AIM 100: Five top tips for companies taking action on diversity
As the focus on diversity continues to grow, it’s critical companies get engaged with diversity, show their commitment and communicate effectively.
As both the right thing to do and a catalyst for better business, there has been a significant focus on achieving greater diversity, equity and inclusion in our workplaces over the past decade. Following the spotlight from the Davies and Hampton-Alexander reviews (which looked at women in senior leadership), the percentage of women in senior leadership positions and on boards of FTSE 350 has increased significantly, while the Parker review of ethnic diversity of UK boards, and others, are encouraging larger companies to broaden their outlook to consider and incorporate more encompassing measures of diversity.
Although there is still plenty more to do, large companies, especially the FTSE 100, have made progress in this area, and this is reflected in their communications, as they report on their various initiatives to create change. But smaller companies are in danger of being left behind.
AIM and Small Cap companies have traditionally not been the focus of these reviews and diversity at board and company level is still lacking at many businesses. As our AIM 100 reporting research, Seeing a bigger picture, demonstrates, many companies feel exposed by a lack of diversity and therefore rely on broad and generic statements about the importance of diversity. And although some companies are proactively promoting diversity as a key focus area, 21% still make no reference to it at all.
In the meantime, research continues to show the value that diversity can bring. New research conducted on behalf of the FRC, Board Diversity and Effectiveness in FTSE 350 Companies, found that higher levels of gender diversity in the boardroom of FTSE 350 companies ‘positively correlate’ to better financial performance, with the boost coming after three to five years. Interest from investors also continues to grow and they are asking companies about the steps they are taking to improve diversity.
So, as AIM and Small Cap companies continue to get to grips with diversity, what can they do to improve their communications in this area? Here are our five top tips:
1. Be transparent
Collecting data on diversity across your workforce and at board level is an important first step. By understanding your base point and including diversity metrics in your reporting, you can start to measure progress.
2. Get board-level buy-in
As we’ve seen, better diversity is linked to better performance, so this is an issue the board should be actively engaged in. Conversely, without buy in, little is likely to change. Ensure this commitment is clearly communicated in your governance reporting.
3. Set out commitments
By including specific commitments to increase diversity across all levels of the organisation and report on progress year-on-year, it makes change tangible and accountable. It’s important to not only focus on gender, but consider other aspects of diversity too, such as ethnicity.
4. Make it meaningful
Bring your reporting to life by citing any activities and initiatives that are already underway and provide concrete examples. This could be by providing training opportunities, building networks, or developing more diverse shortlists for senior-level positions.
5. Share it widely
Diversity and inclusion is an important and cared-about issue for employees, potential new recruits, customers and other stakeholders. Share what you are doing with all these groups – and as they may engage in different ways, this means going beyond corporate reporting and making use of your website, social media and other channels.
Diversity is an ongoing issue that will continue to rise up the agenda for large and small companies alike. While initiatives to date have focused on FTSE 350 companies, the FCA’s current consultation on diversity disclosure targets all listed companies, whatever their size, and further requirements will certainly be coming down the line. This means it’s important that all companies get engaged with diversity, show their commitment and communicate their efforts and progress.
For more information on diversity in corporate reporting, and much more, download our latest AIM 100 reporting research: Seeing a bigger picture. We’d love to hear your thoughts – please get in touch with Rachel Crossley at [email protected] and join the conversation.