Strength in diversity

Most of us will have noticed an increased focus on diversity and inclusion (D&I) in the last few years – there is no doubt the recent #MeToo, Black Lives Matter and trans rights movements have brought to the fore the challenges some groups face in wider society. The pandemic has highlighted that for many businesses the line between the private world and the work world has become less distinct – gone are the days where businesses could exist just to do business. Whether it’s climate change, social and community issues, or D&I, businesses need to be clear about their purpose, legal obligations and the risks that arise from doing nothing.

D&I issues are very much on the agenda for legal businesses, and there are real opportunities for firms of all sizes to reap the diversity dividend. But some firms risk losing out, or worse, stiff penalties. Legislation and regulation, risks to your talent pool and supply chain, and client risks mean that firms need to understand their exposure and plan accordingly.

The SRA requires all regulated firms to report on the diversity of their workforce every two years. The data must be published on the employer’s website, making them publicly available to clients, employees and potential future recruits. But reporting the data is just one step in the process. Firms need to take responsibility for embedding wider D&I practices to ensure good compliance and measurable change. And that change must start with the leadership to be truly sustainable.

Governance management

The SRA Standards and Regulations (STaRs) require that firms have effective structures in place to ensure compliance by the firm and its people. This stands true for managing D&I risks. Firms should look at their existing leadership, decision-making and management structures to understand how they can support better D&I outcomes and how this intersects with their D&I governance structure.

At the end of 2020 Osborne Clarke launched its governance board – the Diversity Champions Forum (DCF). The DCF has a strategic role in challenging and supporting the firm’s D&I programme, ensuring it achieves measurable change in the recruitment, retention and engagement of an increasingly diverse workforce. The firm’s executive board, which has overall accountability for D&I activities, appointed one member to chair the DCF and another to act as an executive champion for race and ethnicity. This added focus and a direct link to the firm’s leadership forum enables the firm to keep diversity high on the executive priority list, driving greater accountability.

Infrastructure for delivery

Once firms have embedded accountability in the overarching governance, they also need to think about what structures are required to deliver the strategy on the ground. If firms can afford it, a dedicated D&I resource can help coordinate activity and bring fresh thinking to their D&I approach. The D&I resource can’t do it all however – firms need to distribute ownership of the D&I work across their business. To be effective, every department needs to understand how they contribute to D&I outcomes and risks. Small firms also need to have structures in place to ensure that if they grow they aren’t exposed to greater risks. So what can be done (regardless of the size of the firm)? Consider the following:

Develop a diversity risk register

Once firms have their infrastructure in place it will be easier to assess the risks facing their business when it comes to D&I. These risks should be articulated in a risk register. As with other compliance risk registers, this will keep those risks in view and lead to more active management.

Data is a hugely powerful tool and harnessing it is essential to making gains in this area. It allows firms to identify those areas where their organisation is failing to deliver diverse or inclusive outcomes that they might be blind to.

Effective data monitoring

A good example of effective monitoring is to look at equal opportunities. If there are people with a specific set of diversity characteristics who are disproportionately failing to progress at a stage of the recruitment process, firms need to be aware of this to be able to investigate and make adjustments. Often businesses mistakenly believe that theory is practice, but often the reality is very different. The only way to offset that gap is through data or adopting a risk-based approach.

There is a need for equal opportunities monitoring at the recruitment stage, but there is also a need to monitor, for example, retention or staff turnover, the accurate documentation of performance reviews, staff engagement and even fair work allocation, among other things. As the old adage goes, if you’re not measuring, you’re not managing, and if you’re not managing, you won’t be alive to the potential risks facing your business.

Embedding strong, actionable policies

Many firms turn to their policies as cover for D&I related risk, citing, for example, policies for a D&I, recruitment, equal opportunities, harassment etc. Having a policy is one thing, but firms have a responsibility to ensure those policies are translated into practice. The best policies are memorable, clearly actionable by the employee and regularly monitored to ensure they are relevant, appropriate and delivering the desired outcomes.

Allay (UK) Ltd v Gehlen highlights the importance of making sure firms have taken the necessary steps to turn policy into clear practice. This case demonstrated that having a policy with weak training provisions in place was not enough. Having a policy outlining the firm’s stance on bullying, harassment and racism is one thing – ensuring managers and employees understand their obligations under that policy is another.

Effective training

Firms can’t be an inclusive workplace if people don’t understand what that means or if they are defining inclusivity for themselves. This is further complicated as the lines between what happens outside and inside the office have become more and more blurred. It’s good practice to create an environment where everyone understands what the business stands for, how they are expected to support each other and what culture the firm is aiming to build.

While many firms provide some form of basic diversity training each year, it may not be enough to support real outcomes. It’s important to educate people in how to spot and respond to discrimination. For example, if a firm is reviewing their D&I training, it’s useful to consider the objective for it – is it there to increase people’s understanding of D&I? Or to ensure understanding of what bullying and harassment looks like in the workplace? If firms are clear about the purpose of their training and design it accordingly, they can track its completion and put in place measures to test its effectiveness.

Clients and supply chains

The business case is clear: increased diversity and inclusivity has been linked to improved organisational performance, talent attraction, higher productivity, and better employee morale and engagement. Added to these benefits, the legal market is changing. Not only are clients also dealing with these issues – and in need of support from their legal experts – many are now looking at how they can deliver diverse outcomes through engaging their supply chain, and that means law firms.

It’s useful to look at a recent pilot programme that was launched in the US by Diversity Lab. The aim was to standardise diversity requirements for panel firms. There are similar efforts and collaborations in the UK.

At Osborne Clarke, we estimate that nine out of 10 panel reviews ask us to explain our approach to D&I in detail. In other bids, we’re asked for this around two-thirds of the time. Clients are also looking at how their work contributes to, or drives, the increasing diversification of the profession. Larger clients are requesting reporting on the diversity of teams working on matters, and some are moving towards establishing targets for firms to meet.

With risk comes opportunity. In many ways D&I in 2021 is reminiscent of climate change over a decade ago – many considered that a niche issue for a limited number of businesses but today it’s clear that climate change represents risks and opportunities for businesses of all sizes. And while the subject matter is different, the challenges and opportunities presented by delivering a clear approach to D&I, grounded in data and accountable risk management, are no different.

Firms that get on the front foot now, understand their risks, collaborate, and build a clear plan of action with accountability, will reap the benefits and avoid the inevitable pitfalls.