Crisis of Confidence in Diversity and Inclusion

The recent turmoil at the top of two organisations, NatWest and Stonewall  has focused attention onto the Diversity and Inclusion sector (D&I), and revealed tensions which have been brewing for some time. At first glance the retail bank and the LGBT Charity may not seem to have much in common but both have lost their leadership because their organisations may have promoted ‘inclusion’ to such an extent that they exceeded their business mandate and lost the confidence of their customer base.

Alison Rose, CEO of NatWest, owner of Coutts private bank was forced to resign after news broke that Coutts had closed the bank account of politician Nigel Farage because, it was revealed by a Freedom of Information request, his values or political views didn’t fit in with the bank’s ‘inclusive values’. This was followed a day or two later by the resignation of Peter Flavel, the CEO of Coutts. Shares in Nat West fell by more than 8% last week in an ironic twist given that Mr Farage’s custom was considered by those who closed the account to be a reputational risk.

Separately, Nancy Kelley, the Chief Executive of Stonewall has made a premature and hasty departure without explanation. Then on July 30th Chair of Trustees Iain Anderson made some remarks in a Sky interview which were followed hours later by a public retraction from Stonewall and an apology from him, leaving questions about the charity’s leadership.

The Nigel Farage/Coutts public debacle has revealed that the public do not approve of a bank straying into political and moral waters. As Warren Buffett said in a FT article a couple of years ago, “it is not the job of a business to make moral judgements”

But increasingly businesses of all kinds have been doing just that.

Organisations – moral agents of social change?

Over the past few years many corporates and public sector organisations have embraced elements of the diversity and ESG (Environmental,Social and Governance) agenda. However on occasion they have done so without reference to equality law and introduced policies not always supported by the wider population or even their own employees.

How did we get here? In 2002 Schneider Ross colleague Sue Ollerearnshaw and myself wrote a report called the Business of Diversity. In it we outlined the key business drivers for diversity like recruitment and retention, and found that there was also a place for social justice. Was it always necessary to show that adopting a policy would improve the bottom line? Sometimes implementing diversity policies also seemed to be the right thing to do, as many leaders told us.  Corporate social responsibility (before it became ESG) was taken seriously by large global companies and and at times included the diversity team. CSR translated into organisations being active and responsible in the communities in which they operated like having volunteer schemes, supporting local schools as well as undertaking environmental projects. These projects tended to be localised and particular to each organisation. Diversity was approached in the same way. Different organisations had different needs depending on the business, culture and location. Social justice, rarely articulated, then meant broadly that organisations had a part to play in the wider society around them. What organisations didn’t feel was they were themselves agents of social change and that that was part of their mission. It wasn’t. They just wanted to reflect good practice. This is where the emphasis and indeed the types of activities and policies have changed over the past twenty years.

The concept of social justice today has some very specific meanings, most of which are derived from left wing academia, not historically a friend of capitalist enterprise. It is heavily influenced by critical race theory (born in the US) and identity politics and has entered the diversity discourse via the concept of equity which has replaced equality. Equity refers to the fair division of resources, opportunities, and privileges in society. Criticism of this approach is that it creates a hierarchy of privilege creating division rather than emphasising commonalities. And others argue that it is not in organisations’ power or interest to guarantee outcomes rather than provide opportunities.

One strand of diversity has been particularly visible and dominant in recent years and that is LGBT or rather the T. This may seem strange given that the number of trans employees in any organisation is likely to be very, very small, in itself raising questions as to the rationale for its prominence. Special celebratory days, weeks and even months have given corporates an opportunity to advertise their ‘progressive’ credentials with reference to one group/identity or another. Enter Stonewall which since 2015, has advised thousands of organisations on how to be trans inclusive.

Time’s up for Stonewall?

But the LGBT charity and lobby group has also had a turbulent time in recent weeks. In early July Chief Executive Nancy Kelley unexpectedly announced that she was leaving after being at the helm three years. On July 2Oth Chairman of Trustees, Iain Anderson gave an interview to Sky presenter Beth Rigby which was painful to watch. Mr Anderson struggled to answer questions Beth Rigby posed about the conflict between some of the policies and demands Stonewall promote for trans people and women’s rights, particularly in sport. However, Anderson did give a small hint of a suggestion that Stonewall would be prepared to meet with groups challenging its approach (like the LGB Alliance with which it has refused a meeting on two occasions). You can watch the whole interview here

The following day a statement was issued by Stonewall correcting  Mr Anderson and in that statement Mr Anderson also issued an apology for upsetting the LGBT community. The statement is here

 This was descending into farce. That very afternoon Chief Executive, Nancy Kelley also left the organisation for good before her period of notice was up. In another blow to Stonewall the Labour Party has now done a major U turn on Trans Self Identification, one of Stonewall’s key goals. Who knows where that leaves Stonewall now? The LGBT charity has found itself being increasingly challenged on the policies it promotes to those who sign up to its Diversity Champions programme and rewards in its Workplace Equality Index. These includes the declaration of pronouns in emails and even at meetings, mixed sex toilets and the removal of gender based language like mothers and fathers. This has been rolled out in countless organisations via diversity and inclusion departments in the name of inclusion, regardless of the number of trans employees they have and without any consultation to other employees.  However recent years have seen some high profile companies leaving the schemes.

Organisations overstepping the mark

Coutts, via Nat West in its quest for inclusion has been a long term participant of Stonewall’s schemes until this year when it dropped out. It isn’t just NatWest that may be overstepping the mark in certain areas of diversity and ESG. Many FTSE 100 companies as well as professional services and public sector organisations have taken on the mantle of social change advocates.  One problem, as I argued two years ago here, is that although we in Diversity and Inclusion have often pushed organisations to go a bit further than the law in order to be a leader e.g. better maternity pay than statutory pay, many have now veered into territory that has political and even legal repercussions. And in doing so they have often failed to tie in policies with their own specific business needs and have not ensured that their workforce is invested in the values espoused. Many people have told me that they are too nervous to raise any concerns about certain policies for fear of being labelled right wing or a dinosaur or worse. This is not good diversity practice.

 Have we reached a place where Diversity and Inclusion has fallen into groupthink? Simon Fanshawe, author of The Power of Difference, says in a piece in the Times today that,

“Where to be ‘inclusive’ now apparently is defined as ‘you have to speak like this, think like this and behave like this. Or we’ll exclude you’.”

Where we might wonder is diversity of thought?

ESG including diversity was initially lauded as responsible capitalism by many people, including investors, who are now wondering if it has all gone too far, to the detriment of business profitability, and giving it the less kind title of ‘woke capitalism’. 

And now the government may be stepping in. Today (July30th) Kemi Badenoch wrote in the Times that

“It is not government’s job to write companies’ HR policies. However, it is our job to stop them doing harmful things based on a misunderstanding of the law. Our Inclusion at Work panel of experts from academia and business will develop resources based on evidence not ideology”.

 Let’s see what this brings. If recent days tell us anything it is that when people see the tide turning they usually turn round and swim with it.

Unfortunately growing criticism of the social justice agenda in organisations is in danger of damaging years if not decades of hard work during which diversity and inclusion had come in from the margins and gained a rightful seat at the business table. However the public doesn’t distinguish between this and the more extreme ‘politically correct’ or ‘woke’ agenda which is now being so publicly challenged.What a shame if the brilliant parts of D&I are caught in this wider backlash. Those who work in D&I need to take up the reins and be much clearer about which parts belong inside the business and which are better campaigned for outside.