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The Diversity Bonus: Why Inclusion Matters in the Age of Business

 

23 April 2018

Disruption and innovation are key values for businesses wanting to thrive in the digital age – the Business 4.0 era.

They are not skills that come from traditional learning at school. They are unlikely to come from learning the ropes at a new job, or even from emulating the behaviour of more senior colleagues.

Innovation requires a fresh perspective and the ability to see beyond established norms. Disruption requires an element of daring and a resistance to accepting the status quo. Above all, both demand a mindset that always embraces change.

Individual and corporate mindsets are notoriously difficult to change. But, by ensuring greater diversity within teams, leaders will automatically break down received patterns of behaviour, bringing fresh perspectives and a progressive mindset to the workplace.

So, if disruption and innovation are essential for enterprises to flourish in the age of Business 4.0, diversity is vital to deliver what is needed.

Growth opportunities

There is evidence to suggest that greater diversity has a direct impact on the bottom line. In 2015, McKinsey consultants studied more than 350 large public companies in North America, Latin America and the UK. They found that those in the top quartile for gender diversity were 15% more likely to produce better returns. Companies in the top quartile for ethnic diversity were even more likely to do better.

In a global analysis of 2,400 companies conducted by Credit Suisse, organizations with at least one female board member yielded higher returns on equity and higher net income growth than those that did not have any women on the board. French food and services giant, Sodexo is committed to gender balance. Women make up 40% of all its staff, and 43% of the board of directors are female. The company says an ideal gender balance improves both brand image and employee engagement.

Multi-cultural teams with mixed ages and genders can provide the abundance of talent that companies are often searching for

Diverse teams for diverse customers

If companies are to succeed, they should be as diverse as the customers they serve. Google took the decision to publish the ethnicity of all its employees back in 2014, acknowledging that its staff needed to better represent its billions of users. Apple and Yahoo quickly followed suit.

One study pooled data from more than 7,600 business leaders based in London. It discovered a small but significant ‘diversity bonus’ for all types of firms. It found that more culturally-diverse leadership teams were more likely to develop new products than those with homogenous leadership teams. And it also highlighted that diversity helped foster entrepreneurship and achieve a better reach into international markets.

Analysis from the Harvard Business Review suggests that teams made up of diverse people perform better as they are forced to turn to facts to back-up their decision making, rather than relying on perceived wisdom and collective thinking.

“Diversity means more debate and more perspectives and so better decisions,” McKinsey’s UK managing partner Vivian Hunt told the Financial Times.

Cosmetics firm, L’Oréal attributes its success in emerging markets to the decision to place executives from mixed cultural backgrounds in the critical activity of new-product development.

More diverse teams tend to attract and retain the top talent – a key factor in maintaining an edge over competitors. Technology easily enables cross-country working, with cloud connections providing all that is needed to have teams made up of the most highly skilled workers from different countries.

And in the final analysis, multi-cultural teams with mixed ages and genders can provide the abundance of talent that companies are often searching for.

Leading by example

There are already some clear examples of Fortune 500 companies benefitting from their diversity and inclusion policies. With over 120,000 employees globally, creating an inclusive environment is serious business at Novartis. Within the organization, the word ‘disability’ has been replaced with ‘diverseability’ because they don’t view people living with disabilities as having a lack of ability, but rather having diverse skills and proficiencies.

Mastercard firmly believes that diversity is the backbone of innovation. It has executed a particularly unique reverse mentoring program, YoPros, that offers one-to-one learning for older employees wanting to familiarize themselves with social media. Programs such as these help foster a high degree of inclusion in the workplace.

Harnessing abundance through diversity

Strong leadership in this area is essential to make progress. Companies are combining a greater understanding of the problem with continuous awareness and mentorship programmes, training and employee engagement platforms and channels to drive a higher degree of inclusion.

The world is shrinking, language barriers are being broken down by online translation tools, while technology easily facilitates meetings between people from multiple countries and ethnicities. As traditional boundaries are broken down by the power of technology, leaders will have the opportunity to help individuals unlock their own potential, and in the process, harness an abundance of new skills, ideas and innovation.

Overcoming unconscious bias requires a conscious decision to step out of the comfort zone and relentlessly challenge prejudices.

The good news is that diversity breeds diversity. As teams become more inclusive, they will naturally select people from a greater range of backgrounds. It is well worth the effort of getting to that point, aided by both technology and strong leadership. The opportunities truly are limitless.

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