Does greater diversity equal greater profits? Bella Mehta explains how diversity can deliver and make a positive impact on your bottom line.
We’ve long thought that diversity was a ‘good thing’, something we should be doing. Now, though, we have concrete evidence that not only does diversity have the feel-good factor, but it also has real business benefit. In fact, no longer is it a ‘should do’, but a ‘must do’.
The American Sociological Review has recently published research by Professor Cedric Herring titled: ‘Does Diversity Pay? Race, Gender, and the Business Case for Diversity’. Professor Herring’s findings are a stimulus to the pro-diversity, pro-flexible working brigade who have long felt that diversity adds value. Seven of his eight hypotheses were proved, namely that:
Racial diversity is associated with:
- Increased sales revenue
- More customers
- Greater market share
- Greater relative profits
And gender diversity is associated with:
- Increased sales revenue
- More customers
- Greater relative profits
The only hypothesis not proved is that gender diversity is associated with greater market share.
Organisations that value diversity and embrace flexible working are more self-aware, creative and astute at winning business. However, diversity doesn’t come without issues that need to be resolved. Even new generation companies are finding it hard. Internet companies hired lots of bright young things in their 20s – international, top of class, high achievers – now they’re in their 30s and starting families and realising that the world isn’t equal for men and women.
Indeed, The Aziz Corporation’s recent research shows that 77% of respondents to our survey believe the gender balance in the working environment has a significant effect on its culture.
Amongst business executives there appears to be a consensus that men are more likely to take risks. 54% agree that men are more competitive than women, while 61% believe that women tend to be more cautious and risk-averse than men. 55% agree that, in general, women are more likely than men to apply ‘common sense’ to apparently complicated situations. Almost half of respondents and a majority of those working in financial services (53%) agreed that having a greater number of women in senior positions in financial institutions could have prevented at least some of the excesses which have caused current problems, not so much providing greater relative profits (the last bullet point above) as preventing bankruptcy you might argue.
Creating diversity
Even companies like Google are having to work hard to recruit and support a diverse workforce, to deliver their global vision. Matt is a creative development and program manager in North America: "Coming from a small, closely-knit native American community at Stanford, I often worried about diversity and how any organisation deals with underrepresented populations. At the time I started, Google didn’t have a native American network, so I casually asked our chief culture officer how I could get one going and, shortly after, the Google American Indian Network (GAIN) was born… Google has really empowered us to embrace diversity initiatives and continues to offer full company support for successful execution of those initiatives."
Delivering diversity requires culture change at an organisational level and at an individual level. Indeed, Matt’s success with GAIN wouldn’t have come about without support from the top – Google’s company culture change is well under way as chairman and CEO, Eric Schmidt, is a proponent of diversity: "Our products and tools serve an audience that is globally and culturally diverse – so it’s a strategic advantage that our teams not only encompass the world’s best talent but also reflect the rich diversity of our customers, users, and publishers."
This rich diversity isn’t all plain sailing. Professor Herring says: "It is likely that diversity produces positive outcomes over homogeneity because growth and innovation depend on people from various backgrounds working together and capitalizing on their differences. Although such differences may lead to communication barriers and group conflict, diversity increases the opportunities for creativity and the quality of the product of group work. Within the proper context, diversity provides a competitive advantage through social complexity at the firm level."
Breaking down barriers
The key then is to quickly and effectively break down communication barriers and deal with group conflict. And that’s as much down to individual ownership and personal transformation as it is to organisational cultural change – after all, it’s the personal transformation that we have direct control over.
When I work with clients, I always ask them to examine their own stereotypes, to try to elicit our unexamined thought patterns about other groups. Then I give the client choices about how they can deal with other groups – are they holding themselves back from being promoted by their very own behaviours and how they stereotype others?
We are inherently biased against groups we’re not naturally part of; the trick is to embrace this diversity on a personal level, to build a sense of both self-belief and belief in others who aren’t mirror images of ourselves. And perhaps the most difficult thing to do is not to recruit in our own mould. All too often I see silos of clones in companies, where each manager has their ‘mini-mes’ running around after them. It’s time to break the mould – to do things differently.
And now there is a business case for breaking the mould, for embracing cultural change – albeit American. What I would welcome is similar academic research in the UK. Diversity doesn’t need to be daunting. We need to show that diversity delivers: if it can deliver increased sales revenue, more customers, greater market share and relative profits in the US, let’s show it can deliver all these in the UK.
Bella Mehta is diversity consultant at The Aziz Corporation
2 Responses
Diversity can not be dumped as it is a step to the new paradigm…
As a point for discussion, those interested in moving out of the notion of “diversity” to a new paradigm might simply need to take a different view at what diversity means in today’s environment. From an HR perspective in 2009, we must look at diversity as an inclusive concept rather then an equality concept. Organizations that strategically focus on recognizing diverse differences amongst their employee base and potential employees recognize that diversity is no longer about creating equality by treating everyone the same. Rather, diversity is about creating an inclusive environment, one where differences are embraced and recognized. I believe that the new paradigm is simply a shift in thought about what “diversity” really is not about some new better concept…
Let’s ditch diversity and find a new paradigm
The HR concept of diversity implies there is a "norm" against which diversity can be measured and against which practices can be tailored to accommodate a wider range of people. This may well have been true in the 1960s when the "norm" was a white man working full time with a wife to deal with non-work activities.
The 21st Century workforce is markedly different – multi cultural, multi ethnic, comprising both genders, with greater openness about sexual orientation and responsibilities outside of work. It’s time to ditch the notion of "diversity" and find a new paradigm which more effectively embraces the contributions of everyone.