4 Why we want more diversity
When thinking about what a company can do in order 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. This may not be the case though and 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 David McKay (2016):
Companies thrive when they are open to new ideas and new people. As do economies and our world. That is why the world’s most innovative businesses, cities and economies are the most diverse … a powerful recipe for success is the combination of what each of us brings as unique individuals together with a common purpose and goals. That leads to new insights and innovation.
In 2015, the McKinsey report into 366 public companies showed that those who were in the top quartile for ethnic and racial diversity in their management teams were 35% more likely to have better financial returns than the average for their industry (Hunt et al., 2015) . Similarly, those in the top quartile for gender diversity were 15% more likely to have better than average returns.
This information is also displayed in Figure 3.
Activity 3 Benefits of diversity
Why do you think that organisations with a greater gender or ethnic diversity are more likely to outperform other organisations within the same sector? What do you imagine this increased diversity brings to the firm?
Some of the reasons you might have come up with include:
- improved customer orientation – having a range of different perspectives in an organisation that mirrors the society in which you live means that a company can meet the needs of a wider section of society
- more employee satisfaction
- a better global reputation for the company
- increased innovation due to different perspectives and ideas.
- a wider talent pool to recruit from.
Next you will look at the three categories of diversity.