians, and ethnic minorities. These include Tesco's introduction of multicultural food ranges in different neighbourhoods to meet local customer food preferences and Deutsche Bank's retail banking unit's targeted marketing campaign to increase its gay and lesbian customer base. The bank achieved a
directly traceable profit and business success with its pilot in Berlin, and is now in the process of extending the campaign to other major cities in Germany. Other examples include the Dove soap marketing campaign by Unilever, underpinned by a clear diversity philosophy and message, which resulted in a 700% increase in sales of the product line.

Coco-Mat and Manchalan both show that applying equality and diversity principles to mainstream industrial performance is compatible with business success. Since its creation in 1999, Manchalan has increased its revenue from ?332,475 to ?2.7m, and its staff from 56 to 236 in 2004. Similarly, Coco-Mat, founded in 1989 by three former refugees, has grown dramatically and has a current turnover in excess of ?12.3m and stores in Greece, a number of other European countries and China.

Media coverage in general is seen as essential in helping raise the public profile and image of businesses by promoting their equality and diversity values and commitments. But beyond that, it is also equated by some companies with revenue savings equivalent to the advertising costs of marketing campaigns.

  1. External recognition and image

Good practice companies recognise the importance of corporate image and reputation, and undertake a wide range of outward-facing activities and initiatives that help raise their external standing in society, and contribute to an understanding of the principles and values they wish to project.

Such external activities include developing partnerships and links with academic and research institutions, participating in research studies and benchmarking exercises, entering for equality and diversity recognition awards, philanthropic giving to tackle social exclusion, supporting access to education and training opportunities, sports development activities, presence/sponsorship of community festivals and financial support to NGOs and the charitable sector.

Good practice companies also seek external validation of their diversity efforts, using diversity awards as an important form of external recognition. They are often keen to enter their companies for a broad spectrum of these awards, and to measure their progress against the various standards and levels of performance set by them.

Many good practice companies also stress the importance of participating in external networks and forums, and for their senior leaders to speak externally at conferences, employer networks, to the media and to other platforms concerned with equality and diversity.

The Compendium highlights the activities of companies that positively seek to embrace their social responsibilities. As a media company Bertelsmann used its capacity and communications infrastructure to launch an initiative to raise internal and external awareness, and promote education about disabilities within the company and among the public at large. It estimates that 64 million people watched the TV spots that formed part of its campaign. Similarly, Grupo Santander (Spain) sees its support of marketing campaigns around social issues ( cooperating with such NGOs as the Red Cross, Doct-ors without Borders, and UNICEF) as an important part of its effort to enhance its customer base and corporate image.