06 Sep 3 reasons why business leaders can’t afford to ignore diversity
Much has been written about the importance and value of diversity. Diversity provides multiple perspectives and experiences (gender, ethnicity, cultural background and various acquired skills are some ways in which diversity is manifested). Organizations such as Catalyst and McKinsey have looked at what happens with corporations that have three or more women on the board of directors or have more diverse workforces, particularly at the executive level. They find a connection between financial performance, value creation and the presence of women and other under-represented groups.
McKinsey has shown that companies in the top quartile for women’s representation on executive committees report an average return on investment of 22% versus average ROI of 15% for companies without that level of representation. Similarly, the World Economic Forum reports that helping women start their own business could immediately increase economic input by as much as $5 trillion.
Equity and social justice require that there be a fair and even playing field and that people feel included.
There is an ever-mounting number of reasons for why diversity and inclusion are competitive advantages, particularly in the face of demographic change: matching up client and customer; attracting and retaining talent; enhancing global strategies for growth; the urgent need for innovation, flexibility and creativity in a fast- changing world.
But there is another way to frame and articulate the value of diversity, that is, by looking at the disadvantages of not having diversity:
1. The risk of homogeneity. Homogeneity is driven by a strong human urge to belong, and yet it can drive out good decision-making and multiple and better solutions. Groupthink is the term commonly used. It can manifest itself in the strong desire for group consensus even in the face of opposition, critical analysis, countervailing facts, and learned experience. This risk is accompanied by the danger of exclusion, as opposed to the benefit of inclusion. Organizations can easily over-hear some and under-hear others. The unheard are excluded from asserting their opinions, facts and critical thinking. This danger of exclusion is precisely what enables homogeneous thought, with its accompanying risks.