by Elaine Teo, Tenshey Coach
If someone offered you a silver bullet that says, “I could make it 21% more likely that your business will be more profitable than your competitors”, would you take it?
What about “33% more likely”?
This silver bullet already exists. It’s called Diversity.
In McKinsey’s latest ground-breaking report “Delivering Through Diversity”, published in January 2018, surveying over 1,000 companies covering 12 countries on their profitability (in terms of earnings before interest and taxes, or EBIT) and longer-term value creation, they found “Diversity is correlated with both profitability and value creation”.
To be precise, companies with the greatest gender diversity were 21% more likely to outperform their least gender-diverse industry peers on profitability.
For ethnic and cultural diversity, this was even more obvious – a 33% difference between top-quartile companies for ethnic and cultural diversity compared to their bottom-quartile competitors in the industry.
The Business Case for Diversity and Inclusion
In their report McKinsey stated:
“Awareness of the business case for inclusion and diversity is on the rise…companies have increasingly begun to regard inclusion and diversity as a source of competitive advantage, and specifically as a key enabler of growth.”
What this means – D&I is no longer just a “nice box to tick”. First-mover businesses have begun to grasp the power of a truly diverse and inclusive leadership team and workforce to improve their bottom line.
Why? How does greater diversity and inclusion deliver better results to a company? For that we have to look at the ways in which less diversity harms a group.
The Dangers of Groupthink
Psychology Today defines groupthink thus:
“Groupthink occurs when a group of well-intentioned people make irrational or non-optimal decisions that are spurred by the urge to conform or the discouragement of dissent. This problematic or premature consensus may be fueled by a particular agenda or simply because group members value harmony and coherence above rational thinking.”
Cognitive biases such as groupthink can easily result in flawed, non-objective thinking. This can be dangerous in a business operating environment.
Worse, the risks of groupthink are exacerbated in the Volatile, Uncertain, Complex and Ambiguous (VUCA) nature of the global economy.
When making wise, well-rounded and objective judgement calls is tricky enough because of human cognitive biases, how much harder is this to do when there are so many moving parts in the equation?
How Diversity Reduces Groupthink And Widens Your Net
One of the best ways is to lean in against the homogeneity of your group (“group” meaning any group of people who work as a group in your firm) by bringing in more qualified women, ethnic, cultural, and other minorities.
You can’t find enough top talent?
- Start early – nurture your base of young diverse talent, make them feel they matter, engage their hearts as well as their minds.
- Widen your talent pool by looking for hidden pockets, such as mothers returning to work, or early retirees who still have plenty to offer, bringing maturity and experience as well as unacknowledged capacity and willingness to learn.
- Flex your company policies and practices creatively. Focus on your desired end result and find targeted ways in which they can come in and add value to your business in those dimensions.
Working against cognitive biases and moving “out of the comfort zone” is not easy – not for an individual, and certainly not for an organisation.
It takes motivation, commitment, and perseverance to reap the fruits of such an investment.
It also takes skill. Knitting diverse perspectives together in a constructive way, and avoiding the pitfalls of conflict and disengagement, demands expertise.
Seek out D&I, cultural, and change experts to support your company to do this well and navigate past the potholes.
The Global Case for Boosting Your Company’s Diversity and Inclusion
Human beings are social animals. The urge to stick with what’s known and comfortable is primal – as is the opposite urge to cast out thoughts and behaviours that are divergent to one’s own.
Think about it. What emotional current underpins common words like “outsider” and “black sheep”?
Yet what the McKinsey report is telling us is – we stay safe and homogeneous at our peril. At our businesses’ peril.
In this VUCA world of the increasingly-interconnected global economy, where boundaries continue to blur, and barriers continue to fall, new markets appear on the horizon even while competition intensifies in established ones.
Many businesses are already feeling the bite of this. They face calls from an increasingly diverse clientele to tailor products and services more astutely to meet their increasingly differentiated demands.
How can companies hope to make their customers happy and keep them that way, and win new customers, if they don’t understand their customers well enough in the first place?
How well can a homogeneous team truly understand the demands of a highly diverse, fickle, fast-paced marketplace?
And how can a team who does not know how to practice inclusion effectively believe that they are doing the best job possible of capturing their diverse audience’s hearts, when they do not even know how to welcome and leverage the strengths and views of colleagues truly different from their own?
There is mounting evidence from thought leaders and researchers like Bloomberg’s Gender Equality Index (GEI) and McKinsey pointing to the fact that more diverse and inclusive companies perform better on financial measures as well as customer and employee satisfaction.
The question is, how? How to effectively deploy the power of D&I within their companies and teams is the challenge business leaders face.
But for those who are getting it right, the rewards are considerable – not to mention seizing first-mover advantage.
At Tenshey we have the know-how to turn Diversity and Inclusion to a substantive business advantage for your company. Our expert coaches draw from rich expertise and multiple success stories of leading D&I initiatives across a wide range of companies and industries internationally.
Contact us at email@example.com to find out more.