Why Inclusion and Diversity should be on every Internal Audit function’s plan this year
15 October 2020
Even as the pandemic transformed how we live and work, there’s been a groundswell of energy worldwide behind social issues such as the Black Lives Matter movement. As a result, issues such as employee wellbeing, inclusion and representation have been brought to the fore for organisations across all industry sectors.
We’ve seen that workforce risk is inextricably linked to political, economic, social, technological, legal and environmental factors, often far beyond the control of individual organisations. What is controllable, however, is the way in which organisations are run and how they address the way that structural and systemic inequalities can create barriers to success. Inclusion and Diversity (I&D) is increasingly key to the successful execution of business strategy.
Doing the right thing in the right order
You’ll notice that I talk about I&D rather than the more commonly used D&I. This reflects the need for an inclusive culture to have been established in order to deliver on diversity. It is not enough to simply place a group with diverse identities in the room – people have to be given the space to bring their whole authentic self as well as to voice their opinions and ideas. To achieve sustainable shifts in diversity, it’s essential to look not only at who is in the organisation, but how they are being empowered and how the organisation is building this into their strategy.
An inclusive culture is about everyone respecting and supporting each other, regardless of their ethnicity, gender identity, socio- economic background, disability, sexuality or age. Research has consistently demonstrated that the more diverse the workforce, the better the business performance. A diverse workforce underpinned by an inclusive work environment where talent can thrive, results in higher productivity, profitability and cost reduction. Workforce diversity also promotes customer-centricity, and much broader customer insights, as well, as organisations that embrace diversity enjoying a greater market share.
Alongside the clear commercial benefits, the government and regulators are increasingly focused on I&D, with the introduction of Gender Pay Gap reporting in 2017, the PRA requirements for Board diversity at insurers and the FCA’s inclusion of I&D as part of culture assessments. For listed organisations there is increased scrutiny from investors over diversity of Boards. Ensuring diversity is incorporated into environmental, social and governance (ESG) strategies is also an additional area of regulatory focus around investment, profitability and sustainability ambitions, as covered in the World Economic Forum’s IBC 'Measuring Stakeholder Capitalism Report 2020'.
“Looking at I&D through a commercial lens is a huge, but still largely untapped opportunity to differentiate your business, boost brand loyalty and reinforce your social licence to operate. It should have a central place on the strategic agenda, with enterprise-wide responsibility for delivering it.” - ‘Are you missing Millions?’ Report by 30% Club and PwC.
Today, inclusive cultures and workforces need to be more than an aspiration; they are becoming a key determinant of success. It is imperative that they are on every FY21 Internal Audit plan. In part two of this blog, I’ll be exploring the integral role that Internal Audit can and should play in providing the business leadership with assurance that the organisation’s approach to I&D is effective and positively moving the dial in the right direction.