Find industry insights and updates relevant to your business needs.
“Organizations equipped with a range of voices and perspectives throughout the ranks are better able to innovate, take risks, solve problems creatively, bounce back from failures, and turn challenges into opportunities.” – BCG Henderson Institute
Over the years, we’ve all read about the need for diversity in our companies. Now, as we turn the corner into 2021, it’s time to talk about it as a business strategy and an imperative of all successful companies.
In many Fortune 500 companies, CEOs themselves are taking the lead on diversity within their companies. Mikael Ohlsson of IKEA told the Harvard Business Review, “My leadership on diversity is vision-driven from a business point of view and value-driven at the foundation.” (https://hbr.org/2013/09/great-leaders-who-make-the-mix-work)
By taking the lead themselves, these CEOs are not just showing their colleagues how important diversity is, but also showing their investors and their customers. In this way, they are shifting decades of precedent and proving that diversity is not only good for optics but also good for the bottom line.
So clearly, the most successful businesses in the world think that diversity and inclusion make their company more successful. But, what does this mean for small and mid-sized business owners in the Capital Region? What lessons can we take from these larger businesses and apply directly into our day-to-day operations?
Think about it – you can’t listen to every one of your customers. Instead, by hiring people that reflect your customers, you have the ability to bring your customers’ ideas and thoughts into your decision-making processes. You need to listen to people from all backgrounds, because without doing so, you risk leaving out a very important point and reducing the amount of revenue your company can achieve.
According to Harvard Business Review, a team with members who share their clients’ ethnicity is 152% more likely than another, less diverse team to understand those clients. By wholly committing to diversity in the workforce, organizations are able to align more closely with an increasingly heterogeneous customer base.
As every company looks to expand, we are all battling for the same employees – those that are problem solvers, leaders and listeners. If your company is looking to hire these highly sought- after people, they are going to need to stand out from the rest. Having an already diverse workforce allows you to attract a more diverse talent pool – and make your company culture and sales more successful.
Researchers have found that when diverse teams have made decisions for a business or organization, they outperformed individual decision makers up to 87% of the time. In a study from McKinsey & Company titled “Diversity Matters,” gender-diverse companies are 15% more likely to financially outperform their peers and ethnically-diverse companies are 35% more likely to do the same.
However, not only can workplace diversity have more concrete financial effects on a business, it also boosts the company’s reputation and brand and presents the organization as a more desirable place to work. This leads to better hiring results. And, according to Glassdoor, 67% of job seekers said a diverse workforce is a key element when considering job offers.
Studies have shown that as we are introduced to ideas and people that don’t match our experiences, we become empathetic towards those diverse backgrounds – and start to accept that our worldview isn’t the only worldview. We then start to treat all people with kindness and understanding. We – in a way – become better people.
Researchers have found that companies with above-average diversity scores reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity—45% of total revenue versus just 26%. For companies where innovation is the key to growth, such comradery is vital.
Furthermore, research has found that a homogenous culture can negatively impact natural cognitive diversity due to the pressure to conform. If employees do not feel welcome at work, or welcome to naturally express themselves, they are more likely to feel pressure, fear rejection and fail to produce their best work.
If you’re interested in reading more about this topic, you can find it at a variety of links below.