By Dr. Larry D. Parker, Jr.
Department Chair, Transportation and Logistics Management, Supply Chain Management, Reverse Logistics Management, and Government Contracting and Acquisition
One of the major battles presently being fought in the U.S. is the importance of diversity in organizations. Though companies may target diverse populations, the internal culture behind the scenes is a much different story. Businesses still lack diverse leadership, and specific measures have to be put in place so that the number of diverse leaders is made to increase.
Entertainment industries are being pushed to include a more diverse and gender equal populace in their writer’s rooms. Similarly, tech companies also need to put action where their mouth is.
In a 2015 article by Forbes writer Ruchika Tulshyan, “Racially Diverse Companies Outperform Industry Norms by 35%,” Tulshyan notes, “The world’s most innovative companies – Google, Facebook, and Apple, spend corporate dollars and branding towards promoting gender and racial diversity at their organizations. Yet, when it comes down to actual numbers, very few companies have a workforce that reflect our nation’s demographics. In fact, tech companies are notorious for the lack of ethnic and gender diversity.”
Related link: Diversity, Equity, Inclusion and Accessibility in Workplaces
Diverse Teams Are Smarter, Produce Better Results and Lead to Greater Employee Morale and Retention
Why is diversity in the workplace an asset? Ensuring this type of workplace produces smarter, more diverse teams whose in-depth thinking produces better results as well as greater employee morale and retention.
In their article “Why Diverse Teams are Smarter,” Harvard Business Review writers David Rock and Heidi Grant quote research that proves the benefits of diverse teams. Rock and Grant note, “A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean.”
Companies that also have at least one female on the leadership team achieve better equity returns and higher profits. In addition, the company benefits from a greater morale among its employees, which contributes to a higher retention rate.
“Through their working relationships with people of different backgrounds, abilities and cultures, employees gain respect for the unique talents and ideas their coworkers bring to the table,” suggests HR expert Ruth Mayhew. With this mutual respect among team members, a company will reduce conflicts and prioritize a positive work environment for all its employees, allowing for growth and sustainability. In fact, a study by HR Science Forum found that “positive perceptions of an organization’s ‘diversity climate’ were related to decreased turnover intentions.”
Related link: Why Organizations Benefit from a Chief Diversity Officer
What Makes Diverse Teams More Effective?
What makes diverse teams more effective? Diverse teams are better at fact-checking – not only what they’re working on but also each other. Also, they consider suggestions brought from “outside” thinkers, and there is less conformity so different ideas are put into effect.
Let’s break these concepts down a bit more. A diverse team’s ability to fact-check means that they stay more focused on what is truth and can more easily pinpoint biases or prejudices that may arise within the organization. Since the team isn’t composed of people of the same gender and race, these diverse backgrounds play a key role in making sure a project or product accurately depicts customer needs.
By considering suggestions brought from “outside” thinkers and not just from someone of a similar background, a wider array of possibilities can present themselves. Diverse teams think outside the box and come up with innovative ideas. Rock and Grant note that a U.K. survey of over 7,000 businesses “revealed that businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogenous leadership.”
Diverse Teams Are Better for Company Growth
Are we more comfortable working around others who look, speak and act similar to ourselves? Yes. But that internal culture isn’t what leads people and companies to grow and prosper.
Surrounding ourselves with like-minded individuals stunts our intelligence and limits our outlook on life. But by developing diverse teams made up of individuals of different gender and ethnicity, you are not only broadening those teams’ perspectives but also the company.
The studies are out, and the results are in. Diverse teams – or even homogeneous ones led by a diverse leader – produce greater results in business innovation and profit. What more could a company ask for?
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