Wake-up Call: Workplace diversity is good for business

Published: 14 January 2020 By David Rock, Heidi Grant Halvorson

Wake-up Call: Workplace diversity is good for business

Studies show that non-homogenous teams are smarter and better for you company

 

Enriching your employee pool with representatives of different genders, races and nationalities is key for boosting your company’s joint intellectual potential

Enriching your employee pool with representatives of different genders, races and nationalities is key for boosting your company’s joint intellectual potential

Striving to increase workplace diversity is not an empty slogan, it is a good business decision. A 2015 McKinsey report on 366 public companies in the US found that those in the top quartile for ethnic and racial diversity in management were 35 per cent more likely to have financial returns above their industry mean. It also found that those in the top quartile for gender diversity were 15 per cent more likely to have returns above the industry mean.

In a global analysis of 2,400 companies conducted by Credit Suisse, organisations with at least one woman board member yielded higher return on equity and higher net income growth than those that did not have any women on the board.

In recent years a body of research has revealed another, more nuanced benefit of workplace diversity: non-homogenous teams are simply smarter. Working with people who are different from you may challenge your brain to overcome its stale ways of thinking and sharpen its performance.

Let’s examine why diverse teams are smarter.

– They focus more on facts: Having people from diverse backgrounds might actually alter the behaviour of a group’s social majority in ways that lead to improved and more accurate group thinking.

Diverse teams are more likely to constantly re-examine facts and remain objective. By breaking up workplace homogeneity, you can allow your employees to become more aware of their own potential biases – entrenched ways of thinking that can otherwise blind them to key information and even lead them to make errors in decision-making processes.

– They process those facts more carefully: Greater diversity may also change the way that entire teams digest information needed to make the best decisions. Scientists think that diverse teams may outperform homogenous ones in decision-making because they process information more carefully.

– They are more innovative: To stay competitive, businesses should always continue to innovate. One of the best ways to boost their capacity to transform themselves and their products may involve hiring more women and culturally diverse team members.

One study found that companies with more women were more likely to introduce radical innovations into the market over a two-year period. Another revealed that businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogenous leadership.

In a nutshell, enriching your employee pool with representatives of different genders, races and nationalities is key for boosting your company’s joint intellectual potential.

Creating a more diverse workplace will help to keep your team members’ biases in check and make them question their assumptions.

At the same time, we need to make sure the organisation has inclusive practices so that everyone feels they can be heard. All of this can make your teams smarter and, ultimately, make your organisation more successful, whatever your goals.

– Copyright Harvard Business Review 2016

 

Previously published in The Irish Times.

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