32% of SME employees see no diversity in leadership teams

Published on 25/11/2021 by Sukanya Awasthi

Diversity in the small to midsize enterprise (SME) is a broad topic. In previous articles, we have explored it from the point of view of managers and begun to see how employees think and act regarding diversity. In this second article focusing on employees and diversity, we examine some of the issues in more detail.

Workplace diversity and discrimination in UK

Diversity in the SME workplace is fundamentally about people, and people professionals have a range of tools at their disposal to build more diverse workforces. Therefore, we have highlighted where human resources software and related solutions can help at appropriate points.

Our findings here are based on a survey of 1,001 SME employees carried out in October 2021. You can find a full methodology at the bottom of the article.

Discrimination in the workplace

Workplace diversity tends to describe an end goal. Usually, the conversation begins when organisations look at themselves —and the world around them— with a critical eye and ask whether they treat everyone fairly. In some cases, the trigger is discrimination; where an employee suffers unfair treatment because of who they are.

What is workplace discrimination?
Under the Equality Act 2010, there are nine protected characteristics, including race, religion, age, and disability. We cover them in more detail in the first article in this series. Discrimination refers to unfair treatment based on these characteristics. It can be direct (treating certain groups unfairly) or indirect (putting general rules in place that disadvantage certain groups). Discrimination can also include harassment and victimisation of those who have previously complained. GOV.UK has guides to discrimination in general and in the workplace. And Citizens Advice has a guide to help understand if you have been discriminated against and what action to take.

22% of the SME employees responding to our survey said that they have been discriminated against or know someone to have been discriminated against in the workplace. The most common types of discrimination witnessed or experienced are based on racial/ethnic group (30%), followed by age (28%), and gender (24%).

Discrimination faced by employees in workplace infographic

64% of those who experienced or saw discrimination filed a complaint, but 44% of those who did so said that their complaint was not taken seriously. GOV.UK states that if an employer does not resolve a discrimination complaint in a satisfactory way, you can contact a trade union representative, Acas, Citizen’s Advice, or take your employer to a tribunal.

Diversity in leadership

Diversity in a workforce is admirable, but it is important to reflect that diversity among key decision makers, as well. Our survey found that many SMEs appear to have equitable hiring practices, but there may be other forces at work that prevent people from certain demographics from rising through the ranks.

Nearly one-third (32%) of respondents to our survey said that their leadership team was ‘not diverse’, while a similar proportion (37%) said it was ‘a bit diverse’. This may be due to structural problems within SMEs. 15% of respondents said that men have more opportunities to get promoted and work in leadership roles in their company. 39% said that their company is not transparent with pay rises and promotions —i.e. when someone receives a pay rise, bonus, or promotion, the news is not made easily accessible to all employees.

Gartner research from earlier this year has identified that programmes to encourage the progression of diverse talent often falter when people reach mid-level positions. In this article, the authors outline three critical steps organisations can take to ensure that their talent pipeline remains productive all the way to the top.

Did you know? SMEs can use talent management software to collect accurate and standardised data on employee performance so managers can uncover challenges and concerns and make well-informed decisions about talent progression.

The gender pay gap

The gender pay gap refers to the difference in earnings between men and women. This has become an issue of national importance in recent years. In 2017, for example, the UK government made it mandatory for companies with 250 employees or more to publish their salary data —plus they can provide supporting information to justify the data and outline action plans, if required.

Looking at the latest data from larger organisations released in October 2021, the UK pay gap for the workforce as a whole appears to be decreasing. It has fallen by around one-quarter in the past decade to 7.9% in April 2021.

When we spoke to SME employees, 20% said that men are paid more than women in their company, while 18% said they don’t know. However, as outlined above, a large proportion of SMEs do not share this data either externally or internally; 39% say their company is not transparent with pay rises and promotions —a further 16% said they don’t know.

Gender pay gap between men and women in workplace infographic

Did you know? Employee engagement software facilitates the two-way communication between an organisation and its employees. It can help SMEs communicate its values to the workforce and includes features to help employees invest in that culture.

Turning momentum into change

Diversity has been hard to ignore over the past few years. Perhaps the most prominent media attention went to the actions sparked by Black Lives Matter in the wake of the murder of George Floyd in May 2020. Demonstrations took place around the world, including in Australia, Brazil, France, India, Japan, New Zealand, Nigeria and the UK. The New York Times estimates that in terms of participation, the protests may be the largest movement in U.S. history.

The movement and its message caused people to consider the impact of race in their own lives, and many companies did the same. Our survey reflects this: roughly half of respondents (45%) say that their company held meetings and discussions about improving diversity in the workplace in the wake of the Black Lives Matter protests. However, a similar proportion (44%) said there was no action.

Company’s response to Black Life Matter movement infographic

In the majority of cases, these talks brought about positive changes. In 60% of cases, respondents said that their company has actively improved its diversity and inclusion policies.

Company’s initiatives on diversity infographic

Did you know? Policy management software can help SMEs draft, review, approve, and share policies within the organisation. Tools can help demonstrate that employees have read and understood policies, and record-keeping functionalities help demonstrate compliance to regulators.

The message for SMEs seems clear. Both employees and managers recognise the importance of diversity in the workplace and think that their companies are making positive steps but could be doing more. SMEs should identify their current challenges, set goals, define actions, and continue to measure progress.

Looking for human resources software? Check out our catalogue!


To collect the data for this report, we conducted an online survey on diversity and inclusion in October 2021. Of the total respondents, we were able to identify 1,001 UK respondents that fit within our criteria:

  • UK resident
  • Over 18 years and under 65 years of age
  • Work in an SME which has up to 250 employees

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

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About the author

Content Analyst for the UK market. Committed to offering insights on technology, emerging trends, and software suggestions to SMBs. Plant lady, café hopper, and dog mom.

Content Analyst for the UK market. Committed to offering insights on technology, emerging trends, and software suggestions to SMBs. Plant lady, café hopper, and dog mom.