In today’s highly competitive business world, businesses are seeking out every opportunity to gain a slight advantage over their rivals. An often-overlooked advantage comes in the form of diversity. Many businesses don’t appreciate that increased productivity is one of the biggest benefits of diversity.
Research by consultancy McKinsey (2020) has found that companies with more ethnically diverse leadership teams outperform their competitors by up to 36%.
So how does this happen? In short, having leaders with different backgrounds and perspectives results in better decision-making, greater innovation, strategic thinking, higher engagement, and better staff retention.
It’s not only at the executive level where diversity matters, either. A diverse range of employees should work at every level of an organisation. This is because they will share some common experiences with their potential end-users and target audiences, enabling them to create better products, provide a better service and generate higher returns for the organisation.
People with different backgrounds and experiences may also see the same problem in different ways and come up with different solutions. This increases the odds that one of those solutions will be effective. Such responsiveness is vital in our rapidly evolving business environment.
Working with people from a range of different backgrounds allows your workforce to be more accepting of new ideas. It will therefore enhance the skills, strategy and output of your workforce. This all adds up to greater innovation and better decision-making and, in turn, improved productivity.
Diversity and happiness
More importantly, diversity leads to happier, more engaged staff. Employees care deeply about how their organisation is perceived and are more likely to want to work for a business that cares about diversity and inclusion. Also, if they see potential progression opportunities for themselves, they are more likely to stay with the business.
Prospective applicants will also measure how well an organisation is run based on its diversity policies and the visible results of these policies. Research by job site Glassdoor (2021) found that more than three-quarters of jobseekers and employees (76%) consider a diverse workforce to be an important factor when evaluating companies and job offers.
A workforce from a diverse background does not automatically make your organisation diverse and inclusive. Diversity and inclusion require continued effort. Furthermore, if they aren’t handled carefully, diversity policies can also present difficulties that can negatively impact on the organisation’s performance and productivity. So, it’s important to understand how to introduce diversity into your workplace effectively.
Finally, what can you do if you aren’t seeing greater diversity translate into productivity gains?
Firstly, hire modest leaders. If an organisation’s leaders are modest people who value learning and knowledge, then the people who follow them are more likely to feel valued and empowered to make recommendations.
Secondly, create an empowering culture. When all employees feel valued and encouraged to make contributions, they are more likely to speak their minds about what needs to be done, to the betterment of the organisation.
Finally, create a culture that values learning from different perspectives. That way, you can capitalise on what diversity the organisation has.
There’s no doubt that diversity can be a powerful business advantage. But only if you have the right culture and structures to unleash its potential.
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This article was published in February's edition of EDGE Management Magazine.