Diversity is no more something to aspire and plan for, diversity in workplaces is today a reality. With global workforces that are multi-generational and have increasing representation from other diverse groups like women and differently abled, it has become imperative to understand how to make this diversity work. In 1990, a Harvard Business Review publication – “From Affirmative Action to Affirmative Diversity”, stated that diversity is not just something an organization should have, but all organizations already have it and therefore learning to manage diversity effectively would make them more competitive.
Building an inclusive work culture is not an easy task. It takes effort and resources. So, for every organization to consciously put effort towards inclusion, they need to know “why” diversity and inclusion are critical. The business case for diversity and inclusion has been known for a while now and every new research and organizational experience only strengthens this.
Here are some ways in which diversity and inclusion drive business value.
- BCG and the Technical University of Munich conducted a research to understand the relationship between diversity in management and innovation. The research found that companies with more diversity got more revenue from innovative products and services.
- Innovation is said to be the biggest business driver for organizations today. Innovation is what sets you apart in a world with numerous products and services catering to the same need; businesses need to continuously innovate to survive.
- However, innovation is not easy. While workshops and training programs can help us think outside the box, true innovation comes from different perspectives. Different perspectives are inherent in diversity. However, only in an inclusive culture are these different perspectives valued.
- A culture of innovation is driven by a diverse and inclusive workplace that encourages and values different thoughts and perspectives.
- Financial Gains:
- Diversity and inclusion have shown to have significant positive impact on financial gains of organizations. While this correlation does not necessarily mean causation, however, diversity and inclusion has shown to improve financial gains in organizations.
- Mc Kinsey’s 2015 study titled “Diversity Matters” found that “companies that are in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians”. The same was confirmed in the 2017/18 study by McKinsey.
- Decision Making:
- Another key benefit of Diversity and Inclusion is better decision-making among teams. People who are similar tend to also have similar thinking and perspectives and are more likely to display “groupthink”. Diverse teams, on the other hand, have diverse perspectives that lead to better problem solving and decision-making since they can weigh issues from different viewpoints thus leading to better decisions.
- A study of 385 Norwegian companies by Mariateresa Torchia, Andrea Calabrò and Michèle Morner showed that the greater the diversity in the board members, the higher the intensity of board creativity and cognitive conflict during the decision-making process. This means that the decision-making process becomes more robust with diversity.
- However, research also shows that for better decision-making and problem solving, cognitive diversity is what matters more than just diversity of age, gender and cultures.
- Another business benefit of diversity and inclusion is cohesive teams. Diversity and inclusion are said to result in better teamwork by creating an environment of trust and psychological safety. A 2015 study by Catalyst, Inclusion Matters showed that more employees felt included, the more likely were they to engage in team citizenship behaviors and go beyond the “call of duty”.
- Team members who feel a sense of belonging through inclusion are more likely to display loyalty and engage in productive behaviors like innovation. Organizations that are vocally diverse and inclusive also attract better talent that in turn feeds into high-performing teams.
Apart from these benefits, another aspect of business value driven by diversity and inclusion is the brand value. Today, customers and employees alike want to be associated with brands that are socially responsible and promote a culture of diversity and inclusion.
With such overwhelming results on the positive impact that diversity and inclusion can have on business value, it is necessary for organizations to engage in the right practices that promote a culture of diversity and inclusion.