Increasing diversity within companies has long been seen as an integral social initiative. Now, it’s being recognised as a business imperative.
Research shows that having a diverse workforce has a significantly positive effect on profitability, and that companies not willing to do so will be consistently outperformed.
That’s why those who lead the way in progressive decision-making and culture – Apple, Facebook, PWC – have their own ‘Diversity and Inclusion’ departments working full time on the cause. It’s part of what makes them the best in the world.
At First State Super, we support employers across a broad range of businesses and industries. This means that we directly observe the improvements diversity brings to culture, decision making, overall performance and driving the bottom line.
The business case for diversity
Research shows that the difference comes from the top; ‘progressive’ hiring in management positions has a considerable trickle-down impact.
A comparison of firms in the US showed that those with a 30 percent share of women in corporate leadership roles experienced a 15 percent increase in profit, as shown in a Harvard Business Review article.
This is further reinforced by McKinsey & Company research that shows companies with ethnically diverse boards are 35 percent more likely to outperform their competitors.
While gender diversity is steadily improving here in Australia, it still has a very long way to go, especially at the top. While there are more women than ever in the Australian workforce, they only make up 14% of chair positions, 24% of directorships and 15% of CEOs.
Diversity in action
Not only does diversity result in happier staff and higher profit margins, it also allows for better decision making. It’s a simple equation: cognitive diversity in high-level decision making avoids the phenomenon of groupthink (the natural enemy of sound choices).
As First State Super’s General Manager of Human Resources, Steve Hill sees this firsthand, observing that;
'The breadth of experience, skills and perspectives provided by a diverse workforce improves problem-solving capabilities and leads to the identification of more effective solutions to business challenges.'
A more inclusive and diverse team not only understands its customers (or members, clients or patients) better; it is more engaged with the workplace and with each other. Steve Hill confirms they ‘consistently see a strong correlation between diverse and inclusive workplaces and employee engagement. Engaged employees generally deliver stronger customer outcomes, and subsequently stronger business performance.'
You are who you employ
These insights reveal an interesting observation – in a diverse workplace it’s less about the business defining the individual, and more about the individual defining the business.
If companies are to benefit from diversity, we need to intentionally change our behaviour to instil a progressive culture and focus on unconscious bias and cultural cohesion. In doing so, we can:
- create a sense of community
- forge peer relationships
- open an honest dialogue
- build understanding.
Increasing business diversity is easy to do and now, even easier to justify. Build a diverse company and you’ll have one that can outperform its competitors in the twenty-first century’s modern economy.