Why does location matter for diversity and inclusion?

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Remote working may not work for everyone in the same way
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For organisations uncertain about remote working, 2020 was the year their preconceptions turned around. But in the ongoing quest for greater diversity and inclusion, there are still aspects of where employees work that we need to get right, says Steve Black.

We all know that more diverse companies perform better than their peers. McKinsey’s most recent study found that “companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability”, and in terms of ethnic and cultural diversity “top-quartile companies outperformed those in the fourth one by 36% in profitability”.

However, its Women in the Workplace research, carried out during the pandemic together with Lean In, has suggested that one in four women were considering downshifting their careers or leaving the workforce. And senior-level women were 1.5 times more likely that their male peers to think about downshifting due to Covid-19.

Given that in the UK we have seen a range of worrying data showing that women and ethnic minorities are more affected by unemployment or at risk of unemployment compared to others, it is no exaggeration to suggest that diversity and inclusion is facing a significant setback.

And yet, the Lean In research has also suggested that 70% of US companies believe remote working will enable them to increase diversity in recruitment.

Does remote work benefit all employees?

So why is there a disconnect? I would suggest the challenge is that senior leadership teams must ask themselves whether remote working has benefited all their employees equally.

What remote working should have told them is that employees no longer have to be explicitly tied to a location. For those organisations with the most ambitious diversity and inclusion goals, this development should expand the diversity of potential recruits and provide more flexibility to retain a workforce that reflects the whole of society.

Traditionally, most people tend to build their lives within Monday to Friday commuting distance of their employment, but the pandemic has shown the limitations of being location dependent.

With lockdown shutting down support mechanisms such as childcare and schooling, many employees have struggled to balance commitments. It also underlined the importance of support networks. Smart employers must recognise the value that this more location-independent approach offers to their teams to find support.

Given the long-term economic challenges facing this country, such as “levelling-up” and offering more affordable housing to workers, enabling a “work from everywhere” policy could be a powerful recruitment tool for brands.

Lack of flexibility

More importantly, enabling employees to work remotely from wherever they want has a much more fundamental benefit: flexibility. The Lean In report cited a lack of flexibility at work as the number one factor pushing a female employee to contemplate leaving a company.

The flexibility to work from another location could be crucial to preventing unnecessary stress and loss of income.

Given that we have proven the remote working model does work during the pandemic, it seems only logical it should be considered a key mechanism to address some of the reverses we have seen in D&I in the last nine months.

Of course, there are considerations for HR professionals when evaluating such talent mobility, including the tax and employment law implications. Remote work within a country may be relatively straightforward from a compliance perspective, but if you allow an employee to work in another country, there are personal and corporate tax, social security and immigration requirements that must be considered.

Strategic employers must get ahead of these debates and start to map out their approach to work locations – which countries (or states in the US) are pre-approved, which are non-starters and how to handle employee requests.

And once a company has embraced new models of working, ongoing management of the employee footprint is key. Who should be working in a given location may not match where they are actually working – especially with more employees out of the office.

And as we get to a vaccinated population, business travel will ramp back up – adding to the risk of employees accidentally overstaying in a location and creating tax exposure and compliance risk for the company. As we reframe our approach to where people work – now is the time to start having the direct conversation around employee tracking. Companies need to know where work is being done and of course employees have a right to privacy – how do we resolve that conflict?

Should we track employees?

When the topic of ‘tracking’ is brought up – we all think about our employer seeing what time we left the office or seeing our dot moving on a map as we go interview at a competitor. Such street-level tracking is unnecessary for compliance and exposes employers to risk – with things like Uber’s God View highlighting the risk of knowing too much.

It’s recommended that companies track the absolute minimum level of data possible – just enough to ensure you are compliant without crossing the line into ‘big brother.’ When you talk to employees – nearly all understand the need to know what country they are physically working in and few have a problem being tracked at a country level.

The hurdle is often clear communication and involving employees in the conversation – even challenges such as getting European Works Councils to approve tracking solutions are not ‘impossible’, contrary to the fears of those in HR.

As we head into 2021, the biggest priority should be ensuring collaboration between the talent mobility, recruitment, HR, and finance teams, who have not historically co-ordinated efforts around the question of D&I.

With those functions working together, new policies can be shaped and rapidly rolled out – helping reduce cost, improve D&I, and stay compliant – all while retaining employee trust.