- “Diversity is the engine of invention. It generates creativity that enriches the world.”
———–Justin Trudeau, Prime Minister of Canada
Diversity is the latest buzzword touted by every business and every Tom, Dick, and Harry! But what does it mean? And how do you get past the rhetoric and put them into practice in the business world? We have all heard of homogenous companies and all-male management teams or “boys club” board of directors. This phenomenon is usually viewed as an ethical problem, but what if it’s also a business problem? What if a lack of diversity is alarming for your bottom line?
Business leaders and the business community have to come up with propositions and approaches to tackle the issues and create a more diverse working environment that isn’t only good for employees but also good for business. Way too often, organizations treat diversity as a box-ticking exercise, which could be referred to as “Diversity 101.” Companies push marginalized groups and people of color into token positions or resentfully appoint a female onto the board and declare to be diverse. But in full awareness that the decision-making is still made almost entirely by homogenous teams of men and depending on your geographical location, white males, for that matter. This diversity is merely surface “window dressing.”
Business leaders need to see a lack of diversity as a crisis for the intrinsic culture of their companies, which has to be assailed at the highest levels and through every fibre of the business.
No action, no gains
Companies that integrate diversity policies throughout the organization are more creative and innovative, have more engaged employees, and earn more money. Diversity is a win for everyone! It is true when diversity increases, the impact isn’t just felt throughout the business. It also affects the ways companies can market themselves. That’s because customers are the most crucial aspect of any business venture and, in many ways, reflect the companies they buy from.
Ultimately, the business world thrives because it’s a complex space that’s constantly in flux. The diversity across industries and markets and the variation in environments keep businesses on edge. Companies with limited diversity tend to be susceptible to the same influences, making them less robust. On average, organizations with greater diversity are more robust than organizations with less diversity. A diversity of skills would increase the team’s performance within companies overall.
It is clear to see how diversity can make businesses perform better, which means that diversity is more important than ever. Yet this isn’t necessarily happening. The 2008 financial crisis, for example, was primarily caused by a lack of diversity in financial products (subprime mortgages) and strategies. Greater diversity would’ve made the system more robust. To really change a company’s culture, businesses have to surpass awareness and concentrate on tangible actions. These actions shouldn’t be occasional and individualized but instead embedded in the company’s daily operations.
Out with the old, and in with the new
Diversity, in its essence, is about businesses engaging with different perspectives and having employees with varied characteristics and traits. But in recent years, our societies and indeed the business world too have become progressively polarized, existing within homogenous “silos” of people sharing exact characters, personalities and went to the same universities. Politically, who would have thought that the United Kingdom would exit the European Union and that the US would elect a president who openly derides refugees and immigrants and fabricate a platform based on their exclusion from the country and all levels of society.
Focusing on diversity is about recognizing the significance of having different voices at the table and doing everything necessary to build a company culture that allows them to bring their whole selves to work. If leadership doesn’t manage to make that inclusive environment, they risk a failure in representation and a market failure.
As a fact, companies won’t change unless the people in charge also change, and business leaders can reap big rewards by challenging themselves in diversity. For instance, one tool is to audit themselves, which requires leadership to take a good look at their own biases. Because while turning a critical eye on their prejudices and relationships can be uncomfortable, it will help them lead and build relationships with people different from them. For instance, business research commonly shows a correlation between the experience of employees and that of customers. Therefore, if companies only employ men, they’re more likely only to have male customers or at least an overwhelming majority. On the flip side, a diverse company will have more varied customers and be more successful.
Addressing complex problems demands more than just intelligence and skill. What’s more, it demands diversity. When organizations build a cognitively diverse team, they increase what’s known as group wisdom, meaning that the broad range of perspectives in the team gives it thorough coverage. This collective intelligence doesn’t just arise from academic knowledge, however. Thus group wisdom requires a deep understanding of human behavior. Naturally, diverse teams are much less inclined toward groupthink; their ideas are more original because they challenge each other. Conversely, they don’t share the same prejudices and blind spots, these teams are better able to spot each other’s mistakes and anticipate future risks to the company.
The key premise is that having diverse teams is good for business. According to studies by McKinsey and Company show that companies that fall into the top 25 percent in gender diversity are 15 percent more likely to generate above-average earnings. That number skyrocket to 30 percent for ethnic diversity.
Greater diversity means greater robustness, which makes a company perform better. Diversity also encourages innovation, as it pushes people with differences in perspectives, skills, knowledge areas to combine efforts within a business to search for new niches to compete and thrive. These characteristics are actual of all business in the world, from ecosystems to financial markets.
These days, diversity workshops are ubiquitous. While this heightened awareness is excellent, studies have shown that although companies know their biases, this isn’t enough to change their behavior. Instead, it could have the opposite effect; business leaders may become complacent after training and fail to interrogate their deeply entrenched biases. Appointing diverse candidates is one thing; making them feel respected and valued enough to stay is more salient. If the business doesn’t demonstrate that they are “walking their talk,” they won’t retain their talents and highly skilled staff. The key is creating a workplace that foster psychological safety so employees know they’re genuinely free to express their views and perspectives.
In conclusion, transformation happens through action. Culture is something companies do intentionally, consistently, and includes everyone within the business.
Frost, Stephen, and Alidina, Raafi-Karim (2019): Building an Inclusive Organization: Leveraging the Power of a |Diverse Workforce. Kogan Page.
Kaplan, Mark, and Mason, Donovan (2013 ): The Inclusion Dividend: Why Investing in Diversity and Inclusion Pays Off. Bibliomotion.
Page, E. Scott (2010): Diversity and Complexity: How Diversity can Contribute to the Performance of Adaptive Systems. Princeton University Press.
About the Writers:
Romein is a (self-confessed) Pan-Africanist by heart. His diversified professional career spans many different sectors, i.e., local government, mining, consultancy, construction, advertising, and development cooperations.. Romein is the Head: Business for Development at PIRON Global Development, Germany (www.piron.global). Contact him via ([email protected])
Ebenezer is a Development Communication Specialist, MSME & SDG Enthusiast, Finance & Investment Nomad and a WriterPreneur. He`s Country Director (Ag) of PIRON Global Development GmbH, Ghana (www.piron.global). Contact him via ([email protected])