Why Diversity Works
By Donna James, Research Director at Populus Select
Promoting and supporting diversity in the workplace is not only the right thing to do but the great news is that it’s also good for business. We hear this message a lot now but is it true? How does that work?
First, we might want to think about what diversity is. The Equality Act (2010)[1] lays out the groups or ‘Protected Characteristics’ with which all employers will be, or should be, familiar. Why should employing people from these groups increase the bottom line?
Anyone who remembers Theranos's spectacular downfall (if you don’t, look it up. It’s an amazing story) will know that part of the problem was that the founder surrounded herself with ‘yes’ people and that employees who questioned the company’s technology, quality control, or ethics were fired.
So, that leads us to the question of whether ensuring diversity in the composition of the workforce and leadership by race, ethnicity, gender, sexual orientation, gender identity, etc. is a means of ensuring we are bringing different perspectives, views, knowledge, and ways of thinking to the team, to the Boardroom? In a way, it doesn’t matter as ensuring diversity in the former leads to the latter.
“It’s about how different points of view are accepted and valued,” according to Marta Steele, (a workplace expert from PeopleResults, an HR consultancy firm.) It’s a good place to start. Steele raises a great point that is often overlooked when discussing diversity. Diversity can be seen as a collection of individuals with differing opinions, ideas, identities, political views, and socioeconomic backgrounds[2].
Regardless of our identity or background, we all deserve the opportunity to develop our skills and talents, to work in a safe, supportive, and inclusive environment, to be fairly rewarded, recognised for our work, and to have a meaningful voice on matters that affect us. Not only that, it’s important that organisations promote the fact that everyone stands to benefit when they embrace and value the diversity of thoughts, ideas, and ways of working that people bring from different backgrounds and experiences. Optics matter and it also happens to be true.
Diversity can help your team become more agile and better equipped to pivot and adapt as necessary to remain competitive. Companies committed to diversity and inclusion significantly outperform those that aren’t. McKinsey (in their Diversity Matters report), states that companies committed to diversity show “a 39 percent increased likelihood of outperformance for those in the top quartile of ethnic representation versus the bottom quartile. The penalties for low diversity on executive teams are also intensifying. Companies representing women exceeding 30 percent (and thus in the top quartile) are significantly more likely to financially outperform those with 30 percent or fewer. Similarly, companies in our top quartile for ethnic diversity show an average 27 percent financial advantage over others. Meanwhile, those in the bottom quartile for both (ethnic and gender diversity) are 66 percent less likely to outperform financially on average, up from 27 percent in 2020, indicating that lack of diversity may be getting more expensive”[3].
While UK legislation sets minimum standards primarily through the Equalities Act, an effective diversity and inclusion strategy goes beyond legal compliance and seeks to add value to an organisation, contributing to employee well-being and engagement, fostering diverse views, and a constructive, questioning culture accepting diversity in all its forms.
So, promoting diversity in terms of the ‘protected characteristics’ is a precursor and necessary but not sufficient condition for a diverse workforce. Recognising the gaps in thinking in the leadership and filling them with those with other thinking styles and ideas AND acknowledging the way subconscious bias can influence the prospects of those who are different from leaders/managers (This perception bias between employer/manager and employee has been articulated for some time, and measured by Francis Green and Donna James)[4].
Not only is an active diversity programme good for employees and society, but it can equip organisations better to meet the needs of an ever-changing trading and working environment.
[2] https://www.youmanage.co.uk/5-steps-to-increase-diversity-and-inclusion-in-the-workplace/
[3] https://www2.deloitte.com/content/dam/Deloitte/us/Documents/about-deloitte/us-inclus-millennial-influence-120215.pdf quoted in https://www.forbes.com/sites/roncarucci/2024/01/24/one-more-time-why-diversity-leads-to-better-team-performance/
[4] Francis Green and Donna James ‘Assessing skills and autonomy: the job holder versus the line manager’ Human Resource Management Journal, 24 August 2006 https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1748-8583.2003.tb00084.x