Inclusive Procurement at HS2

Mark Lomas is the Head of Equality, Diversity and Inclusion at HS2 which is the high speed railway network being built between London and the north of England. HS2 runs an inclusive procurement process, which establishes a range of diversity elements in the supply chain. These include the spend with diverse suppliers, EDI training, achieving an externally verified standard, data reporting and policy compliance. The HS2 approach to inclusive procurement starts at the first stage of the tender process. I asked Mark how HS2 established the business case for supplier diversity with HS2 when they created inclusive procurement.

‘I’d like to claim it was because of my own genius but actually, it was more a case of right place, right time. The HS2 program obviously has a large amount of procurement. We’re dealing with public money on this huge programme over many years. It’s more than just building a railway. HS2 will deliver a number of strategic benefits including more accessible travel, skills and employment across different areas of the UK. Part of the ability to embed equality, diversity and inclusion, or EDI, in the supply chain goes hand in hand with some of the strategic problems in the sector.’

The construction sector faces skill shortages. An ageing workforce means a quarter of will retire within 10 years. As HS2 extends beyond that, the opportunity to embed EDI into the procurement process is key to outcomes. A client organisation, HS2 works with its biggest suppliers to deliver the work. HS2 monitors and manages their performance. Embedding diversity and inclusion into the procurement process and the supply chain delivery establishes those legacy outcomes and wider benefits of HS2.

‘Through a supplier lens, there’s a huge amount of investment over a period of years. Essentially, you’re getting paid to invest in the change that you need to make your own company and the sector sustainable.’

We talked about how EDI are embedded at each stage of the procurement process. Mark said whilst it’s a common question, it’s not really ‘rocket science’. At the pre-tender screening stage, it is quite basic — asking about policy, whether the company has lost tribunals or has any EHRC judgements against it. This is the pass-fail element. Companies don’t get through the gate with those unless they can demonstrate that the learning has been done, with evidence that it’s unlikely to happen again.

The second stage is the ITT stage. It’s here Mark says there is a ‘real bang for your buck’. The difference between winning and losing a major contract at HS2 is around 3% to 4%, a narrow margin. There are specific tender questions on equality, diversity, inclusion, skills, employment and education. The weighting is worth 6%, making them critical factors in winning a bid. Mark believes, ‘that kind of bakes in the business case. No one wants to lose a massive contract because of what they’re not doing in EDI’.

The third stage is about monitoring performance. Suppliers submit monthly data that demonstrates progress against achieving accreditation, supplier diversity outcomes, monitoring, compliance with policies. The data is collated and at the touch of a button, EDI performance can be seen across the entire HS2 program. Reports can be produced by overall contract, contract area, gender, ethnicity, disability and whether people have attained their EDI verification. Starting with a clean slate allowed HS2 to embed EDI in each stage of the procurement process and contract management process. The performance data and monitoring drive a continual improvement cycle.

I asked Mark how equality, diversity and inclusion have been embedded in leadership accountability?

‘It’s important that your leaders are bought into what you’re doing. When you’re trying to drive performance through a whole organisation, there’s no way that a small EDI team can do that by yelling into the wind. It’s just not possible. With the leaders engaged and following the programme and disseminating messages it works a lot better. Our leadership is engaged in the professional and personal development aspects. That means being comfortable with diversity, understanding change and the wider strategic picture in our sector. Knowing that no-one loses when there’s increased inclusion. With many construction jobs and a skills shortage, diversity is not a threat, it’s a benefit.

Starting from that point means it’s an easier conversation to engage leaders in. Also on personal growth, all our leaders have a key performance indicator for the reverse mentor programme. On this annual scheme, they exchange viewpoints and experience across the business, with people who are different from them. This helps them understand why diversity is important to people in other parts of the organisation.

HS2 wants people to participate and use their voice. Leaders are accountable for ensuring that everyone in their directorate has completed a minimum of one EDI engagement session. That might be a network activity or a lunch and learn. We even have EDI games like crosswords and puzzles that we use internally and also share with our supply chain. Pretty much all organisations now have a sort of a basic EDI awareness that everybody has to do and pass, and that is also part of our leaders’ accountability, making sure that’s done. On top of that, we might set specific challenges or have a league table showing how the leaders are performing against the diversity indicators.

The success in pushing EDI through HS2 and the supply chain has been threefold. Number one, people understand the strategic case. It’s not a threat, it’s a benefit to the sustainability of the sector and HS2 legacy. Number two, as a leader, it is an expectation. It’s built into our competency frameworks, it’s built into how we recruit leaders. Number three, it’s around personal participation and encouraging participation throughout the organisation. In those ways, we’ve been quite successful in making it stick.’

When Mark and I worked together at the BBC. I was always impressed with how his approach hard-wired diversity and inclusion into the organisation at the level of day to day operations. I asked him why inclusive growth was so important to HS2.

‘Inclusive growth is important to HS2 because it’s underpinning the future of the sector. I’m sure everyone’s familiar with supply and demand. When you have skills which are in greater demand but they’re in short supply, it costs more. Even if you look at it from just a cost sustainability point of view, the broader your talent pool, the more skills, the more sustainable you can make the talent pool and the cost of building projects.

Delivering that HS2 legacy is fundamental. From an EDI point of view, our transport, our rail, our stations, should be more accessible and inclusive than anything that’s gone before. That’s number one. Number two is about the skills, the jobs, the diversity of those in the sector, making sure that over the long term, we’re reducing those skill shortages and we’re increasing the diversity of talent. If we just allow things to progress how they had done over the last 20 years, the data shows us we would be short of the people and skills needed to build projects like HS2 in the future.’

HS2 YouTube channel has EDI videos explaining the approach to inclusive procurement. To speak to EDI supply chain managers email [email protected] and the team will get back in touch.

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