Why bother with diversity?
Earlier this week I had a chance to attend an excellent Women in Business Lending event hosted by Trade Ledger™ and deliver a keynote speech on the subject of diversity, innovation and authentic leadership. It really got me thinking.
None of us are biased. Or so we think. The issue with judgement is that it occures subconsciously, and that our preconceived bias is usually repeatedly confirmed by our peer and socio-economic group till it forms our unquestionable, comfortable reality.
We know that lack of diversity leads to convergent thinking. People who share similar training and life experiences tend to reach the same conclusions and view problems the same, limited way. This short-term, comfortable consensus leads to a much less harmonious long-term impact, resulting in narrower thinking and products/services that don’t meet their full potential or respond to the needs of the wider, diverse population.
The Snail Race To Diversity On Boards
As a woman, I feel extremely priviledged to have received comprehensive education, when many women in various parts of the world are not granted that basic human right. I am priviledged to have a varied career with opportunites for challenge and growth, where my insight is sought and included in decision-making. I'd like to think this is the case for everyone, not just women but that all minority groups are represented on the highest level of decision-making in organisations. Obviously, that's not the case.
Things are moving in the right direction but painfully, unacceptably slowly. At the current pace it will take us another 20 years to reach gender parity, and 50 years to reach ethnic parity on boards. This change is even slower for LGBTQ+ groups. According to Mogul Diversity Report from this year, there are not even 100 fully diverse boards in the Fortune 500 companies.
Research has shown that firms with more women in senior positions are more profitable, more socially responsible and provide safer, higher-quality customer experiences - among many other benefits. It seems that true diversity continues to be a missed opportunity.
So, what can you do?
When you next speak to the board (or to someone who will) you may wish to remind them that the most diverse companies are now more likely than ever, to outperform their less diverse peers on profitability (according to McKinsey and their latest diversity report).
If your board responds warmly to numbers - and which doesn't, you may want to point out that companies with above-average diversity have 19% higher innovation revenues, and 9% higher EBIT margins than their less diverse counterparts.
Analysis of more than 150 companies found that after women join the top management team, firms become more open to change and risk-aware, and they tend to shift from an M&A-focused strategy to more investment in their internal R&D. In other words, when women join the C-suite, they don’t just bring new perspectives — they actually shift how the C-suite thinks about innovation, ultimately enabling these firms to consider a wider variety of strategies for creating value.
Obviously, the issue of corporate diversity starts a lot earlier. Julie Ashmore Dann Joana Negrao Laura Douglas and Priya Raju and Emily Lloyd-Penny (pictured above) who formed a wonderful panel of experts at the Women in Business Lending event, rightfully pointed out that we need more women sought after and accepted to STEM degrees and programmes to further diversify recruitment pool. This requires grassroot work enabling girls and young women to believe in their abilities and expand on their skills.
Business Case or Fairness Case?
Do we really need a business case for diversity though? Isn’t it obvious that it’s the right, the fair thing to do? After all, your organisation doesn't feel the need to explain why it believes in values such as innovation, resilience, or integrity.
If you look at Fortune 500 companies, 80% use the business case to justify the importance of diversity. In contrast, only less than 5% use the fairness case. The remaining 15% doesn't include diversity as their key value. Research, recently conducted by Yale and London Business School professors, confirms that when it comes to attracting diverse talent, the ''business case' rhetoric for diversity present on your website and in job offers will actually deter minorities - be it women, ethnic minorities or LGBTQ groups. Moreso, it will also deter white men. It is because to all these groups the business case suggests they will be assessed on the basis of what their diversity (or lack thereof) can bring to the table, and not on their actual skills and abilities.
So, when it comes to convincing shareholders or top management teams to make diversity your top value and priority, it may be worth it to present it as a business case showcasing how it drives your performance. However, if you truly believe diversity to be an intrisic value, you may want to adapt your external messaging accordingly, or even to challenge the board's thinking.
Not Just A Number
After all, none of us want to be a number in diversity statistics. We want to be heard for our individual input and expertise. We want to be seen as multi-faceted beings enriching the organisational fabric with our original point of view based on our unique experience. Only when organisations achieve this level of inclusivity, will they create an authentic sense of belonging among their teams, and unleash new potential for innovation and growth.