Making the most of differences
PROMOTING AND SUPPORTING DIVERSITY IN THE WORKPLACE MAKES BUSINESS SENSE
Bis vor nicht langer Zeit beschränkte sich Diversität in vielen Unternehmen auf ein ausgewogenes Verhältnis zwischen den Geschlechtern. Doch das hat sich inzwischen geändert. ROBERT GIBSON führt aus, was heute Vielfalt ausmacht und welche bereichernde Wirkung sie hat.
What do you think of when you hear the word “diversity”? Gender equality? Quotas? Political correctness? Yet another trendy buzzword from the US? The United Colors of Benetton? Promoting diversity is increasingly being seen by business people not just as something you should do, but as something you must do if you want to survive. It is being taken more seriously than ever before by more and more companies. Diversity departments are being established and they are appointing chief diversity officers (CDOS), with influence beyond HR, to play a strategic role in business development. Ambitious diversity targets are being set, key performance indicators (KPIS) implemented and initiatives launched.
What lies behind all this activity? Is there a real business case for diversity?
Monocultures and bananas
As a farmer, you may be tempted to grow just one crop. This can be highly lucrative, as you can benefit from economies of scale. If the crop fails, however, it can be disastrous, as you will lose everything. A current example is the banana. We are heavily dependent on one type of banana, the seedless Cavendish, which is under threat from the fusarium wilt fungus. If it spreads, bananas will be in extremely short supply or even become extinct.
The danger of monocultures is also evident in the world of finance. As an investor, you may be tempted to invest everything in an exciting startup company that seems to have great potential in the market. The trouble is: if it fails, you lose everything.
The same principle applies to business. If you employ only one type of person, focus on one type of customer and rely on one type of supplier with a limited range of services or products, you may be successful in the short term. But your company will probably not survive in the long run in a fastchanging business environment.
What is diversity and why promote it?
According to the Cambridge Dictionary, “diversity” is “the fact of many different types of things or people being included in something; a range of different things or people”.
Promoting and supporting diversity in the workplace is about valuing everyone in the organization, so that everyone feels able to participate fully and achieve their potential. This is not only a moral obligation; it also makes business sense.
In many companies in Western Europe and the US, the focus of diversity initiatives is on gender. Getting a balance of male and female employees at all levels of an organization is obviously important, but so are other diversity dimensions. Which dimensions are particularly relevant will vary widely across the globe. For instance, in China, you may find a relatively high proportion of women in management positions, but the lack of representatives of particular regional groups is more likely to be a key issue.
At the core, there are internal dimensions to an individual that are hard or impossible to change. These include gender, sexual orientation, world view, physical and mental ability, ethnic origin, nationality and age.
External dimensions are easier or possible to determine or change. These include family status, parenthood, physical ap pearance, educational background and socioeconomic status.
Organizational dimensions are easiest to influence and include function (such as sales, procurement, HR, finance), job
grade, field of work, length of service, place of work and membership of organizations (for example, trade unions).
These dimensions can be visualized as a diversity wheel, which can be used as a basis for the diversity policy in your organization.
In many countries, there are laws about diversity and discrimination that businesses have to follow. In some cases, a business will have to prove that it has implemented a diversity policy in order to be considered as a bidder for a government contract.
A famous case was the London Olympics. The London Organizing Committee of the Olympic Games and Paralympic Games (LOCOG) had a clear policy of using a diverse pool of suppliers. This seems to have been successful, with the heads of 18 per cent of UK companies involved coming from ethnic minority groups, while 20 per cent were run by women, two per cent by LGBT people and 1.7 per cent by people with a disability.
More and more research is linking diversity with financial performance. The nonprofit organization Catalyst summarizes the research in an infographic titled “39 Reasons Why Diversity Matters” (see “For more information”, p. 25). Harvard Business School researchers examining venture capital have concluded that “diversity significantly improves financial performance on measures such as profitable investments at the individual portfoliocompany level and overall fund returns”.
Although monocultural teams may be able to perform more efficiently than multicultural ones, they are less likely to be innovative. Research carried out by the Technical University of Munich and the Boston Consulting Group into 171 German, Swiss and Austrian companies showed a clear relationship between the diversity of companies’ management teams and the revenues they receive from innovative products and services.
Frans Johansson, in his bestseller The Medici Effect, shows why innovation happens at the “intersection” where ideas and concepts from diverse industries, cultures and disciplines meet.
If you want to understand how diverse customer groups think, and market your products and services successfully, then you need to involve people from the target group. If you don’t do this, mistakes can be expensive. Dolce & Gabbana’s recent advertising campaign in China, featuring ads showing a Chinese woman struggling to eat Italian food with chopsticks, is an example of how a brand can be seriously damaged overnight. No doubt more involvement of the target group in the marketing team could have saved the day.
As a result of demographic trends, there is a serious shortage worldwide of skilled workers, particularly those with a background in STEM (science, technology, engineering and mathematics) subjects. Employers cannot afford to exclude potential candidates on the basis of their gender, physical ability, sexual orientation, ethnic background or any other diversity dimension.
And it is not just about recruiting. If you are to retain employees from diverse backgrounds in your company, there needs to be an inclusive environment and development opportunities. If employees believe that this is not the case, they will leave and your investment in them will be lost.
To be successful, diversity in a company has to be managed in a systematic way. The German association Charta der Vielfalt recommends a fivestep approach to increasing diversity in organizations, whether they are small and mediumsized enterprises (SMES), large corporations or publicsector bodies:
1. Define objectives
2. Determine current situation
3. Plan implementation
4. Carry out implementation
5. Measure success
They ⋅ suggest asking a number of important questions:
How and where can diversity management be helpful for your business as regards, for instance, customers and ⋅ clients, suppliers or business partnerships?
What is the composition of the workforce, the customers and the supplier companies? What diversity measures already exist without organizations being aware of them?
“DIVERSITY IS BEING INVITED TO THE PARTY, INCLUSION IS BEING ASKED TO DANCE”
⋅ How can diversity be introduced or strengthened in the ⋅ organization?
What steps lead to the goal? In what time period does one intend to implement specific measures? How are they ⋅ communicated in the company?
What effect have the measures had? How can each of them be optimized, stopped or expanded to other areas?
From diversity to inclusion
“Diversity is a fact, inclusion is a choice.” “Diversity is being invited to the party, inclusion is being asked to dance.” These are popular sayings that stress the need not only to focus on recognizing diversity but to look beyond that by creating an inclusive environment. As the world becomes more and more interconnected, this is increasingly needed at all levels in teams, organizations and society as a whole.
Companies launching international diversity initiatives are, of course, faced with the challenge of balancing international standards and respecting widely differing local attitudes to diversity. To be successful, we need to be ambitious and not just aim for everyone to be invited to the party and asked to dance, but also for everyone to have the chance to choose the music.