It’s widely accepted that employee diversity can have a positive impact on the success of businesses. According to the McKinsey report, companies in the top quartile for gender, racial and ethnic diversity are more likely to enjoy higher financial returns. The report found the reverse also to be true – companies in the bottom quartile for diversity experience below average returns.
But there is a problem in the framing of diversity. Many corporates see it as something to support. Yet actual diversity – the kind that is going to help a business grow – has to be an inherent part of culture. Not simply a bolt on quota constructed around the public’s perception of what is right and wrong.
Diversity is about much more than ethical background. Only employing people that have a university education for example, inevitably maintains a business as usual culture that might lack a broader view. Increasing diversity in junior roles while a predominantly middle-aged male senior management team holds the reigns is extremely wide of the mark. To lean on that stalwart McKinsey report again, it suggests that diversity on the exec board is another factor that leads to higher profitability.
Ingrained bias is a huge headwind in some sectors like financial services which is notoriously behind the innovation curve. Broadly speaking, a true diversity of employees can help a financial services firm manage the ingrained biases that might stand in the way of attracting customers that will likely have different expectations to those that got you to where you are today.
It has become harder for corporates to attract talent as it started losing the talent war to the ‘sexier’ sectors such as technology. Today’s employees demand more from their employers. So those companies offering more flexible working contracts and more inspiring working environments are likely to do well. The Institute for Public relations in the US discovered that nearly half of all millennials say that an inclusive and diverse workplace is an important factor in a job search.
Challenger and fintech firms are obsessed with talent. They recognise that people have choice and that a good mix of people leads to healthy tension, which in turns leads to creativity. Attracting a diverse range of talent, especially for firms with a broader, or more international reach, can help a large business dissect segments, broaden its viewpoint, and innovate.
Bringing different types of people together will result in new ways of thinking and help adapt to rapidly shifting consumer and technology trends. A company has to be able to reconcile its diversity goals with its longer-term business plan. Otherwise, it is diversity for the sake of diversity. A mere HR initiative. And that, like many responsive policies, is a drain on resource and misses the point.
Keith is a freelance copywriter who works in London and Brighton