Diversity is crucial within the workplace
(Photo from Themocracy.com)
Speak to any finance student about investments and two things are likely to be said:
- If they’re honest, they’ll have no clue what you should invest in.
- They’ll tell you that putting all your money in one company is a recipe for disaster. You have to diversify across companies to reduce your risk of losing money.
This shouldn’t just apply to finance. And yet, we are just two weeks into the changed US administration and it appears the new leadership has artificially limited the range of talented people available to American companies. Immigrants are being refused re-entry or extradited from the US. Clearly this is controversial from a humanitarian perspective. But forget the moral or ethical argument for the time being. There is a business case against this.
Studies consistently show a positive correlation between greater boardroom diversity and financial performance. According to research published by McKinsey & Company, companies in the bottom quartile both for gender and for ethnicity at board level are statistically less likely to achieve above-average financial returns than the average company in the dataset. Their research analysed 366 companies in total from the UK, US, Canada and Latin America. Although causation can’t be concluded from such a study, the results from such a broad dataset are compelling.
And it goes so much further: Age, sexual orientation, and socioeconomic status variety are as important as more visible differences. It’s differences in the way of thinking and viewpoint that is key. Groupthink has been the death of many an organisation.
Many top companies are aware of importance of workforce diversity and in our current climate diversity couldn’t be more relevant. Donald Trump’s immigration policies look set to effect the level of diversity within US companies. Google issued a statement pointing out the US order will “create barriers to bringing great talent to the US”. A line-up of top CEOs have openly criticized the ban. Goldman Sachs, Nike, and Apple are a few illustrating the range of businesses who have broken rank from staying politically neutral. You might immediately be thinking, ‘well surely this is great PR for those that speak out’. You’re right. But in the process they are openly in disagreement with the leader of the world’s largest economy. Hardly someone you want to be on the wrong side of.
Have these business leaders lost their mind? Perhaps, or it could be that they know such a policy, particularly if expanded, is going to have a real impact on the productivity of their respective firms.
Let’s be clear, diversity for diversity’s sake is wrong. However, we should all want the best people in the top jobs. If an organisation’s pipeline to senior leadership is leaving behind a segment of the population, this is something we should be investigating. In a competitive world, can any business afford to miss out on talent and ideas by excluding X% of the population from its pool of employees? Its untapped potential businesses are missing out on.
If it’s the companies that fight to create a diverse workplace that end up on top in future, perhaps this should be one factor for us as students when choosing one employer over another. Is the work culture conducive to everyone, regardless of race, or gender? Will I truly be able to balance advancing my career around childcare requirements?
Interested to hear more? A business director and mum of two, Sarah Nield, will be offering a 20 minute motivational talk on her career pathway this month. Please send us a line for the event link.
By Lisa Johnson-Davies & Nabeel Alhassan