Diversity: Beyond the Buzzword
Let's take a step back and reflect on the concept and why it's worth fighting for.
Diversity is kind of a buzzword these days. We hear it often: “building inclusive and diverse workforces is not only the right thing to do, it also makes business sense”. Let us take a step back and reflect on these two aspects. Why is diversity the right thing to do? And how does it make business sense?
The Moral Case
It might seem obvious to most readers, but it’s always good to formulate specifically why diversity matters. In a non-inclusive society that does not promote diversity, people from specific backgrounds (in terms of ethnicity, sexual preferences, gender, etc.) are under-represented in certain sectors. This means that these people do not have access to an education, a job or a career that might very well suit them perfectly. Let’s take the example of engineering education – today, engineering schools have critically low rates of female students. This is due to the fact that our society still thinks (maybe unconsciously) that engineering is a male sector. In practice, young girls are not very often guided towards these fields and tend to believe that they do not belong there. If high schools, parents and the corporate world in general do not promote diversity in this sector, many girls who would have been excellent engineers will miss the opportunity of their life by simply choosing another path. This is, of course, one example of the millions of cases that we could make. By the way, I’d be happy to hear your opinion in the comment section!
The Business Case
Now that we are convinced that it’s the right thing to do, let’s talk about the business case. Intuitively, we can understand that a company that has a diverse workforce is better able to understand its diverse customer base and thus to offer better products or services to these customers. Again, this diversity can be anything from various backgrounds, interests, family status, ethnicity, gender and more. This added value is translated into higher financial results: these organisations make more money. A Harvard article argues that diverse teams feel less comfortable, and that is precisely why they perform better. They carried out a few experiments and showcased that groups that had to solve a problem had a higher chance of having the correct answer when an outsider was added to the team: the results went from 29% (without outsider) to 60% (with the new team member). However, these better outcomes came at a price: the participants felt that the work was harder and the “collaboration flowed less smoothly”. Basically, their conclusion was: no pain, no gain. It might be a little bit more tricky in the beginning to work with someone that is different from you, but it is most of the time worth it. Another Harvard study showed something similar: it revealed that teams with an equal gender mix perform better than male-dominated teams in terms of sales and profits.
Now let’s get quantitative. Here are a few figures that unambiguously show the close correlation between corporate diversity and performance.
- The British Conservative peer Baroness McGregor-Smith led a review of race in the workplace which showed that the UK GDP would be 1.3% higher if black and minority ethnic people were fully represented across the workplace. Her review also provides a few useful recommendations for employers to achieve diversity targets, such as providing unconscious bias training in the workplace and that employers should ensure that the selection/interview process is done by more than one person (ideally including individuals from different backgrounds).
- McKinsey, one of the world’s most prominent consulting firm, shared their insight with the world in 2015 about “why diversity matters”. Since then, their research and results became a real reference in the field. These tangible, financial arguments helped to convince those who were still sceptical about diversity initiatives in the workplace. Indeed, after observing more than 350 public companies from various industries all over the globe, their findings are compelling: (a) the 25% most ethnically/racially diverse companies are 35% more likely to have financial returns above their national industry medians, (b) in the UK, senior-executive teams that are gender diverse correspond to a huge performance uplift: for every 10% increase in gender diversity, the companies’ profit rose by 3.5%, (c) the bottom 25% companies in terms of gender, ethnicity, and race are statistically less likely to achieve above-average financial returns than the average companies in the data set.
These are only a few of the figures that quantify this relationship diversity/performance.
We would be keen to hear about your experience – have you ever worked in a diverse team that performed incredibly well? How would you explain that in your specific case? Do you work for a company that values diversity? How do people feel about that? Please do share your thoughts with us below!
Lola Wajskop graduated with a Masters in Electronics and IT Engineering last year. Originally from Belgium, she currently lives in London where she is pursuing a Masters degree in Management at London Business School. She wants to work in tech and is passionate about her initiative “Yes She Can”, that she launched two years ago with a friend. The goal? Promote engineering studies among female high school students.