Only four of the 92 EFL and Premier League managers are from black or ethnic minority backgrounds - Nuno Espirito Santo (Wolves), Sabri Lamouchi (Nottingham Forest), Darren Moore (Doncaster Rovers) and Keith Curle (Northampton Town).
And Allison, who played over 70 times for the Blades before completing a PhD at Sheffield Hallam University, believes more can be done.
“When jobs are advertised, we see the same organisations using the same five or six places to promote the vacancies, so you are always going to get the same type of person," Allison said.
"There is also often a real lack of diversity within these recruitment agencies and then a lack of BAME representation on interview panels. I don’t think I’ve ever gone for a role where I’ve seen a BAME individual sat opposite me.
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“I think there should be targeted programmes to diversify recruitment but having quotas and targets isn’t the right way to do it. We want the best and most qualified people to get the jobs but to do so fairly, we need the recruitment process to be transparent and without unconscious bias.”
Allison now sits on the board at UK Coaching and has also held roles at the Football Association, where he primarily focused on the representation and quality of BAME coaches at elite level.
“We’re definitely moving in the right direction, but unconscious bias is a real challenge - some individuals or organisations may not even be aware that they are taking a prejudiced view," Allison added.
"For me, it’s about educating and supporting people and organisations, not about sanctions or coming down hard on them.
"At UK Coaching, we’ve been doing a lot of work on how we support individuals to recognise their unconscious biases and the actions required to overcome these."
Allison also represented Chesterfield after leaving the Blades, for whom he scored in a memorable Sheffield derby win over Wednesday in 2003.