The Spirit of Diversity and Organizational Progress

Author: Nachiket Sukhtankar, MD – DXC Technology, India

Many credible reports and surveys clearly establish a strong link between diversity and organizational growth. Yet the concept of Diversity, Equity, and Inclusion (DE&I) is yet to become mainstream in the Indian corporate landscape. 

Embracing DE&I is a social, political, ethical, and moral responsibility. Doing so also drives organizational growth and improves a company’s market success.  

Diversity gives us a competitive business advantage

Diverse and inclusive cultures provide organizations with a distinct competitive edge. Analysis by McKinsey & Company in its report, Diversity Wins: How Inclusion Matters, shows that companies in the top quartile of gender diversity on executive teams were 25% more likely to experience above-average profitability than peer companies in the fourth quartile. The report notes that companies with executive teams comprised of more than 30% women leaders are significantly more likely to outperform those where women make up between 10 and 30% of executive teams. There is a substantial performance differential — 48% — between the most and least gender-diverse companies.

The Wall Street Journal has observed the influence of diversity on the financial performance of S&P 500 companies. Its researchers considered 10 performance indicators including age, ethnic diversity, percentage of women in leadership roles, and board composition in their analysis and concluded that the top 20 most diverse companies outperformed the least diverse firms in terms of share price and operating results. This was achieved both over 5- and 10-year periods.

A diverse and inclusive workplace leads to innovation

A diverse and inclusive workplace brings multiple perspectives to the organization to drive innovation and opportunities A team without intellectual and emotional diversity can get complacent and may not respond well to unpredictable and challenging situations. The ongoing global health crisis is a glaring example. Organizations leveraged the diverse strengths of their workforce to come up with innovative solutions to run the business as usual.

A BCG study of more than 1,700 companies around the world supports this.  The study shows a strong and statistically significant correlation between the diversity of management teams and overall innovation. It states that companies that reported above-average diversity on their management teams also reported innovation revenue that was 19% higher than that of companies with below-average leadership diversity — 45% of total revenue versus just 26%’.

DE&I increases employee retention and gives access to a wider talent pool

Employees and job seekers have started to look for more than a well-paying 9 to 6 job. They are looking for workplaces that make them feel accepted, included and valued. A Harvard Business Review article focuses on how organizations can use diversity and inclusiveness  — religion, gender, sexual orientation, socio-economic background, and generation — as a strategy to retain people for longer terms.  When an organization values and welcomes DE&I, employees feel connected with the employer and at ease with themselves, leading to higher organizational loyalty.

Glassdoor’s Diversity and Inclusion Workplace Survey found that 76% of job seekers and employees today report that a diverse workforce is an important factor when evaluating companies and job offers. It also points out that about 32% would not apply for a job at a company where there is a lack of diversity among its workforce.

Organizational culture is successful when the workforce is engaged, loyal, and invested in the overall vision of the business. This is better achieved by putting diversity at the forefront.

Diversity Boosts Brand Value

Championing workplace diversity shows that a company is invested in a culture dedicated to learning from multiple perspectives. Such multi-layered companies exude vibrance, thereby raising their brand value and overall reputation. In turn, this helps attract new customers and partners and helps companies venture into new markets.

Diversity has multiple other advantages, such as improving employee morale and productivity and reaping the benefits of better decision-making and problem-solving.   

As forward-thinking companies understand that diversity can be fuel for the growth engine, it is time to move from design to implementation. This can be achieved by aligning DE&I goals with the business objectives, overcoming conscious and unconscious biases, and implementing structured learning modules.