Earlier this week Baroness McGregor-Smith, former CEO of Mitie Group PLC, launched Race in the Workplace, the government review considered the issues affecting black and minority ethnic (BAME) groups.

The report reviewed 74 of the FTSE 100 companies. It found that only one in eight of the working population were from BAME (Black, Asian and Minority Ethnic) backgrounds, and highlighted the disadvantages that those from BAME backgrounds still face in the workplace. Despite these alarming statistics, the government is not planning to draft legislation to address this issue, but is instead looking for companies to take a proactive approach themselves.

Why does this matter? The Government report states that tackling barriers of progression could boost GDP by 1.3% a year – equivalent to £24bn. In other words, it makes good business sense. First, a racially diverse employee base allows a company to address a racially diverse customer base in a much more effective and authentic way. Second, just as is the case with gender diversity, a company cannot afford to ignore a significant proportion of the population and be competitive. Lastly, it decreases potential for group thinking.

Outside of the FTSE, some businesses are already taking action. The BBC’s new diversity initiative aims to educate its employees, provide wider coverage around diversity and actively make its workforce more diverse. One specific aim is to increase their BAME leadership representation in the workforce from 10% to 15%. However, according to Baroness McGregor-Smith, many of the companies reviewed didn’t even have meaningful data on the subject of racial diversity.

How can companies create a more diverse workforce?

The Race in the Workplace report suggests that large employers should nominate a board member to deliver five-year diversity targets. However, it is clear that many UK boards don’t yet understand diversity issues and that there remains a shortage of skills to implement diversity policies at board level.

It is important first to understand the barriers that a particular industry is facing. Achieving a sensible and beneficial diversity target in five years will be extremely challenging for most industries. Not because of discrimination in the workplace, but more because of ingrained cultural issues.

From my own experience, BAME parents and families have particular views on what professions constitute a ‘proper’ career. Traditional careers, such as doctors, engineers, accountants, lawyers and bankers are held in high esteem and have tended to successfully attract talented young people from BAME backgrounds. Other professions, including creative industries, retail and fintech companies, have not.

For these industries to attract a pipeline of talented young people from ethnic minority backgrounds will require a much more concerted effort. They will need to consider how best to communicate the merits of a career to BAME audiences at a young and adolescent age. The problem is compounded by the evident lack of senior role models in these industries. Unless young people can see a realistic career path to the top, they are less likely to pursue a career in that particular industry.

So the problem does not necessarily lie in a conscious (or unconscious) bias against BAME applicants during the recruitment process. Quite the opposite, many companies are actively looking for a more diverse representation in their graduate intake for example. Some are even taking steps to mitigate against unconscious biases by running recruitment processes that remove applicant names, ethnicity and other potentially ‘revealing’ factors. Theoretically this should ensure that everyone has a fair chance of getting an interview opportunity at a firm, but it does not solve the problem of developing a healthy pipeline of BAME applicants. If most BAME talent is applying for roles at accountancy firms, banks, and law firms, it is hard for other industries to compete, however committed they are at board level.

There is much that can be done, but the first step is to engage with graduates and young people from BAME communities to highlight the opportunities and benefits that these industries offer. This requires a grass roots initiative that begins with schools and the graduate recruitment process. Engineering companies in the UK have long lamented the lack of STEM graduates coming through the pipeline and for many, this has rightly become a boardroom issue. Organisations have responded by targeting schools, universities and offering apprentice schemes in these areas. It will require this sort of concerted bottom up approach to address racial diversity too.