Many leaders are starting to think racial equity strategy should sit within risk teams. Which is unsurprising when you look at the stats.

There’s been a significant rise in the number of organisations who have found themselves facing – or being forced to face – a ramped up and long overdue reckoning around race.

Whether racial discrimination is clearly apparent, or whether it exists below the surface. Failing to prioritise and tackle it in the right way can cause a number of significant issues for organisations. But when handled correctly, doing the right thing is quickly becoming the new corporate currency.

To turn significant strategic and reputational risks into huge value adds for your business. Here are three key focus areas to consider when forming a committed racial equity strategy.

3 risks you can mitigate with a racial equity strategy action plan

Racial discrimination cases are on the rise

In 2020, employment tribunals in the UK saw a 48% rise in the number of race discrimination claims, with 3,641 cases in total.

What these statistics don’t tell us is whether more discrimination is taking place. Or whether, in the wake of the Black Lives Matter, movement employees feel more confident raising issues of racial discrimination in the workplace.

Either way, the message for employers is clear. Fail to act upon racial discrimination in your organisation and the legal risk is greater than ever.

As well as damaging your employer brand, a race discrimination case is financially costly for your organisation. In 2019-2020, the average compensation paid in race discrimination cases was just under £10,000. That said, compensation in any type of discrimination case is uncapped, meaning damages can reach six-figure sums.

The great resignation and the link to racial bias

Three in ten Black employees feel discriminated against by their employer, according to Savanta research. And 42% of Black employees in the UK have resigned from a job due to inequity.

As well as demonstrating shocking and problematic issues of bias. These figures reveal considerable business risk. Particularly when we take into account the current hiring climate.

Prompted in part by the pandemic, 69% of all UK workers are ready to change jobs. With around a quarter saying they’re planning to switch jobs within the next three to six months.

Younger generations are particularly keen to work for organisations that share their values. 83% of Gen Z candidates say that an organisation’s commitment to diversity and inclusion influences their job selection.

Attrition rates are already high. The “Great Resignation” means organisations are having to work harder to retain top talent. Now is not the time to be losing additional employees due to workplace inequity.

To avoid the costs of staff turnover and the associated disruption to your operations, you need to encourage staff to stick around. An anti-racism action plan can form part of that solution.

Ethnicity pay gap reporting is looming

Organisations are now being asked to voluntarily report on their ethnicity pay gap — much like they do when it comes to gender. But despite these calls to action, progress in racial equity reporting has been slow.

Only 13 FTSE 100 companies currently publish an ethnicity pay gap report. And, as a result, the CIPD is calling for Ethnicity Pay Gap Reporting to be made mandatory by 2023.

This makes it important for organisations to look ahead. By implementing a comprehensive racial equity strategy now, and incorporating ethnicity pay gap reporting without delay, you can stay ahead of regulations.

This is good for your brand and for your risk mitigation strategy.

Leading the conversation, instead of waiting until the regulations are imposed, helps you to convey your commitment to social justice and racial equity in the workplace.

It also means you can start reaping the rewards of a diverse workforce ahead of your competitors.

There is no one-size-fits-all approach to a racial equity strategy

If your organisation doesn’t already have a racial equity strategy action plan in place, it’s clear that now is the time to act.

It’s a smart move to keep pace with the early majority. That is, opinion leaders who are already calling for more effective racial equity commitments in the workplace — to reduce organisational risk and maximise the opportunities associated with DE&I too.

Accepting the need for change is an important first step. But how should you go about implementing that transformation?

While the same problem of racial inequity exists in many organisations, the right solutions and strategies differ.

Racial equity needs careful consideration if you are to develop a tailored racial equity strategy that works for your business and your employees. Only then can you successfully mitigate the risks inequity poses to your organisation.

Looking for some inspiration on where to get started forming your racial equity strategy? Find out how UK leaders are tackling racial inequity and mitigating risk in 2022. Download FLAIR’s latest Racial Equity in the Workplace Report today.