How is Diversity connected to Productivity
The demographics of our cities are changing. Advancements in technology and transportation have shrunk the world, resulting in an unprecedented rise in migration – especially people moving within the country in search of jobs. This has resulted not only in a change in the demographic of our cities, but also in the demographic within a workplace. However, diversity does not limit itself to the inherent and visible traits of the workforce. It extends to the acquired traits of the workforce which ultimately lead to the organisation’s distinct and unique business practices and work culture.
The question arises: can an organisation manage an increasingly diverse workforce while supporting its ultimate goal of productivity as well as quantifiable and qualitative progress. In order to justify an organisation’s investment into diversity, it is vital for it to contribute visibly to it’s productivity.
Creativity and Innovation
Research shows that diversity is connected to creativity and innovation. It brings a diverse set of experiences, perspectives and backgrounds to the table. Creative and innovative ways to come up with solutions to business problems is vital to the functioning of any good organisation.
The best companies are created not by aping the practices of other companies, but by creating their own unique and distinctive practices. An example of a company creating their own unique business practice was seen in the case of the company, Whole Foods Market:
Case Study – Whole Foods Market
Whole Foods Market is the largest natural-food grocer in the world. What sets Whole Foods apart from other organisations is its unique business practices and an unflinching commitment to diversity. One such remarkable business practice that sets Whole Foods aside is the concept of team-based hiring. After a four-week trial period, the team members decide on whether a new hire stays in the organisation or goes. In order to stay permanently, the trainee needs the vote of two-thirds of the team that (s)he is assigned to. This ensures two things – firstly, the team members chose trainees carefully as the team is judged and even given bonuses based on their performance as a whole. Secondly, it conveys a strong message of collaboration.
As of 2017, Whole Foods Market has appeared in Fortune’s list of 100 Best Companies to Work nine years in a row. It also ranked among the top 13 most diverse of the 100 companies listed.
The link between Whole Foods’ commitment to diversity and its innovative business practices is no coincidence. In order to stay competitive, businesses must continue to innovate. A study published in Economic Geography concluded that increased cultural diversity is a boon to competitiveness. The results of this study revealed that diverse leadership teams were more likely to develop new products as well as new and innovative business models than organisations with a more homogeneous leadership.
Better Problem Solving Skills
Multicultural organizations are found to be better at problem solving and can supply a greater variety of solutions to problems in service, sourcing, and allocation of resources. This is because diverse forces possess a better ability to inject fresh ideas into an otherwise stagnant employees and incorporate new perspectives when it comes to solving problems.
For example, Diversity in terms of age also ensure that cross generational issues are better managed.
What truly makes good companies great, is their ability to not only attract and retain top talent, but also to keep their employees engaged. Experts say that when a company is able to attract and engage a highly diverse workforce, it is more likely to outperform its peers.
Case Study: Sodexo
Sodexo is one of the largest companies in the world, operating in 80 countries and employing 420,000 employees. In an effort to drive employee engagement through a sustained and comprehensive commitment to diversity and inclusion, the company embarked on a journey to create various diversity and inclusion initiatives. These initiatives include Employee Business Resource Groups, Mentoring, Training and Development, Flexible Work Arrangements and Recognition. After the introduction of the initiatives, the Employee Engagement Survey has reflected an increase in the employee engagement. According to the Survey, engagement of women and people of colour has increased since the survey was first conducted in 2006. In fact, the results of the survey held in 2012 show that diversity is among the top two engagement drivers for Sodexo employees and 83 per cent of employees felt that employees who were diverse were valued or the differences they bring to the workplace.
A 2016 report on Gallup.com summarized the company’s study on the relationship between employee engagement, diversity and financial performance which was published in the Journal of Leadership and Organisational Studies. According to the report, organisations which have gender-diversity and employee engagement that were higher-than-average also had a 46% to 58% better financial performance than companies that were below the median on diversity and engagement. Another study, conducted by Watson Wyatt in 2009 found that when employees are highly engaged, their companies enjoy high productivity, lower turnover risk, attract top talent and increase customer satisfaction.
A diverse workforce also means a diverse set of skills and experiences (e.g. languages, cultural understanding) which allows a company to provide service to customers on a global basis.
A multicultural organization is better suited to serve a diverse external clientele in an increasingly global market. Such organizations have a better understanding of the requirements of the legal, political, social, economic and cultural environments of foreign nations.
The ability of an organisation to attain and retain diverse talent, differentiates the company from their competitors. Having a diverse workforce means the company offers services and products unique to them.
Also, a diverse workforce that feels comfortable communicating varying points of view provides a larger pool of skills and experiences in suggesting ideas that are flexible in adapting to fluctuating markets and customer demands.
McKinsey research has found that companies with a more diverse workplace, perform better financially. Ethnically diverse companies are more likely to outperform non-diverse ones by 35%, and companies with greater gender diversity were more likely to outperform non-diverse ones by 15%.
Apart from the financial advantages, by having a non-diverse workforce the company also risks facing poor publicity, as was seen in the case of Twitter, when Leslie Miley, the only black engineer in a leadership position announced that his departure from the company was the result of diversity issues.
Despite overwhelming evidence that suggest diversity contributes to the increased productivity of the organisation, a diverse workforce poses a many challenge for the workplace. These may include difficulties in communication, a mental block among employees leading them to resist change, as well the expenses associated with diversity training and research. When incorporating a diversity policy into their workplace, companies must rely on employee assessment and research data to customise a policy appropriate for their particular organisation.
Author: This post has been submitted by Moksha Sharma, as part of her assignment with Ungender Insights. Moksha Sharma is currently a student of Jindal Global Law School, Sonipat.