Diverse Organisations Are More Profitable: Are You Ready to Make the Leap? 0

Diversity has a resounding impact on the company’s culture and its ability to compete in the modern world. But why diverse and inclusive companies are more successful and which changes they’re making to achieve this success. Let’s find out.

While diversity and inclusion (D&I) in organisations have been long viewed from a human standpoint, it won’t be improper to say that it has its own financial implications too. Australian airline Qantas is a perfect example to begin with. Back in 2013, the airlines recorded loss of A$2.8 billion. This was immediately followed by record-high fuel costs, which only added to the brunt. Fast forward to 2017, and we would witness a perfect tale of transformation unfold. Qantas delivered a record profit of A$850 million, increased its operating margin to 12 percent, won the ‘World’s Safest Airline’ award, ranked as Australia’s most trusted big business and its most attractive employer, and delivered shareholder returns in the top quartile of its global airline peers and the ASX100. But could Qantas pull off this transformation alone? And is it enough to call it a transformation? No, and no.

The change Qantas’ financial reports reflected was not the result of mere operational or functional changes. There was an underlying wave of change that brought forward a transformation this significant. What was this change?

Let’s read it in words of Qantas CEO Alan Joy, “We have a very diverse environment and a very inclusive culture.” Those characteristics, according to Joyce, “got us through the tough times.” And Joyce isn’t the only leader who believes in the power of diversity in driving profits. Google CEO, Sundar Pichai also shares the belief. According to him, “A diverse mix of voices leads to better discussions, decisions, and outcomes for everyone.”

Diversity helps create a culture where everyone can voice their opinions and share ideas. This further fosters innovation and fuels the growth of an organisation. A 2013 report by Deloitte found that when employees ‘think their organisation is committed to and supportive of diversity, they feel included’, their ability to innovate increases by 83%.”

In fact, according to a report by McKinsey & Company, organisations in the top quartile for ethnic diversity were 33% more likely to have above-average profitability than those in the bottom quartile. Another study by MIT revealed that shifting from a single gender office to one with an equal gender divide could increase revenue by as much as 41%. Diversity and inclusion have taken a centre stage during 2018. While many organisations have realized the importance of embedding D&I in their cultural framework, some of them still struggle with the whys and hows. Mostly this is because they don’t know where to start and when. Before we delve deeper into the where part of it, let’s understand the why.

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Diverse Teams Perform Better

We’ve already established this. However, a diverse organisation doesn’t only earn more profits; there are other associated merits. Diversity helps create a culture where everyone can voice their opinions and share ideas. This further fosters innovation and fuels the growth of an organisation. A 2013 report by Deloitte found that when employees ‘think their organisation is committed to and supportive of diversity, they feel included’, their ability to innovate increases  by 83%.

What’s more – diverse teams have also been found to make decisions 60% faster than non-diverse teams. Since you have people from varied ethnicities, demographies and schools of thought on the team, you can better understand your customer base and the challenges your end users may face.

Engaging and Retaining Talent is Easier

Organisations are moving beyond inclusion and laying emphasis on the feeling of belonging. It has a psychological impact on the employees and makes them feel secure at their workplace. This, in turn, helps them be their best selves at work. In fact, belonging has been cited as a key focus by 57% of organisations surveyed for LinkedIn’s Global Recruiting Trends 2018. This compels us to think if the definition of diversity is changing. If you take into consideration what Apple has to say, then yes, the definition is indeed changing. “We take a holistic view of diversity that looks beyond usual measurements. A view that includes the varied perspectives of our employees as well as app developers, suppliers, and anyone who aspires to a future in tech.

“Training can be designed to reduce defensiveness by explaining that we don’t have unconscious biases because we’re bad people – we have them because we are people.”

Because we know new ideas come from diverse ways of seeing things,” says Apple Inc. This means while companies must ensure that workplaces are free from discrimination and that people perform to the best of their potential, there is a horizon beyond that they should focus on – the diversity of thinking.

How to Build a More Diverse Organisation?

Educate the Leaders

Diversity and inclusion works top-down. Managers and C-level executives are likely to play a key role in diversity and inclusivity programmes. Thus, it makes sense to begin the efforts with these leaders. Consider the case of Amex. In 2018, they rolled out specialized training programmes for people at the vice president level and above. These programmes cover the basics of DI and also train them in administrating and driving D&I initiatives.

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Create an Inclusion Council

Remember when the debate of setting up a sexual harassment committee first came up back in 2013? Organisations received the mandate in all sorts of ways – some resisted it, some welcomed it, some were not sure if their company even needed one, and others welcomed it but were hesitant to act upon it immediately. The same is the state of an inclusion council today. While companies understand the importance and welcome the idea, some are still not sure whether to set up one immediately or wait. Honestly, we can’t give you a definite answer for this one as it is a subjective matter. However, what we can say for sure is that it is important to form a council presided by eight to twelve influential leaders, who are passionate and committed to the idea of inclusion. This council should be involved in the goal-setting around hiring, retaining and advancing a diverse workforce and in addressing any employee engagement problems.

Be Cautious of Unconscious Bias

It is important to help employees understand how unconscious biases can impact their co-workers, and in turn the company culture. To begin with, you can ask them to review their own biases and assumptions. However, this may create some friction and make people defensive. Thus, it is important to impart proper training. As Joelle Emerson states in one of her articles for Harvard Business Review, Training can be designed to reduce defensiveness by explaining that we don’t have unconscious biases because we’re bad people – we have them because we are people.

Mix up Your Teams

“It is a good idea to invite a guest of a different gender, cultural back- ground, or age, into a homogeneous team. This teaches employees to respect different perspectives, and inspires novel thinking, connecting thoughts in new ways, and different approaches to problem-solving.

It’s clear that the shift in D&I still includes, but stretches beyond, race and gender. We are in need of a collective push toward recognizing the need for diverse thinkers coming from a variety of different backgrounds, but companies are only slowly moving in this direction.

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