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Inclusive Procurement at HS2

S3: Welcome to The Inclusive Growth Show with Toby Mildon, future-proofing your business by creating a diverse workplace.

Toby Mildon: Welcome to The Inclusive Growth Show, I am Toby Mildon your host and I am joined by an amazing guest today, Mark Lomas, who 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. Mark, welcome to the show.

Mark Lomas: Thank you, great to be here.

Toby Mildon: Mark, today we’re gonna be talking about inclusive procurement, what exactly is inclusive procurement?

Mark Lomas: Yeah, it’s really interesting, it’s a great question, because a lot of organisations aren’t necessarily that clear on it. For us at HS2, inclusive procurement is both what you require within the procurement process to establish your evidence for fitness [01:00] ____ contract, which includes supplier diversity elements, how much you spend with diverse suppliers, along with a host of other elements, EDI training, achieving an externally verified standard, data reporting and policy compliance, all of which form a part of our approach to inclusive procurement which is embedded in each stage of the tender process.

Toby Mildon: Brilliant, and when you started creating your inclusive procurement process and program around it, how exactly did you establish the business case for supplier diversity with HS2?

Mark Lomas: That’s a very good question. 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 larger amount of procurement, we’re dealing with public money and it’s a huge program over a number of years. And it’s more than just building a railway. HS2 will deliver a number of strategic benefits including more accessible travel, and skills, employment, etcetera across various areas of the UK. Part of the ability to embed it in the supply chain is hand in hand with some of the strategic problems in the sector. First of all, for example, we have a vast amount of skill shortages which we know are in the sector. Plus, we have a vastly aging workforce. To give you an example, something like a quarter of the construction workforce is going to retire within the next 10 years, but the program goes on longer than that. The opportunity and to embed EDI into our procurement process was really key for us delivering the outcomes. HS2 is an organisation, is a client organisation. So we work with our tier 1, our biggest suppliers, and they deliver the work on our behalf, we monitor and manage their performance. By embedding it into the procurement process and into what the supply chain needs to deliver, we establish those legacy outcomes and deliver the benefits of HS2.

Mark Lomas: If you’re looking at it from a supplier lens, there’s a huge amount of investment over a number of years. And essentially, you’re getting paid to invest in the change that you need to make your own company and the sector as a whole sustainable in the future, refreshing your talent pools, ensuring that you’re dealing with a wide range of companies in balancing risk. By embedding it into each stage of their procurement process, it becomes a benefit for those organisations that are doing it, and helps them in terms of their business sustainability over the next decade.

Toby Mildon: That’s brilliant. How have you managed to embed this at each stage of your procurement process?

Mark Lomas: Interestingly enough, that’s a question I get often. And it’s not really rocket science but I’ll talk you through each stage of the approach. In our [04:04] ____ documentation, and we set out all the requirements around equality, diversity and inclusion. And at this screening stage, it is quite basic. It is around your policy, whether you’ve lost tribunals and whether you have EHRC judgments against you, etcetera. Those are what we call a pass-fail element. You don’t get through the gate unless you haven’t had any of those or if you had, you can demonstrate you’ve put in the lessons and the learning and evidence that it wouldn’t necessarily happen again.

Mark Lomas: The second stage is the ITT stage. And this is where you get the real bang for your buck, if you like, because the difference between winning and losing a major contract at HS2 can be around 3% to 4%, which is a very narrow margin. The waiting on EDI, equality, diversity, inclusion, and skills, employment, education, is around 6%. And so it is a critical factor in winning the bid. And in our ITT stage, we ask very specific questions around EDI, how you communicate EDI, how you use diversity monitoring to implement change, etcetera, which means you have to evidence how effective and what you’re doing is going to be for EDI. And that’s weighted and stored. And of course, that has an influence, it’s not the only thing, but of course, it has an influence on your overall scoring in the tender. And therefore, 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 and apprenticeships, etcetera.

Mark Lomas: The third stage is how we monitor, how we monitor that performance. In the mobilisation stage, each major supplier has to submit media strategy which covers their basically, [06:00] ____ plans which are set out in the EDI works information or [06:04] ____ services. And then, we monitor performance against that every six months. So they have to submit data, demonstrate progress against achieving accreditation, supplier diversity outcomes, monitoring, compliance with policies, etcetera. And we receive that each month through what we call a PMU, very fancy abbreviation for a fancy spreadsheet, that is then loaded into a data system. And it allows me, at this point in our maturity at a sort of a touch of a button, to see what EDI performance looks like across the entire HS2 program, by overall contract, by contract area, gender, ethnicity, disability, whether people have attained their EDI verification.

Mark Lomas: I think part of what we’ve done very well, and having a sort of a clean slate to start from, is that it’s embedded in each stage of our procurement process and our contract management process. The data process is aligned to that and the systems we use mean it’s not resource-heavy. So myself and the EDI supply chain manager basically handle all the kind of scoring of tenders and the management of that data and we have some support from our IT teams in terms of the data platform, and that forms a continual cycle of improvement.

