Environment, Social and Governance: what can businesses do to attract and retain talent?
Investors have been scrutinising businesses not just on their financial performance, but also on their record on the Environment, Social and Governance factors since the 1960s. However, the reach of ESG has widened significantly in recent years. It is now not just investors looking at a business’s ESG record but also customers, suppliers and, crucially, current and prospective employees.
The 'S' in ESG is concerned with how a company treats people, including its employees. At a time when the recruitment market is particularly buoyant, existing staff and candidates will be looking at more than just pay when deciding whether to join or stay with a company.
Three key areas a business can look at strengthening to ensure they are attracting and retaining the best people are:
- Diversity and inclusion;
- Mental health and wellbeing; and
- Workforce involvement in decision-making.
Diversity and Inclusion
Most businesses know that Diversity and Inclusion (D&I) is important, but what does it actually mean?
Diversity is about what makes people different from one another. This can include their age, gender, ethnicity, sexual orientation, disability, social background, and whether they are neuro-diverse.
Inclusion is implementing practices that promote equal opportunities for all and valuing the contribution of different perspectives.
Employees and potential hires will be looking at a company’s D&I reporting to assess their employer or potential employer. Mandatory reporting requirements for large companies include:
- Gender pay gap reporting (companies with over 250 employees);
- Policies on employment and training of disabled people (companies with more than 250 employees); and
- Statistics on the sex of senior managers, directors, and employees (quoted companies).
However, many companies are now going further and reporting on a wider range of D&I statistics including gender and ethnicity targets for boards and the ethnicity pay gap.
Inclusion is not only about diversity statistics but also how a workplace creates a culture of inclusivity through its working practices. Women are more likely than men to work part time. Employers should therefore consider advertising all jobs as full or part time as standard as well as considering where a “job-share” may be appropriate.
Networking and social events should also aim to be more inclusive. For example, golf days or alcohol-based events are not necessarily accessible or suitable for all employees.
Employers can further demonstrate their commitment to D&I by implementing effective equality and anti-harassment policies. Such policies will address how the company ensures equality in recruitment and promotion opportunities as well as how it deals with harassment and discrimination in the workplace. Training for all staff on equality (for example unconscious bias training) is a further way to embed a culture that promotes D&I within the workforce.
Mental health and wellbeing
Employees are increasingly concerned with how their employer promotes mental wellbeing and supports employees with mental health difficulties.
Implementing an effective stress and mental wellbeing strategy will demonstrate commitment to positive mental wellbeing and challenge stigma around mental health issues.
The strategy could include:
- Provision for monitoring employee mental health and wellbeing through staff surveys;
- Staff benefits which promote mental wellbeing such as private medical insurance that includes cover for mental health, providing access to counselling, or subscription to mediation or mindfulness apps;
- Appointment of mental health champions and mental health first aiders who are staff trained as a first point of support for employees with mental health concerns and making sure their contact details are readily available;
- Signing up to mental health charters, for example, the Mindful Business Charter which intends to reduce sources of stress and promote better mental health and wellbeing in the workplace through innovation such as smart meetings, and mindful emailing and delegation;
- Encouraging staff, particularly senior management, to speak out about their own or their family and friend’s mental health issues to increase understanding of mental health and encourage staff to seek the help they may need;
- Establishing activities to promote wellbeing in the workplace such as mindfulness, yoga, or sport and hobby groups; and
- Provision of information via newsletters and bulletins and signposting to an employer’s policies around flexible working and the types of leave available to employees (such as wellbeing days).
Involving the workforce in decision making
Employee involvement and transparency around decision making is a further way to ensure employees feel they have a stake in the future success of a company.
Companies with more than 250 employees must include in their directors’ report a statement describing the company's action taken to introduce, maintain, or develop arrangements aimed at:
- Providing employees with information of concern to them;
- Consulting employees or their representatives to obtain their views in making decisions likely to affect them;
- Encouraging employees' involvement in the company's performance through employee share schemes or other means; and
- achieving the awareness of employees of the financial and economic factors affecting the company's performance (e.g. through regularly company-wide updates).
Aside from these being mandatory requirements for large companies, all employers should consider important the flow of information to employees about the performance of the company.
Reverse mentoring of senior management by junior employees is a useful way to share information and skills. Leaders are able to find out more about what concerns and motivates their workforce (particularly where this relates to the perspectives of those from minority groups who may be underrepresented at management level) and to obtain creative strategy ideas from different parts of a business.
Employee leadership or resource groups are another way to include employees in decision making. These should be made up of individuals at all levels of a business with a focus on a particular issue. The group could have a D&I focus (for example, an LGBTQ+ network) or a business development focus (for example, a group to share successes, failures and lessons learnt).
When employees feel like they truly have a stake in the company’s success, productivity, wellbeing, and ultimately the attraction and retention of talented people will follow.