How can reward and benefits drive an employer’s diversity, equity and inclusion agenda?

Need to know:

  • Reward and benefits can help organisations achieve their diversity, equity and inclusivity (DE&I) goals.
  • Organisations should start by reviewing existing arrangements to make sure they are not discriminatory.
  • Benefits such as recognition schemes and financial education can also have an impact.

The issue of diversity, equity and inclusivity (DE&I) has shot up the corporate agenda in recent years, on the back of gender pay reporting, the Black Lives Matter movement and the growing prominence of lesbian, gay, bisexual, transgender and queer (LGBTQ) and neurodiversity.

There is no one way of creating more diverse and inclusive workplaces but many areas in which organisations can make improvements, of which rewards and benefits is one. Willis Towers Watson’s latest Benefits trends survey 2019, undertaken before the pandemic forced many businesses to change their immediate priorities, found 60% of organisations were prioritising diversity and inclusion in their benefit scheme design. James Spencer, director, health and benefits, at Willis Towers Watson, says: “This isn’t new; it’s just increasing in focus. It’s encouraging employers to take a look at all of their HR policies, practices, reward frameworks and benefits through that lens.”

Sign up to our newsletters

Receive news and guidance on a range of HR issues direct to your inbox

This field is for validation purposes and should be left unchanged.

Reasses reward practices

In practice, this is likely to mean reassessing existing arrangements for any inadvertent discrimination against particular groups. Reward is a good place to start, says Aubrey Blanche, director of equitable design, product and people, at Culture Amp. “The most obvious aspect is that all reward components should be designed and audited for equity, to ensure that [the employer] isn’t replicating historical inequities in payment for underrepresented or marginalised groups,” she says. Organisations should look to have standardised pay bands, and avoid basing the pay of new recruits on their previous salaries, she adds.

Regular pay audits are also important, to ensure practices remain fair. “[Employers], frankly, shouldn’t be operating without conducting, at a minimum, annual pay equity auditing on all aspects of compensation programmes,” she says. “They should audit their results by employee gender, racial and/or ethnic background, and disability status where data is available.”

Imogen Templeman, a solicitor at Robinson Ralph, stresses the need for reward to be tied to cultural aspects such as teamwork, collaboration and inclusivity, and to avoid individual targets where possible. “These have the ability to cause negative employee relations, a divide in the team and incentivise against a collaborative, inclusive working environment, having knock-on effects to the organisation culture and values that are being created or adopted,” she warns.

Benefits parity

In the benefits arena, it’s also a case of reviewing existing provisions initially and redesigning elements of a scheme if necessary. “Any benefits programme must be clearly thought through, as a poorly executed programme can actually undermine DE&I efforts,” says Andrew Drake, client development director at Buck. “As an example, many [employers] offer family healthcare options, which can be a useful tool to support working parents and ensure that the [organisation’s] workforce is more inclusive and diverse. Often, though, these benefits are not available to all employees and are reserved for more senior staff, effectively weakening DE&I efforts.” 

Group risk policies are particularly susceptible to historic discrimination, says Spencer. “A lot of traditional life and income protection policies are still based around the assumption that people retire at 65,” he says. “Many employers still offer spouse’s pensions but for those who don’t meet the traditional definition of a legal spouse, or with no children, it’s far less relevant. I’d encourage all employers to take a meticulous view of their group risk policies to make sure they are reflective of their current workforce demographic and legislation.”

It’s a good idea to conduct an audit of all benefits on offer, to ensure these do not discriminate against individuals, says Rachel Western, principal, employee benefits, at Aon. As well as pay, pensions and financial planning, this could extend to health, leave, childcare and career progression. “Reward and benefits that focus on physical, emotional, financial, social and work/life balance all carry some element of need to support the DE&I culture of an organisation,” she says.

Where necessary, policies may need to be adjusted. “For example, if an [employer] provides leave for birthing or biological parents, do they also offer the same for foster or adoptive parents?” asks Blanche. “If an [employer] is providing healthcare, does it include gender confirmation and other medical support most often needed by the trans community?

“Does the leave policy include leave specifically for miscarriage or pregnancy loss? Does [the organisation] have a widely publicised and well-adopted adjustment or accommodation programme for employees with disabilities? Each of these examples provide structural support to individuals who are most likely to be marginalised within a workforce.”

Once employers have assessed their existing provisions, it’s then possible to think about how benefits can positively help to improve DE&I. Derek Irvine, SVP strategy and consulting at Workhuman, says recognition schemes which allow employees to reward their peers can help ensure people are judged on their contribution. “This social recognition approach is particularly effective as it allows employees to both find common values and celebrate their differences, bringing people together rather than pushing them apart,” he says. Studying the data around who is recognising who and the value of such reward can also help identify any unconscious bias, he adds, which could then be addressed through training.

Financial education is another tool that can be used to help promote a culture of diversity and inclusivity, says Sarah Lardner, director of business innovation at Innecto Reward Consulting, part of the Personal Group. “While not a new benefit, organisations may want to start thinking about how they tailor it for different demographics within their own workforces; for example, short versus longer-term financial planning,” she says. Other benefits that can help with DE&I include providing language lessons for employees, childcare support for all people with children and ‘floating leave’ to enable people of different religions to take time off for particular cultural celebrations, she adds.

Corporate culture change

But any tweaking of benefits will be limited unless there’s an underlying cultural change, warns Ruth Thomas, pay equity strategist at Payscale. “It’s one thing to make sure [employers] have a reward offering that is attractive to a diverse workforce but what can [they] do to also ensure this fosters inclusion and belonging?” she asks. “Reward and HR teams need to make more of an effort to understand that we don’t operate a level playing field, and we need to get better at providing more personalised employee benefits.”