It’s no secret that there is increasing pressure on businesses to employ a diverse workforce and with good reason. Over the past few years, while there have been steps in the right direction – for instance, FTSE 100 companies reaching more than 25% representation of women on boards – there is certainly more to be done across the board for diversity (and not just on gender parity).
Most recently, the technology sector has come under scrutiny for its lack of diversity, Microsoft and Twitter to boot. Yet, in 2016, it is hard to believe that global organisations are still tackling these issues. Especially considering a multicultural workforce has been proven to help businesses better understand and better target customers globally. It’s clear then that more needs to be done in our workplaces to reflect the truly global world around us.
Diversity: driving the bottom line
Business success can be defined in many different ways but ultimately, profit and return on investment will rise to the top of the pile. But what many organisations underestimate is the positive effect that diversity – often perceived as a nice-to-have initiative – can, in fact, have on quantifiable business success.
EY’s recent report ‘Women in Power and Utilities Index 2015’, for example, identified a clear correlation between the highest and lowest performing organisations (based on return on equity (ROE)) and gender parity: the top 20 utilities companies in the UK enjoy an average ROE of 8.5%, while the bottom 20 utilities have an ROE of 7%. And while a 1.5% difference might initially seem trivial in organisations of this size and value, it can have a significant effect on profitability.
A study recently published by McKinsey compounds this further by highlighting that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians.
Diversity breeds innovation
Profit aside, innovation is the mainstay of any modern business. In a world where technology is evolving every day, businesses need to find new creative ways to solve age-old and brand new problems. Part of cultivating an organisational culture that is not only open to ideas, but in fact promotes them, is business critical. Innovation requires new thinking: a diverse workforce – from race to gender to education. It encourages teams to think “outside the box” and pool their collective and individual experiences together.
Diversity was found to be a key innovation driver in a recent Forbes study; as well as a critical component of being successful on a global scale, by encouraging differing perspectives and ideas. This makes business sense when one of the most innovative companies in the world, Apple, subscribes to this notion of “inclusion inspires innovation.”
Employing your dream team
We know that hiring, and retaining, a diverse workforce deserves businesses’ attention. But before you can realise the benefits diversity can bring to your company, you first need to make the investment in it. To truly reap the rewards of a diverse workforce you need to implement the correct strategies, processes and organisational approach. We see this as a step-by-step process, so once D&I issues have been identified and objectives set, you need to work to understand, implement, monitor and extend these efforts.
Here are four top tips to ensuring D&I is integrated effectively into your business:
- Senior leadership involvement is key to guarantee the workforce is represented, responsibility is taken, and core values are established and promoted.
- Relevant training, and a network or forum with available resources and mentoring opportunities, could help encourage employee engagement around diversity.
- Your D&I strategy should incorporate time-scales, realistic targets and plans to keep momentum going.
- Internally and externally champion achievements where possible, to motivate staff and communicate the benefits of inclusion to other companies and industries.To generate your own personalised diversity checklist, with actionable examples of steps you could take, check out our Diversity & Inclusion Checklist Generator.
- Oliver Watson: Why diversity holds the key to your organisation’s ROI - Wednesday, June 22, 2016