Why Diversity in Your Company Makes Good Business Sense
Diversity is bigger than just gender and race. It includes culture, age, education, socio-economic status, and mind-set. With rich company dynamics, you are better able to meet the needs of your customer, relate to their pain points, and predict your performance. Having worked in and with multinational enterprises for over 20 years, I’ve learned that diversity in the workplace is an asset for both businesses and their employees. Read on to find out why a well-structured diversity program makes good business sense, and how it can positively impact your bottom line.
1. Drives Innovation and Agility
We live in a complex, interconnected world where diversity, shaped by globalization and technological advance, forms the fabric of society and the modern workplace. From experience, I have seen how diversity in the workplace fosters innovation, creativity, and empathy in ways that homogeneous environments seldom do. Yet it takes careful action and conscious leadership to unleash the true potential of this invaluable asset.
As per the famous quote by Aristotle, the whole is greater than the sum of its parts. When people from different ethnicities and cities come together, the cumulative perspective they bring has shown to be a key driver of innovation. Research shows that they approach problems differently, adding new angles, and presenting a variety of solutions, and it is this diversity of ideas that increase the opportunity that one of those suggestions will be a winner. This responsiveness and creativity are what helps to make sure that the company survives, whatever adversity it faces.
“Innovation comes from people meeting up in the hallways or calling each other at 10:30 pm at night with a new idea, or because they realized something that shoots holes in how we’ve been thinking about a problem. It's ad hoc meetings of six people called by someone who thinks they have figured out the coolest new thing ever and who wants to know what other people think of their idea.’
- Steve Jobs
A recent Boston Consulting Group report shows that companies with more diverse management teams have 19% higher revenues which have been attributed to innovation. According to Mckinsey’s ‘Diversity Matters’ report, companies in the top quartile for gender diversity outperform their competitors by 15% and those in the top quartile for ethnic diversity outperform their competitors by 35%.
A strong DEI (Diversity, Equity & Inclusion) strategy is not just a tick box on your corporate agenda – it relates directly to creating competitive advantage. How well are you placed to face up to your competitors and disruptors? Do you have the rich people dynamic in place that will challenge, collaborate, communicate, and take your business forward?
2. Creates Brand Trust
‘Inclusion and fairness in the workplace . . . is not simply the right thing to do; it's the smart thing to do.’
- Alexis Herman, past U.S. Secretary of Labor
Diversity and inclusion is not a one-size-fits-all program. Today’s buyer doesn’t just buy into your product, they also buy the ideals and values of your company. People expect the companies they shop with and the organizations they support to take a stand—in fact, 70% of U.S. consumers say it’s important for brands to take a stand on social and political issues.
Understanding your diverse client base is central to your success, and the first step in ensuring that your brand is relevant and resonates. This means that companies need to understand what diversity means to their employees, customers, shareholders, and stakeholders in order to make sure their program accurately reflects the mission and values of the organization.
The second step is having the right people on board to live and breathe those shared values.
The more your workforce is able to get on the same level as your customers in terms of ethics and culture, the easier they’ll be able to connect with them on a human level and form the bridge to brand trust and customer loyalty. Just remember that it does start with the tone at the top. Continued reinforcement through rhetoric, actions, and management will prove vital to keeping engaged employees on track and win over skeptics.
The great news is that this is a two-way street; just as the voice of the customer serves to hold companies accountable, the business has the transformative power to change and contribute to a more open, diverse, and inclusive society.
3. Ensure You Are Meeting Legal Requirements
In the legal sense of the equal employment opportunity (EEO) definition, “same chances” or “equal opportunity” means that employers cannot use certain characteristics as reasons to hire or reject candidates or make other employment decisions; in other words, they cannot discriminate against those characteristics. In the workplace, this translates as no person being denied employment opportunities or benefits for reasons unrelated to ability.
Having an EEO or non-discrimination policy in writing, which treats all employees who are similarly situated the same, supported by up to date employee records, can avoid years of pain in legal proceedings. Remember, globally in many courts of law, if you fail to document an event, it’s as if it didn’t happen. At THG Advisory, we work with clients to ensure that governance is in place to embed equal opportunity into the DNA of the company culture, supported and promoted by tools for open and honest conversation.
In employment discrimination lawsuits, the business almost always loses, even if that loss is a diminished public reputation or unfavourable PR. Add to this the cost of time spent preparing for the claim, the effect on employee morale, unwanted stress, and the actual legal cost to the company. Organizations who embrace diversity and put in strong measures to prevent and address discrimination are more likely to avoid the cost of charges and lawsuits, and that in turn will create the trust needed to allow employers and employees to be more closely aligned and grow themselves, the team, and organization.
4. Increases Market Share
A recent Harvard Business Review report shows, ‘Employees at these companies are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.’
Empowered through technology and with greater choice, an increasingly diverse customer base expects better personalization of products and services. The success of a product often lies in its people’s ability to understand and respond to the varying needs of their customers, with a positive impact on the consumer experience and customer satisfaction.
According to the Harvard report findings, “When at least one member of a team has traits in common with the end-user, the entire team better understands that user. A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.”
Diversity in your workplace is interlaced with profit metrics; it equates to a better understanding of your customers, drives relevant innovation, and ultimately yields a greater share of the market and revenues.
5. Attracts Top Talent
When everyone is included, everyone wins.
- Jesse Jackson
Having in place diverse teams of employees with a wide range of backgrounds and points of view helps to attract and retain top talent for the company, reducing turnover and increasing loyalty and performance. Yet this only happens if the environment encourages those views, and should be a place to share, debate, and challenge innovation.
Without the right people on the front line, you lose. Without the right attitude in those people, you lose. With the right people feeling unfairly treated, you lose again. Even if you win temporarily by paying lip service to DEI, the time has shown that in the end, you will lose when the realities are exposed; a bigger problem for SMEs who are more tightly integrated into the communities they serve.
By making sure that your people are at the heart of your company, leveraging the latest thinking in corporate governance, behavioural economics, human resources, and operational risk, you win.
‘Diversity: the art of thinking independently together.’
- Malcolm Forbes
Clearly, diversity and inclusion are important not just from a moral standpoint. They make good business sense, producing tangible, financial outcomes that will benefit your organization. When people think of diversity in the workforce, most think of how employees and executives within the organization are represented. While a key factor for many reasons, there are other things to consider, such as the structures and processes within the organization that can promote or hinder diversity.
THG Advisory works with clients to ensure that VOC (Voice of Customer) is driving their diversity strategy, improving metrics, and increasing bottom-line profit.