Every person doing business should have heard by now that diversity in the workplace matters and has many bottom lines benefits. However, very often we see companies where quite the opposite is happening when it comes to putting diversity into practice.
Although, the company management knows the importance of the topic to improve the company’s performance, why are they not making use of this promising opportunity?
We think that diversity, at first sight, is not tangible for many people. Therefore, we would like to give four concrete examples where and why diversity in the workplace is significant to business success.
Diversity increases revenues
This is for many international companies the most important argument: Diversity improves financial performance. A study from Boston Consulting Group (BCG) found out that companies that have more diverse management teams have 19% higher revenue. For this research, developments of 1,700 companies in 8 countries have been taken into account. But how can diversity increase revenues?
International companies are often present in markets with different cultural backgrounds. Values, norms and especially the language differ from the home country of the company.
In order to attract customers or strategic partners in those countries, it is of course an advantage to have native employees on board. He or she can speak the language fluently and knows the cultural traditions and habits that are important factors for the business.
This knowledge allows the company to avoid mistakes that can cause a shitstorm – it builds customers’ and partners’ trust. Therefore, people are more likely to do business with you or buy your product/service.
Moreover, if some of your employees are born in the countries of your target markets, you get to know your customers better than you would without them. In the best case, these employees are even your target group.
Consequently, they can support the marketing and sales team to approach the target group in the right way and customize the products/services. Doing so, the company can optimally serve the needs of the target groups.
With a diverse workforce, your company gets a closer look at the behavioral patterns of your target customers. By better approaching them, your business can only benefit.
Diversity improves decision-making
Different worldviews and perspectives come along with a diverse workforce. Diversity does not always mean that employees have different cultural backgrounds. It could only mean people with totally different experiences and age groups.
For instance, some people may have the usual education. Others could have worked as a construction worker or as an engineer before switching to advisory services. Working experiences, as well as hobbies and personal experiences, are important to consider in terms of diversity.
Someone who is grown up homeless or handicapped can also be highly valuable for your workforce. For him, safety and insurance product attributes may be more important than luxuries. The more diverse the people’s lives, the more opinions you get when it comes to decision-making. These diverse opinions can help your company face the problem or decision while taking all different point of views into consideration.
Even a study by Colverpop found out that decisions made and executed by diverse teams reached 60% better results than those by non-diverse teams. Moreover, gender diverse teams made 73% better decisions. Also, a team with a wide range of ages and different geographic locations made better decisions in 87% of the time.
Furthermore, better decision-making would of course result in a more profitable business. If difficult (and monetary) questions are discussed in a smarter way, the result is expected to be better than without diverse minds.
Better candidates with diversity
Nowadays it can be hard for businesses to find the right candidates for open positions. In times of talent scarcity, companies are competing against each other when it comes to employer branding and recruiting processes.
Diversity can help solve this problem and stay competitive. Do you want the best talents? Then, you should not exclude them due to hard criteria. If your hiring criteria are too strict, it can happen that you reject a candidate that would actually be a great fit and contribute to your business performance.
If you simply don’t set rigid criteria when it comes to cultural or personal background, your talent pool will be much higher. The bigger the talent pool, the greater the chance to find the one talent that perfectly fits into the open position.
In the end, an optimally balanced labor force with excellent talents will increase your company’s performance in total.
Diversity is the basis for better innovation
Similar to point two, diversity helps teams to see problems from a totally different angle. Thanks to the different backgrounds, the ways of thinking and seeing the world also differ.
Norms and values are often included in product or service innovation. Innovation needs creativity. It means to mix up several tangible and intangible things in a way how no one did before.
If your company wants to be a real innovator, it needs diversity. The same study mentioned before found out that “increasing the diversity of leadership teams leads to more and better innovation.” As you can see, would your whole workforce think in the same direction, you would never experience which world-changing ideas could come up. Your competitors would then create these ideas.
People are the heart of creativity and innovation. This is also the reason why robots replacing humans would probably never happen at the innovation center of your company.
We hope that these four reasons have given you some insights on the significance of diversity for your business success. Diversity is not such a thing that happens randomly, it needs active planning from the HR department’s side. If you want to learn more about diversity in the workforce, visit the global female leaders summit 2019 and get in touch with more future business trends.