In this latest guest blog, Nikki Dallas expains why you should be increasing the diversity in your workforce.
Workplace diversity has improved in the past few years but there is still so much more work to be done.
Current thinking would suggest that organisations would possess a competitive advantage if they invest in cultural diversity and inclusion (D&I) efforts, especially during this turbulent economic period. But are they right? Are there really any tangible benefits to employing people from different walks of life, or are we just hopping onto a trendy bandwagon, ticking the boxes as we go?
Undeniably, it is morally wrong to exclude people based on sex, gender, age or any other social bias, but does hiring a culturally diverse team bring any real benefits to an organisation?
Current research says yes! Here are five reasons why diversity is not only the right choice ethically, but also makes business sense:
Diversity Drives Ideas
There is great comfort in the familiar. It’s one reason humans often gravitate towards others who are like them.
But when it comes to creativity, groupthink is the enemy.
Tomas Chamorro-Premuzican organisational psychologist and professor of business psychology at UCL states that “diverse team composition does seem to confer an advantage when it comes to generating a wider range of original and useful ideas” and a study on “Ethnic diversity and Creativity in Small Groups” by Michigan University found that when giving various groups a brainstorming task “the ideas produced by the ethnically diverse group were judged to be of higher quality –more effective and feasible –than the ideas produced by the homogenous groups”
Diversity Improves Productivity
Productivity is the key to creating and supporting new business. Diversity is also shown to increase productivity with 83% of all millennials being more likely to be actively engaged if they believe their company stimulates a diverse and inclusive culture.
Further to this a study in the June 9 Academy of Management Journal showed that racial diversity in upper and lower management results in greater employee productivity.
Diversity Boosts Business
Gender, as well as ethnic and cultural, diversity in management is linked with both profitability and value creation. According to a report by global management consultancy, McKinsey in 2019, companies who are in the top-quartile for gender diversity were 25 percent more likely to have above-average profitability than companies in the fourth quartile and companies in the top quartile for ethnic diversity outperformed those in the fourth by 36 percent.
The report also showed a widening gap between companies with robust diversity and inclusion programs and those whose diversity has stagnated, with the profitability of more diverse companies improving year on year since their original study in 2014.
Diversity Can Improve Your Retention Rates
Any time an employee leaves a vacant role, there is the time, money, and effort associated with recruiting, hiring, and training a replacement. There may also be separation costs like severance pay.
A paper by global analytics and advice firm showed that 45% of American workers experienced discrimination and/or harassment in the past year, and Performance Management Platform provider Culture Amp’s inclusion survey found that only 40% of women feel satisfied with the decision-making process at their organization (versus 70% of men), which led to job dissatisfaction and poor employee retention.
Diversity does not only improve retention by improving the working atmosphere. An FPI report on hiring refugees in New York found that 73% of employers surveyed reported a higher retention rate for refugees than other employees across all sectors and industries included. Among the various reasons cited, key was the fact that refugees especially value a welcoming and diverse environment, and once they find it, they will stay there.
Diversity Will Help You Bounce Back from a Crisis
Interestingly, studies of past crises conducted by Wall Street Journal and IMF has shown that diversity can also play an important role in recovery. In the 2008–09 global financial crisis, it is reported that banks with a higher number of women on their boards were more stable than their peers.
Researchers from the Cass Business School investigating board diversity on the performance of EU-listed banks found that between 2007 and 2015 –during and in the wake of the global financial crisis, diversity decreased performance variability during crisis periods in countries culturally more open to diversity and that various diversity features (size, tenure, and employee representation) had a positive impact on bank performance.
Fast forward to the current pandemic, and the media is brimming with news on how countries with women leaders are more likely to crush it than their male counterparts, with six times fewer confirmed deaths from Covid-19. While this doesn't automatically mean that these countries are doing better because of female leadership, it is still an exciting discovery, not just for organizations but also a for a post-pandemic future.
Nikki Dallas is the Founder and Director of Talent FM, an executive search firm specialising the facilities management industry. Nikki is passionate like us about fairer recruitment and is working towards reducing bias in recruitment