Beyond buzzwords: the business case for diversity
Where diversity is concerned, there’s no doubt recent world events have sparked soul-searching among businesses regarding diversity efforts. And while diversity and inclusion initiatives have become more of a box-ticking exercise for some s in recent years, they represent important values and principles that can’t be understated. It’s clear that companies are under a great deal of scrutiny to prove they can back up expressed statements of intent with action - and they’d do well to start by looking in greater detail at the business case for diversity, which is a compelling one.
State of play
Looking at recent statistics paints a fairly stark picture of the current diversity landscape. Only 7% of Fortune 500 companies were listed as having a female CEO as of May 2020 (which, believe it or not, was a ‘record high’). Furthermore, despite making up 47% of the workforce, women only hold 19% of board seats.
When it comes to black and ethnic minority (BAME) representation the figures are bleaker still. Over a third of FTSE 100 firms have no ethnic minority board members and just 7% of board and executive level positions in the UK are held by someone from a BAME background. Further, 70% of FTSE 250 companies lack any BAME representation at board level.
There is clearly much to be done before corporate teams echo the levels of diversity in surrounding communities. Important business decisions are still being made overwhelmingly by a white male majority, and while working to diversify those teams might seem like a lot of work (and it is), businesses stand to gain much more in the long term.
Gaining a competitive edge
While improving representation in the workplace is something we should all be striving towards from an ethical standpoint, the business case shouldn’t be ignored, and it’s been widely proven that a more diverse workforce yields better results. A Boston Consulting Group study showed that companies with more diverse management teams achieve revenues up to 19% higher than those less diverse. Other studies have recorded up to 80% improvement in business performance among companies with high diversity levels compared to homogeneous organisations.
Why does increased diversity tend to increase the bottom line? A multitude of backgrounds and experiences leads to a more well-rounded organisation, in which you are more likely to benefit from ‘cognitive diversity’ (diversity of thought) as well as different skill-sets (it’s reported that women are up to 25% better at mentoring than men, for instance). Teams which demonstrate diverse ways of thinking and viewpoints can connect the dots in numerous ways, leading to more innovative solutions superior for meeting customer needs.
Lastly, younger people in particular are now less willing to work for or do business with companies that don’t embrace diversity, so it’s something companies need to consider if they want to attract the best talent and the right customers.
Differentiating between diversity and inclusion
The words diversity and inclusion can often be used interchangeably - while many companies now have a dedicated ‘D&I’ department or team lead, they may not have a clear understanding of the distinction between these goals, so it’s important to clarify how they differ.
Diversity refers to representation among the people within your organisation and includes race, gender, socioeconomic background, sexual orientation, religion, disability and more. It is therefore fairly straight forward to measure. Inclusion is less clear cut as it describes the process of properly integrating these communities so they feel part of the team and are treated equally - this typically forms part of a company’s culture and is therefore incredibly nuanced.
The two need to run side-by-side, and one without the other is futile, so organisations need to understand and tackle both.
How to tackle both
When it comes to recruitment, a blind hiring process is a good place to start to ensure teams aren’t unconsciously influenced by an applicant’s name, ethnic background or gender. Businesses may also need to reformulate their job descriptions to appeal to a wider pool of applicants. Previous studies have shown that job specifications which include an exhaustive list of qualifications can discourage women from applying, since they are less likely than men to apply for jobs where they don’t fit every requirement.
To create and maintain a diverse talent pipeline, companies should offer paid-for internships and traineeships to avoid socioeconomic discrimination. Similarly, targeting graduate job advertising to inner-city universities as well as more traditional institutions is advised, since the former are more likely to attract a diverse mix of graduates. If recruitment firms are a large part of your hiring strategy, make sure they are in tune with your diversity policy and that it informs how they source applicants.
At the interview stage, it’s important to have a diverse panel so that candidates feel comfortable and to help eliminate as much unconscious bias as possible. Secondly, work on standardising the interview process, as unstructured interviews usually lead to more biased hiring decisions, with people more likely to hire in their own image. Staff training and coaching plays a hugely important role here. There are many diversity experts dedicated to coaching employees on how to recognise and tackle unconscious bias, and how to avoid discriminating unfairly in the workplace.
It’s also important to take steps to create a work environment that’s safe and inclusive so that diverse communities can thrive. The standard must always be set by senior leadership, which is why training senior leaders and decision-makers in these initiatives is just as (if not more) important than the wider team. Leaders need to show they are receptive to unfamiliar perspectives and ideas, and encourage people at all levels and from all backgrounds to speak freely in meetings and brainstorms. On top of encouraging the equal treatment of all, this prevents the ‘groupthink’ pitfall and decreases the likelihood that a potentially great idea is left unsaid.
The business case for diverse teams is clear, and there is no longer any excuse for a lack of commitment to progress towards equal opportunity in the workplace. By taking inspiration from the above and investing the necessary time, effort and resources in diversity and inclusion initiatives, businesses will see ROIs that directly improve their bottom line.