Diversity, equity and inclusion (DEI)

Authors from City University of Hong Kong and The Hong Kong University of Science and Technology make a case for an enhanced DEI workforce policy to bolster Hong Kong’s competitiveness and sustainable development, and put forward a number of practical suggestions for improvement.

In light of recent challenges to sustaining Hong Kong’s innovation capacity and competitiveness, as well as to enhancing its human capital and talent pool, this paper explores the potential contributions of developing a DEI labour force, and puts forward suggestions for improvement measures at policy and corporate levels.

The values of DEI

Businesses and governments play an instrumental role in enhancing the representation and participation of different groups in society by implementing and promoting DEI policies in their respective jurisdictions and activities. ‘Diversity’ is based on the acceptance and tolerance of different perspectives among groups. The concept became prevalent in the 1980s, in response to changes in the demographic characteristics of the social labour force and the workplace. It refers to a simple recognition of the social fact that groups or individuals with different characteristics coexist in a community or group setting, and a belief that each individual offers a unique contribution arising from  their varied, and thus unique, experiences and characteristics. Diversity can be defined in two ways, both narrow and broad.

A narrow understanding of diversity refers to differences in ‘ascribed’ characteristics, such as age, gender, race and physical ability. Such diversities generally cannot be determined by people’s subjective wishes or abilities. A narrow sense of diversity is sometimes described as ‘superficial diversity’, because most of the differences can be identified by looking at a person’s appearance, or can at least appear to be identified. Therefore, differences according to the narrow sense of diversity have long been a source of power differentials, discrimination and prejudice in society.

A broad sense of diversity includes differences in ‘achieved’ characteristics, such as educational level, geographic background, language, culture, religion, values, socioeconomic status, family status, experience, skills, professional knowledge and personality.

From a practical and policy perspective, the two definitions have their own advantages and disadvantages. Emphasising a narrow understanding of diversity can lead society to focus on groups that have traditionally been discriminated against (such as women, people with disabilities and ethnic minorities), but it then also becomes easier to ignore other minority groups. Hence, it is not conducive to the unity of various minority groups in society to promote diversity in this narrow sense. A broad sense of diversity, on the other hand, highlights that all differences are equally important, making up for the limitations of narrow diversity. But in reality, differences vary in importance and treatment methods. Governments and enterprises are usually unable to simultaneously and equally take into account the variety of differences due to limited resources. In consequence, there is a need to consider the practical situation to evaluate the pros and cons of adopting different diversity definitions in context.

Given that everyone can offer a different contribution to society, the communal population together carries a moral responsibility to one another in the sense that every member of the community should be equitably treated without suffering from systemic disadvantages – thus the ‘equity’ requirement. Governments and institutions should improve fairness and justice in procedures and resource allocations to ensure an equal opportunity and treatment for everyone, and to identify and eliminate barriers to the equitable participation of all groups. Given diversities, a uniform treatment may not necessarily achieve fairness. This complicates policy considerations as ‘one size fits all’ policies may often not be optimal.

Early work on promoting diversity focused on enhancing proportional diversity, or representational diversity. To some extent, these efforts have improved job opportunities for groups that were historically underrepresented in the job market. However, the advances are often limited to entry levels, while promotion opportunities have been scarce, or the impact is not sustained as many of those who initially benefited might still leave the job market prematurely.

The value of ‘inclusion’ requires a worker to fulfil his or her needs for uniqueness and belongingness through communal experience, which also enhances his or her sense of identity and commitment to the communal group. Inclusion removes all barriers and discrimination by actively encouraging each individual or group to express his/her views and to make contributions, as well as to participate in creating a culture and collaborative environment that everyone accepts with mutual respect. Specifically, diversity in the workplace ensures that employees are not excluded because of their identities, and that the company creates a work team with a wide range of backgrounds and experience. Inclusion further provides the necessary space and opportunities to encourage each employee to express opinions, and to develop and create value.

DEI and sustainable development

Nine of the 17 United Nations Sustainable Development Goals (SDGs) are closely related to DEI values. Whether for society at large or a firm, DEI is the key to sustainable development.

• Goal 1: End poverty in all its  forms everywhere.
• Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
• Goal 5: Achieve gender equality, and empower all women and girls.
• Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
• Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation.
• Goal 10: Reduce income inequality within and among countries.
• Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable.
• Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable and inclusive institutions at all levels.
• Goal 17: Strengthen the means of implementation and revitalise global partnership for sustainable development.

Effective DEI policies will help promote economic development, provide fair opportunities and build a truly harmonious society. First, DEI policies create an inclusive and diverse environment, where acceptance of different opinions and suggestions are encouraged. Social innovation can be promoted to address pressing social problems, which enhance competitiveness and promote economic development. Second, DEI policies aim to correct long-term imbalances in development resources and structural barriers to development opportunities, helping to build a fair society where all people – especially disadvantaged groups facing adversity – have equitable access to development resources and development opportunities. Third, DEI promotes mutual understanding to achieve true social harmony. Because people have the opportunity to express different opinions, and to gain acceptance and respect, society can better cater for the needs of different people by bringing together different ideas and viewpoints. Promoting mutual understanding through communication can help eliminate discrimination, strengthen community relations, increase a sense of belonging, establish an atmosphere of inclusion and diversity, and achieve true social harmony.

