4 Why we want more diversity
When thinking about what a company can do to increase productivity, the first thought is likely to be that they should hire the best and brightest available talent. This translates into hiring people who have excellent qualifications and can show that they have succeeded in the way society typically recognises education and intelligence. However, a large number of surveys and studies have shown repeatedly that true innovation in an organisation thrives in a culture that is inclusive and values diversity of ideas, encourages unique perspectives and challenges stereotypical thinking.
In the words of Steve Jobs, co-founder and former CEO of technology giant Apple Inc:
A lot of people in our industry haven't had very diverse experiences. So they don't have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. The broader one's understanding of the human experience, the better design we will have.
In 2023, the McKinsey Diversity Matters Even More report (Dixon-Fyle et al., 2023) spanning 1,265 companies and 23 countries, showed that companies that were in the top quartile for gender and ethnic diversity in their executive teams were 9% more likely to outperform their competitors financially, whereas those in the bottom quartile for both were 66% less likely to outperform financially on average.
Online decision making platform Cloverpop considered 600 business decisions made by 200 teams and found that gender-diverse teams outperformed individual decision makers 73% of the time, while teams diverse in gender, geography and age did so 87% of the time (Wong, 2024).
Lorenzo and Reeves (2018) examined diversity in management positions in more than 1,700 companies across eight countries, and found a statistically significant correlation between diversity and innovation outcomes – the most diverse having innovation revenues that were 19 percentage points higher.
Activity 3 Benefits of diversity
Why do you think that organisations with greater diversity are more likely to outperform other organisations within the same sector? What do you imagine this increased diversity brings to the firm?
Comment
Some of the reasons you might have come up with include:
- improved customer orientation – having a range of different perspectives that mirrors the society in which you live means that a company can meet the needs of a wider section of society more effectively
- greater employee satisfaction
- a better global reputation for the company
- increased innovation due to the sharing of different perspectives and ideas
- a wider talent pool to recruit from.
In the next section you will look at three categories of diversity that should support your understanding of the ways in which diversity can impact on team interactions.