Interview: Stephen Frost, KPMG's head of diversity discusses the UK's Olympic legacy

Former London 2012 Olympics head of diversity Stephen Frost explains how the Games can encourage diversity in construction.

Antony Oliver
10 April 2015

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Stephen Frost is KPMG’s UK Head of Diversity & Inclusion and joined the organisation in 2014 after serving five years ensuring that the 2012 London Olympics and Paralympics had diversity and inclusion at the heart of their delivery.  Antony Oliver discusses the lessons learnt from this once in a lifetime opportunity

There is a huge amount of discussion across the infrastructure sector and the whole of business about the need to employ a more diverse workforce. Why is it so important?

I think there are five reasons why we might want to embrace a diverse workforce: 

• The first is about serving your clients or customers better in a fast-moving market. Trends and technology are developing much faster than organisations, and businesses are now being exposed to a wider array of influences than ever before. Diversity within the organisation helps to examine all of this from new perspectives and ultimately helps the business to make better decisions in an ever changing environment.
• The second is around employee recruitment - and with the majority of new entrants to the labour market now coming from minority groups, if you don’t talk to them you won’t employ them and subsequently miss out on new talent.
• Third is about productivity – people perform better when they can be themselves. Having diverse role models makes it much likelier that more of your employees will fulfil their potential and stay long enough to add real value to the organisation.
• Fourth is about avoiding homogeneity and reducing the risk of group think – diversity can trump the traditional view of ability in producing better financial and other outputs in decision making scenarios.
• Finally, doing real work on attracting and developing diverse talent reveals your organisational ethics to stakeholders and shows a willingness to leave a better social imprint in a time when society has understandable trust issues with business generally.

This article first appeared in KPMG's latest Focus digital app for infrastructure building and construction which is now available and tackles the pressing issue of skill shortages in the industry. To download the app click here.

At LOCOG (London Organising Committee for the Olympic Games and Paralympic Games) you helped the organisation achieve new levels of workforce inclusion. How did you get it so right and how can other businesses benefit from understanding your achievement?

Put simply, we built diversity into the system rather than having it as an add-on. I describe the three paradigms for embracing diversity in business as:

• Diversity 101: the compliance paradigm –because you have to.
• Diversity 2.0: the marketing paradigm –because it serves the company’s self-interest but there is a reality/perception gap.
• Diversity 3.0: the system paradigm – embedded into business strategy with value created for all parties.

Most companies undertake the first two and while they’re not necessarily bad activities, they’re insufficient as standalone initiatives. LOCOG adopted all three approaches from the beginning with an emphasis on the third. So rather than having, say, a programme for women and a programme for ethnic minorities, we just built them all into the entire recruitment system and held everyone accountable.

The London 2012 Olympic and Paralympic Games saw mass participation by diverse groups with 9% disabled, 40% Black, Asian and Minority Ethnic (BAME), 46% female and 5% Lesbian, Gay, Bisexual and Transgender (LGBT) staff.  What might a project like, say, High Speed 2 (HS2) learn from this achievement?

Success starts with truly (as opposed to superficially) understanding the challenge, then leading and taking responsibility, and then delivering. So, for example, if HS2 is set to spend, say, around 25 times the LOCOG budget, and if they marshall that budget with similarly systematic strategy (to LOCOG), they should theoretically get 25 times the effect. HS2 should build a diversity strategy throughout its recruitment system, its talent system and its retention system, into its supply chain, stakeholder and external communications plans. If HS2 delivers on diversity like this, it creates the potential for huge change.

How do you stand on quotas – good or bad? Necessary or unhelpful?

People get confused between targets and quotas. As a rule of thumb, targets are great because they are based on the actual talent available. Quotas are potentially bad because they can be an artificial obstruction to the free flow of talent. However, nobody is objective when it comes to recruitment as we are all deeply biased creatures so some sort of measure can serve as a useful yardstick.

If we develop diversity targets in line with available talent then that gives you a reasonable milestone. So I am definitely in favour of targets, not least because they stop us going backwards. But if you really push me I think quotas have a place as a short tem temporary measure to kick start the pipeline. One of the best examples here in the UK was women being shortlisted for parliament which lifted the number of women from 12.5% to 25% overnight. This improved the overall quality of debate in parliament. But in the long run targets are a much better way of taking us towards a genuine meritocracy.

When you joined KPMG you said you were impressed by the firm’s commitment to creating a diverse and inclusive culture. What has been achieved in the last 12 months?

First, we’ve established a baseline based on a 93% response rate. We modelled recruitment, promotion and retention for the last three years and projected the diversity trends forward three years. If we carried on as previously, we risked greater homogeneity in large parts of the business and so it gave us 

a really robust wake-up call and an irrefutable baseline of evidence. Second, our new Inclusive Leadership Strategy was signed off by the Board and we went public with our targets across sexual orientation, disability, ethnicity as well as gender, setting the agenda for transparency and leadership in this area. Third, we started the cultural change programme with our One Firm Event and Inclusion Week, creating mass participation and a genuine bottom-up approach to diversity and inclusion.

What are the barriers to stopping you achieving a more diverse business at KPMG?

I think one of the major barriers that we must constantly guard against is complacency. It’s quite hard to educate smart and decent people – getting the facts across that we are all biased and flawed creatures and that’s OK, we just need to consciously and constantly check our behaviour.  Another is knee jerk responses. It would be so easy to lapse into tokenism as a way of hitting targets.  Targets must be about improving productivity and genuinely managing talent rather than imposing positive discrimination.  A final one would be fatigue – rather than wagging a finger we must dangle carrots to say why boosting diversity is a good thing. There are, of course, a large number of factors particular to consulting that make it harder but the current business environment is changing because the world is changing. That brings with it challenges as well as opportunities.

KPMG recently warned that a lack of construction skills could soon start to impact the wider industry. Should government take a stronger role to encourage a more diverse workforce?

It requires all hands on deck. Government has got a role to play because in a still dominant “diversity 101” world they are the compliance police. But the private sector also has a role to play because compliance is fundamentally only about attaining a minimum standard without actually creating added value.

So if businesses want to create that value they need to be ahead of the curve, understand the way the wind is blowing and anticipate the skill gaps. It is about asking what you are doing to tap your talent pool and up-skill local construction workforces – geographically and by sector discipline.

Are there examples of companies, industries or countries that infrastructure could gain inspiration or insight from around diversity?

Too few I am afraid. North America is largely at “diversity 101”. Northern Europe is largely at “diversity 2.0”. Almost no one is at “diversity 3.0” and I don’t think anyone has cracked it – it is all still up for grabs. That said, the Olympics was pretty good and demonstrated what can be achieved and I think that the work KPMG is embarking on, potentially, could go there too. Systematic change is about driving the business and its profit and loss, so with the right leadership, it is a good problem to have. But without leadership nothing will change.