Companies in Europe are still lagging behind in improving diversity, Swiss companies are ahead in comparison

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• European companies do not perform well in the new DEI Index compiled by EY: the average DEI Index score is 5.69 out of 10. Only Swiss companies achieve an average score of 6.0.
• DEI progress in Switzerland is encouraging: 89% of employees surveyed say that they understand their company's attitude and actions towards the DEI issue.
  
• Only 34% of managers surveyed in Europe belong to underrepresented groups (16% excluding women), compared to 66% of non-managerial employees (31% excluding women).
  
• 30% of employees in Europe have experienced discrimination or bullying in their own company, but only just over half of these have reported such cases.

Zurich, 4 April 2024 - Diversity, equity and inclusion (DEI) is increasingly seen as an important part of the corporate agenda globally, but only 7% of organizations are actually building a diverse and inclusive culture in the workplace. This is according to the EY European DEI Index, a new study conducted in partnership with FT-Longitude - a specialist thought leadership agency that is part of the Financial Times. The survey is based on the views of 900 managers, from top management to the C-suite, and 900 non-managerial employees from nine European countries. The companies surveyed come from Switzerland, Austria, Brussels, the Netherlands, Italy, Portugal, Spain, France and Germany.

A less diverse management is too optimistic about its own DEI performance

Companies in Europe continue to struggle with pursuing their DEI goals and improving their diversity culture. One of the reasons for this could be that diversity in management teams is still relatively low: Only 34% of executives surveyed say they are members of underrepresented groups, compared to 66% of non-executives. This percentage is even lower if the proportion of women is excluded: Then only 16% of managers and 31% of employees say they belong to an underrepresented group. Robin Errico, Chief Risk Officer and Diversity & Inclusion Chair at EY in Switzerland, says: “Diverse leadership should be an important goal for all companies and should be embedded in the company‘s strategy. It just makes business sense to have a diverse leadership team as it sets the tone of the company culture and influences the ability to recruite and retain diverse talents.” The lack of diversity among decision-makers leads to an overly optimistic perception of their company's DEI performance: organizations with more diverse leadership teams are more likely to have taken action to improve various aspects of diversity, including cultural diversity (41% vs. 36%), gender diversity (70% vs. 57%) and LGBTQIA+ diversity (27% vs. 22%), than those with non-diverse leadership teams. Errico explains how companies can approach the challenge to increase diversity of leadership teams: “I believe that a company has to strategically decide that top level diversity is important and that they are committed to ensure such diversity. Otherwise it will not happen.”

On the other hand, non-executive employees - whose composition is more diverse than that of executives - perceive the company's DEI progress to be significantly lower: less than half rate their company's performance as 'good' in terms of ethnic or cultural diversity (48%), LGBTQIA+ diversity (35%), socio-economic diversity (34%) and even fewer in terms of disabled people (29%). More importantly, they are concerned about the quality of experience in the workplace: Around 3 in 10 of employees surveyed who are not managers have experienced discrimination or bullying and feel mentally unsafe at work. Almost one in five (17%) state that they have witnessed harassment from colleagues.

EY's European DEI Index shows how perceptions of progress vary depending on whether the respondent belongs to an underrepresented category or not: 55% of LGBTQIA+ employees rate the "opportunity to be out at work" as low, compared to 39% of other employees. Only 35% of women feel a sense of belonging in the workplace, compared to 40% of men. 43% of ethnic and cultural minorities are not optimistic about their career opportunities, compared to 36% of other employees. Only 25% of employees with a physical or mental disability feel a sense of belonging in the workplace, compared to 39% of other employees.

European companies do not perform well: the DEI index

In recent years, interest in issues such as gender equality, racism and accessibility has steadily increased. Many of these issues have been boosted by global movements that have, to some extent, helped companies understand the importance of improving their own culture, internal processes and brand. However, for real change to occur, it is important to track both the progress made and the tangible results. To measure progress in DEI, EY has created the European DEI Index: a measurement system based on the analysis of the data collected in this survey and, in particular, how employees rated their companies on two dimensions: the extent of a comprehensive DEI approach and the level of DEI culture practiced. The companies surveyed were rated on a scale of 0 to 10. The result is that European companies do not score well on average with 5.69 out of 10 points. Switzerland achieved the best score with an average of 6.0, followed by Spain (5.92) and Portugal (5.85), Austria (5.68), the Netherlands (5.65) and Italy (5.63). Germany is the worst performer (5.44), followed by Belgium (5.48) and France (5.56).

DEI progress in Switzerland is encouraging

The data collected on the progress made by Swiss employers in DEI is encouraging. The overall good performance of Swiss companies is also reflected individually: 89% of employees surveyed in Switzerland state that they understand their company's position on the DEI issue and what is on offer in this regard. The European average is 78%. Respondents in Switzerland rate their company's DEI performance higher than the European average in almost all aspects of diversity - in some cases significantly so: 41% rate their company as very good in terms of the diversity of people with disabilities, compared to the average of 32%. This perception is also shared in other areas. Non-managerial employees are less likely to report discrimination (23% vs. 33% on average) and bullying (20% vs. 30% on average), and are more likely to report cases of discrimination when they do occur (59% vs. 51% on average). Margit Vunder, Diversity & Inclusion Lead at EY in Switzerland says: “These results are encouraging and align with the positive trends we're observing at EY within Swiss companies. Swiss culture values careful consideration before decision-making, leading to thoroughness and consistency in actions. Once committed, Swiss organizations exhibit a steadfast dedication to follow through with what they started.”

However, DEI appears to be a weaker differentiator for attracting talent: Only 32% of Swiss respondents say they would not consider working for a company with a weak DEI record, compared to an average of 41%. Switzerland also scores below average when it comes to networks. Although 59% state that their company has a network for cultural diversity (average 53%), Switzerland is several percent below the European average for networks for gender diversity, LGBTQAI+, socio-economic differences or specifically for employees with a disability. Vunder explains: “Switzerland has a strong tradition of professionalism and privacy in the workplace. Employees are more reserved about discussing personal matters at work. Add to this is the work culture that tends to prioritize efficiency and productivity leaving less room for the participation in employee networks.”

The DEI leaders: better performance in finance and talent

As part of the EY European DEI Index, those companies that were rated best by their employees were grouped together as "DEI Leaders". These companies achieved an average score of 7.86. They appear to be more efficient and at the same time perform better than their competitors in terms of both business metrics and employee experience. Managers at these companies reported higher levels of employee satisfaction and productivity over the past 12 months, as well as more financial growth, innovation and customer satisfaction. As all of these aspects are critical to revenue, our findings underline the business case for DEI and reinforce the strategic importance of the topic. Robin Errico says: “Good DEI practices have a proven positive impact on a company‘s performance. I believe DEI polices and KPIs set behavioral practices in a company and are good measuring points for a company to understand how it is doing against its desired position, cultural direction and behavior and also highlights were it needs to do better.”

DEI leaders also benefit from higher employee retention than other organizations. Employees who work for DEI Leaders are less than half as likely to be looking for a job (6% vs. 13% for other organizations), and they are significantly less likely to intend to stay for less than a year (6% vs. 24%). This level of engagement could be linked to the positive views of DEI leaders' employees. A greater percentage of employees in these organizations report high levels of productivity, belonging, psychological safety, optimism about their careers and their ability to "be themselves" at work.

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