Race, gender, sexuality. These are words that we have rightly come to associate with struggles, campaigns and the cause for equal treatment by groups in their dealings with public bodies and private enterprises. Recognition of the moral and philosophical case for equality of opportunity and treatment has probably never been stronger – certainly in most western democracies. And of course, whilst it might have taken some time to catch up, the legislative framework that has been put in place to safeguard and protect the rights of groups with protected characteristics has also been transformed compared to just twenty or thirty years ago.
But what about the economic case for diversity and inclusion in the workplace? In addition to striving to do the right thing for all its people, are there bottom-line benefits that the real estate industry could be missing out on? Well for sure we know that global cities such as London benefit from their diversity and variety on many fronts. In fact, a major attribute of world cities is often their capacity to embrace individuals and communities of very different backgrounds and experiences. In an era of globalisation, this has provided them with the capacity to build economies that too are diverse – helping to create resilience in the face of economic shocks – for example. Often individuals from minority groups are able to tap into networks that might not be visible in the mainstream. That in turn provides them with the capacity to enhance the understanding of the enterprises they work for in meeting the needs of clients and customers – whether in public service provision or indeed to help grow new markets and sources of income.
Diversifying Real Estate: Race is one of three guidebooks that the London Property Alliance has launched recently (the other two cover gender and sexuality). In it, the business case for creating an ethnically diverse workforce is highlighted. Research by McKinsey & Company, a consultancy, found that companies which have more ethnically diverse executive teams outperform their competitors by a third. More “lived experiences” get drawn into ideas, innovation and ultimately solutions that businesses are looking to provide to the market. Diversity at an executive leadership level is more likely to be associated with a more diverse workforce. That in turn means an employer is going to be able to attract and retain staff from a much wider pool of talent, which can help with productivity and general business performance. And importantly, as the McKinsey report points out, there is a penalty associated with a lack of diversity which is not just limited to ethnicity. Researchers concluded that businesses in the bottom quartile for both gender and ethnic plus cultural diversity were 29% less likely to achieve above-average profitability than were all other companies sampled: “In short, not only were they not leading, they were lagging.”
At a time when the real estate sector is having to grapple with the challenges of Covid and indeed the continuing impact of leaving the European Union, the quest for talent and how to best retain it has arguably never been greater. Central London real estate businesses have one, powerful “secret weapon” literally staring them in the face – the remarkable diversity of the people who live and work in this great city. As the month long celebration of Pride comes to a close, it is perhaps worth remembering that doing the right thing on race, gender and sexuality can help to deliver the right things for shareholders, other investors and indeed the wider economy. The case for diversity in the workplace, can never have been stronger.
Chief Economic Adviser – London Property Alliance (CPA + WPA)