While legal and governmental intervention in the area of diversity goes back more than 40 years, in practice it seems that business can benefit from promotion of a diverse workforce.
Both the Catalyst report into Fortune 500 companies and the 2010 McKinsey & Company Women Matter series, which looked at organisations in Europe, China, India, Brazil and Russia, found that organisations with the highest representation of women on their boards of directors had significantly better financial results than those with the lowest representation of women. Although confined to the US, Herring’s Does Diversity Pay? research indicated that organisations with high racial diversity reported higher market share and higher than average profitability.
CIPD research indicates that older workers are less likely to leave: a factor that may partially explain why employment turnover rates have remained low despite the economic upturn.
A survey by Nationwide found that older employees were less likely to take time off sick than younger workers, with 26% of those aged 55 and above taking up to three days off for illness, compared to 40% of 18-24-year-olds.
With research indicating that diversity pays, the obvious question is ‘what is diversity?’ The CIPD defines diversity as valuing everyone as an individual, be they employees, customers or clients. In its report Only Skin Deep: re-examining the business case for diversity, Deloitte suggests that by widening the approach away from visible characteristics and towards diversity of thought organisations are able to ask better questions.
So, instead of 'How can increasing gender, disability and racial diversity help us improve business outcomes?' you move to 'How rich is our knowledge bank?' and 'Do we have the variety of perspectives necessary to deal with complex problems and create innovative solutions?'.
in organisational strategy, context is everything – there is no one-size-fits-all solution
The Department for Business Innovation and Skills (BIS) has produced a survey on the academic literature about the business case for diversity. Among the key findings were: diversity forms an important strand in organisational strategy, context is everything – there is no one-size-fits-all solution – and there is a shortage of case studies that explain what makes diversity work in specific situations.
A second research project by BIS, which is exploring the development of case studies which clearly demonstrate the business benefits of good equality and diversity practice, is ongoing.
The Deloitte report identified that it is not enough to have a diverse workforce, organisations must also practise inclusion – the sense of being valued and included – to truly gain the maximum business benefits from a diverse workforce.
Leaders need to create an open and inclusive environment with a sense of collective identity or shared goals. Just as important as a leader’s abilities is an organisational culture which supports, recognises and rewards diversity and collaboration.