Toby Mildon: What’s great about that is that it’s really embedded into your procurement systems and processes, and it just feels to me like it’s how you conduct business or business as usual. I interviewed you during my book, Inclusive Growth, and one of the things that we talked about in our our case study was how equality and diversity and inclusion has been embedded into leadership accountability. Can you just explain to me how you’ve accomplished that at HS2?

Mark Lomas: Yeah. I think it’s very, very important that your leaders are bought into what you’re doing, but it’s just as important actually, that staff in your organisation are bought into what we do. I’ll touch on the staff a little later, but I’ll concentrate on the leadership. In essence, when you’re trying to drive performance through a whole organisation, there’s no way that an EDI team, which tends to be fairly small, can do that by yelling into the wind. It’s just not possible. With the leaders engaged and following the program, disseminating messages, requirements, etcetera, it works a lot better. And there are two parts to it, in terms of how our leadership are engaged. One is the professional and personal development element of that, and that’s about being comfortable with diversity, understanding change, understanding the wider strategic picture, which is in this sector, no one loses when there’s increased diversity. In many sectors, you have a huge talent pool and not many jobs. So inevitably, if you increase the diversity of those getting jobs, you’re pushing other people out of the sector.

Mark Lomas: In ours, it’s not that way. We just need more people bought into the sector to cope with the investment we have. So diversity is not a threat, it’s a benefit. And when you start from there, it’s far easier to engage the leaders as they are in that conversation. So that first element around personal growth, we achieve that by all our leaders having a key performance indicator around reverse mentor. All of our executive and senior leadership, it was a cohort of 66 leaders, have a reverse mentor. They do the program on an annual basis. And that’s about them exchanging viewpoints and experience across the business, and with people who are different to them, to help them understand why diversity is important to people in other parts of the organisation, lower down in the organisation, etcetera. And that’s about their engagement.

Mark Lomas: The second part is about their accountability for participation. Our basic requirement at HS2 is we want people to participate. We can’t change anything if people don’t tell us what needs to improve and lend us their voice. So our directors are accountable for ensuring that everyone in there in their directorate has completed a minimum of one EDI engagement session. That might be a network activity, a lunch and learn, and we even have EDI games like crosswords and puzzles that we use internally and also share with our supply chain for use. And it’s that around making sure they’re personally encouraging participation, which is another important part of it.

Mark Lomas: One of the other parts is ensuring that the mandatory parts of our program, for example, are completed. 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 all done. On top of that, we might set specific challenges. For instance, when we moved from Success Factors to Oracle, the switchover of the system meant that we lost some EDI data. It was no longer in the system because of the switchover. So our leaders were accountable for making sure that 90% of records were complete with EDI data, and they did that by sharing videos on why EDI monitoring is important, and I’ll share that link with you, but also doing things as basic as having a lead table which shows how the leaders are performing against the diversity information [11:44] ____.

Mark Lomas: So the success, I think, of pushing EDI through HS2 and through our supply chain has been threefold, really. 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. And number two, as a leader, it is an expectation, it’s built into our competency frameworks, it’s built into how we recruit leaders. And three, it’s around personal participation and encouraging participation throughout the organisation. And in those three areas, again, we’ve been quite successful in making it stick.

Toby Mildon: Brilliant, thank you so much, Mark. You and I have worked together in the past, we were both working at the BBC together. And one thing that really impressed me when I worked with you was how your approach to diversity and inclusion was to really hard-wire it into the organisation and how the organisation runs day to day. And actually, that was a huge inspiration for my book, Inclusive Growth, which is all about hard-wiring diversity and inclusion. So this is the Inclusive Growth Show. Why is inclusive growth important to HS2?

Mark Lomas: It’s a fundamental part of what we’re doing, right? Delivering the legacy of HS2 was supremely important. From an EDI point of view, our transport, our rail, our station, the train station, 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, 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. Inclusive growth is really important to HS2 because it’s underpinning the future of the sector. And I’m sure everyone’s familiar with supply and demand. When you have skills which are in greater demand but they’re short of 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 you have skills, the more sustainable you can make the talent pool, the cost of building projects, etcetera. And it is fundamentally important to HS2 that we deliver those legacy outcomes.

Toby Mildon: Excellent, thank you. If somebody wants to learn more about inclusive procurement at HS2, where can they get that information from?

Mark Lomas: Sure, we have some YouTube videos which explain our approach to inclusive procurement and case studies. I’m happy to make that available. Also, if people want to talk to one of our EDI supply chain managers, etcetera, they can email ediq[email protected] and one of my team will be in touch with them.

Toby Mildon: Brilliant, thank you ever so, Mark, for joining me on today’s episode of the Inclusive Growth Show, and thank you for listening to today’s episode and I really hope you can join me on the next episode.

Mark Lomas: Excellent, thanks, Toby.

S3: Thank you for listening to The Inclusive Growth Show. For further information and resources from Toby and this team, head on over to our website at mildon.co.uk.

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