Key Policy Recommendations
1. Compliance with legislation needs to be translated into proactive inclusive business strategies for ethnicity, gender and age. Gender and age inclusion is ahead of ethnicity which is less well mainstreamed in the employment profile of managers and employees. This trend is reflected in both Ethnic Minority and White SMEs, although, in Ethnic Minority SMEs, ethnicity is more pronounced and is male and young. Ethnic Minority SMEs are less mainstreamed in women and old age while, in White SMEs, there is a better cross-section of women and age and who are of one ethnicity – white.
2. Diversity is not a concern for many SMEs, especially where they do not see any connection to their business. However, other SMEs are convinced of the benefits of ethnic diversity on a variety of performance measures and, although SMEs do not have much experience of diversity, there is ample scope to furnish evidence to SMEs with an open mind. There is a need for a greater dialogue between SMEs, so that they can share their experience and knowledge on business benefits of having a diverse workforce.
3. Given some resistance to the idea that diversity can boost performance, conventional approaches to mainstreaming diversity in the workplace may be counter-productive. The business case should be continually underscored in all efforts to promote and support ethnic diversity in SMEs. For example, an analysis of the connection between ethnic diversity and export performance shows that there is a significant connection, including a strong link between ethnic employment, linguistic skills and sales in specific regional export markets. The linguistic and intercultural skills that have been identified would need to be emphasised increasingly in terms of the need for a global outlook, even in the smallest of firms.
4. White SMEs are domestic not outwardly oriented and, when they are internationally oriented, at best they are reactive and, at worst passive. Ethnic Minority SMEs tend to be more internationally risk welcoming compared to White SMEs. Ethnic Minority SMEs tend to be less satisfied with their achievement of export objectives and, yet, they have greater market coverage and see more increases in market trends going forward. A dialogue should be fostered between Ethnic Minority-SMEs and White-SMEs to support a sharing of experience and knowledge.
5. Ethnic Minority SMEs have higher language and intercultural skills that need to be leveraged increasingly as competitive assets and comparative advantages in internationalisation. They should be supported in this by ensuring that existing (or future) actions and incentives aimed at SMEs recognise that EM-SMEs might have differential needs to W-SMEs.
6. SMEs need to be assisted in accelerating their export performance. They are passive with respect to exporting, with the majority having less than 5% of sales overseas. 65% of firms export some of their products and services, but 86% have no intention to export or expand exports within the period up to 2008. Few SMEs use direct methods and government policy would need to be focused increasingly on direct methods including joint ventures especially for the group of SMEs with less than 50 employees. Government policy would need to assist SMEs to moderate the risks involved in reacting to unsolicited orders to direct methods of internationalisation such as greater export market guarantees for micro companies. This could increase support for investment in more advanced Management Information Systems (MIS) and Information and Communications Technologies (ICT), both of which would reduce uncertainty and the costs involved in acquiring market and business knowledge, especially overseas.
7. Diversity is not in itself a guarantee of improved business performance. The business case for diversity rests in the added potential that a diverse workforce can bring to a company. But potential needs to be nurtured. Therefore, SMEs need to be supported in upgrading the skill levels of their employees and managers through schemes that incentivise them to release staff for upgrading and training.
8. The passive compliance with the law and guidance on diversity is rational from the SMEs’ point of view in order to minimize adverse reaction. SMEs need to be encouraged to generate inclusion strategies that go beyond adherence to the minimum standards regarding diversity. Fundamentally, SMEs must be encouraged to recognise ethnic minorities (and diversity) as an untapped resource (see appendix 2).
9. The education and skill base of leaders in SMEs is generally high and needs to be further enhanced through context and issue specific management training and upgrading schemes.
10.Support should be given for further research, in particular, to identify mechanisms which best support SME capitalisation of the untapped resources of an ethnic minority workforce.
Due to the innovative nature of this partnership (a number of partners are national organisations themselves and work closely with policy makers) mainstreaming the work is a strength, providing lasting impact. A key example is the production of a model of the innovative approach designed to be applicable throughout Europe.