Extant research suggests that increasing workforce diversity benefits corporate performance and social resilience against crises. Firms with more women in leadership positions are more profitable, and businesses that hire more staff with disabilities subsequently experience improvements in profits, employee retention and client loyalty, while an increased racial diversity of employees in law firms in the US is shown to be positively correlated with the financial performance of businesses. McKinsey’s 2018 report, ‘Delivering through diversity’, stresses the values of diversity and inclusion in differentiating a company’s competitive advantage, which closely impacts its financial performance. Executive teams with a high degree of racial or cultural diversity are 33% more likely to outperform their peers in profitability, and corporate boards with greater diversity in race and culture are 43% more likely to be more profitable than are other boards. These findings have started to influence public policy. For example, the Commonwealth and Development Office of the UK Government has recently outlined a 2022/2030 plan for promoting disability inclusion.

DEI policy development in Hong Kong

Four Hong Kong ordinances, namely the Sex Discrimination Ordinance, the Disability Discrimination Ordinance, the Family Status Discrimination Ordinance and the Race Discrimination Ordinance, have been enacted to explicitly address concerns in relation to anti-discrimination and equal opportunities. The Equal Opportunities Commission (EOC) was established in 1996 as an execution agency and to review the need for further policy development. The Racial Diversity and Inclusion Charter for Employers, launched by EOC, offers a checklist of DEI policies and practices for business to facilitate the pursuit of DEI objectives. Since 2016, listed companies have been required to disclose details of their workforce, such as gender, age and employment type, under the environmental, social and governance (ESG) reporting framework. Employers who hire workers with a disability will receive an allowance to purchase assistive equipment and install workplace modifications, as well as an on-the-job training allowance for up to nine months per worker.

Despite these measures, room for improvement persists. For example, in 2021 women accounted for only 14.3% of the boards of Hang Seng Index companies, an increase of only 0.4% from 2019. In 2018, the labour force participation rate of the elderly in Hong Kong was 11.7%, lower than the average level of the Organisation for Economic Co-operation and Development (OECD) economies (14.8% in 2017), and far lower than neighbouring South Korea (31.5%), Singapore (26.8%) and Japan (23.5%). The unemployment rate for persons with disabilities has almost doubled, from 6.7% in 2013 to 11% in 2021. Even highly educated persons with disabilities face difficulties finding employment. Of the various ethnic groups, South Asians have a higher unemployment rate (5.3%) than the general population (3.7%), and are predominantly employed in entry-level positions. The language policy for non-Chinese speaking students – the Chinese Language Curriculum Second Language Learning Framework – does not provide adequate support for second-language learning. Many ethnic minorities have not been able to master the Chinese language. As the population ages, age discrimination is increasingly becoming an issue, causing strains on the existing legislative framework.

There is evidence that with proper support, employees with diverse backgrounds will deliver well in the workplace. However, supervisors and frontline staff often lack experience in working with colleagues with diverse backgrounds. Many job seekers with diverse backgrounds are also not familiar with the labour market and need assistance to adapt to the work requirements. Some DEI support and services are currently offered by non-governmental organisations (NGOs), but most are narrowly focused on providing basic training for employees with diverse backgrounds, and are insufficiently geared to the needs of the employers and other colleagues.

Recommendations

What can be done to further enhance the DEI workforce policy, with a view to improving the prospect of sustainable development and competitiveness of Hong Kong? Below we set out a few ideas to kick-start the discussion.

1. Strengthen resources support

Invest resources in support of diversity, from raising awareness of DEI values to provision of training and strategic consulting (especially for human resources departments and senior corporate management). The government and public sector organisations should take a lead and encourage private sector organisations to participate.

2. Strengthen the assessment of the diversity and inclusiveness of enterprises and provide more incentives

The government can step up the evaluative framework of DEI performance to provide incentives  for change. For example, do employees have enough opportunities to  express their opinions? More performance indicators and DEI  rating frameworks may be developed, as well as award schemes to encourage companies to enhance diversity and inclusion.

3. Extend the regulatory framework to better address DEI issues

With an evolving DEI agenda (for example, sexual orientation, aging), there is a need to continually review and extend the regulatory framework. This requires good management of  the discussion process to enable effective communication between stakeholders with diverse interests and values, as well as timely decision-making. The government can use means such as organising public consultations to promote understanding among parties and initiate a process of change through small, incremental measures  (such as piloting in a small segment  of the population and starting  with time-phased, voluntary actions before the introduction of  mandatory requirements).

4. Strengthen the capacity-building  role of NGOs

The NGO sector could play a more active role in raising DEI awareness in businesses and assisting them to develop practical DEI policy initiatives and measures. The current Funding  and Service Agreements administered by the Social Welfare Department for the NGO sector can be expanded to include diverse employment support services to businesses, from matching supply of and demand for workers with diverse backgrounds, provision of training to both the workers and management, and consultancy services on the design and review of corporate DEI policy, to execution monitoring and performance assessment.

Linda Chelan Li, Professor of the Department of Public and International Affairs and Director of the Research Centre for Sustainable Hong Kong (CSHK) of the City University of Hong Kong; Chi Kin Kwan, Assistant Professor of the Department of Social and Behavioural Sciences and Member of CSHK; Nick Or, Assistant Professor of the Department of Public and International Affairs and Member of CSHK; Phyllis Lai Lan Mo, Professor  of the Department of Accountancy  and Associate Director of CSHK;

Kim Kwok, Visiting Assistant Professor of the Department of Social and Behavioural Sciences and Member  of CSHK; and Jeffrey Chung, Teaching Associate of the Division of Social Science at The Hong Kong University  of Science and Technology and  member of the Sustainable Hong Kong Research Hub

City University of Hong Kong and The Hong Kong University of Science and Technology