We have all read about the growth of legislation being introduced across many western economies in order to ensure real change in both the culture and practice of diversity and equality in the workplace. Certainly there need to be clear laws to prevent bad practice, however the positive aspects of diversity are all too often understated and misunderstood.
Looking back at the successful growth of the US economy on the East Coast compared with other areas in the US there is clear evidence that the likes of New York benefited from what was a melting pot of diverse cultures. This blend of beliefs, traditions and behaviours created opportunities for new innovation and ambition that helped people achieve their goals in an environment that was not constrained by a more traditional and hierarchical economic structure.
As I sit here now I can hear on the radio one of my favourite Thin Lizzy songs ‘You can do anything you want to do’ and in some way that song epitomises the culture that the US had in their boom years. Without that diversity, change would have taken much longer and the economic benefits would have been much weaker.
Just as societies can grow and develop from harnessing a diverse and integrated population so can organisations. Just think of a workplace where everyone was similar. Life might seem pretty happy with each person seeing things in the same way and working in the same way, but it wouldn’t be very demanding or innovative and as a result the business could struggle to change and grow. Compare this with a business with a diverse workforce where people at all levels of the organisation had different social backgrounds, skills, age, cultural identity and experience. This would be a much more challenging and creative environment that in turn would create a more dynamic and innovative business.
Despite our instinctive understanding that diversity matters, evidence shows that it is still very difficult to deliver the positive benefits of diversity at an organisational level. Why is this proving to be so difficult? Aside from the often quoted, and questioned, lack of suitable applicants, recruitment is only the start of realising the positive benefits of diversity which can only be developed with a supportive organisational culture. Once employed, integrating people with different attitudes and expectations is essential and involves making people feel like they belong and having leadership and management styles that are respectful, consistent and culturally aware.
A recent study by Frank Dobbin & Alexendra Kalev concluded that traditional diversity programmes are failing. Summarising their findings in the Harvard Business Review July-August 2016 they explained that using diversity training to ‘re-educate’ managers and formally incorporating diversity measurement into recruitment, performance and grievance practices results in less diversity rather than more. They explain that it is impossible to motivate people to bring in and support minorities by forcing them to do so and punishing them when they don’t. Instead, they suggest, that companies showing more positive results focus on cultural change using three principles:
- Engaging managers in solving the diversity problem so they start thinking of themselves as diversity champions
- Creating opportunities for people from different groups to work together as equals, and
- Encouraging accountability for change by openly talking about progress
You might ask, in business does diversity really make that much of a difference? The most successful entrepreneurs recognise and play to their strengths but they also acknowledge the need to have the right range of skills and experience in their workforce to challenge and support them in areas where they are weaker. This mix will always be best achieved by having diversity right through the business from the board through to the shop floor and supported in a culture where constructive challenge and thinking outside the box are encouraged.
Back to the evidence, the 2015 McKinsey Report ‘Why Diversity Matters’ found that:
- companies in the top quartile for racial and ethnic diversity are 35% more like to have financial returns above their national industry medians
- companies in the top quartile for gender diversity are 15% more like to have financial returns above their respective national industry medians
- in the UK, greater gender diversity at the senior executive team level corresponded to the highest performance uplift – for every 10% increase in gender diversity EBIT rose by 3.5%
- diversity is a competitive differentiator with market share shifting towards more diverse companies
- however, in the UK 78% of companies have senior leadership teams that fail to reflect the demographic composition of the UK labour force and population
So, the positive impacts of having a diverse workforce can be seen from increased market share all the way to the bottom line and it seems pretty obvious that if you have more than one type of person in your organisation you are better able to:
- understand and talk to your customers: you are 152% more likely to understand a customer if you have the same traits as them
- use different approaches to innovate and problem solve: diverse groups outperform expert groups in decision making
- capture more market share as your clients identify with you: 80% of consumer decisions in the UK are made by women and then there is the pink pound and the grey pound
- get the right people with the right skills into the right job: most people will leave a job rather than address discrimination in their workplace
If you are still not convinced, remember that all businesses want to employ the very best and what better way to promote your business as a great organisation to work for than to show how you have genuinely embraced diversity. Look at your boardroom, look at your workforce and you will know if you are that progressive business or whether you need to change in order to grow your business.
We are looking for examples of best practice in Jersey so if you have a great story to tell about how your business has embraced diversity and equality and the impact this has had, then please do get in touch with us at [email protected]