Why diversity is good for every business

The idea that greater diversity in the workplace is good for business seems to be gaining ground.

In a recent major step in December 2021, BT announced plans for 25 per cent of its workforce to be from “non-white backgrounds” by the end of the decade.

Yet taking steps to increase the representation of minority ethnic groups (and women) in areas of employment from which they have been historically excluded is not without its committed critics. Objections are raised by those who believe such moves violate the logic of meritocracy – that roles should be won regardless of ethnicity or sex.

Meanwhile, supporters of active pro-diversity policies and affirmative action see such steps as a way of remedying decades of unfairness.

Either way, the economic case for increased diversity appears solid. Research shows that it fosters innovation, promotes learning and improves customer reach.

An influential report by managing consultancy firm McKinsey found that companies in the top 25 per cent for gender or racial and ethnic diversity are more likely to have financial returns above their industry averages. Those in the bottom 25 per cent were less likely to achieve above average returns, suggesting that diversity brings a clear competitive advantage.

Employees with diverse backgrounds and life experiences also foster innovation in business by offering unique insights the insider group misses. Timnit Gebru, for example, is a Stanford-educated former Google engineer and refugee, who became an IT sensation when she showed how algorithms can falsely predict higher re-offending rates for black people compared with white people.

Then there is the issue of increasing population diversity in countries like the UK, US, Canada, Australia and New Zealand, which businesses must engage with to survive. Given that net international migration is now the dominant element in population change, it has been estimated that the descendants of immigrants will comprise up to 40 per cent of the population of around 12 western countries by the middle of this century.

Diversity is also important from an ethical point of view and may signal that a business values morality.

Given all these points, organisations such as BT realise it could benefit from embracing diversity and helping groups that face a disadvantage in society. But that may be the easy bit. The tough part is making it work.

This is because diversity initiatives often originate in the belief that a true meritocracy can be achieved only by creating an environment in which everyone has the same chance of succeeding. Yet there is no blueprint for creating a true meritocracy. It may not even be possible.

As the philosopher Michael Sandel argues in his book The Tyranny of Merit, those who prevail in a competitive meritocracy are often the beneficiaries of long-standing inherited privilege that provides social and economic advantages. Undoing such a system is probably beyond the reach of even the most enlightened human resources department.

To further muddy the waters, there is also the complicated issue of understanding how recipients of systemic injustice perceive fairness.

Various subtle – and not so subtle – barriers are deeply ingrained in many organisations. These may go largely unnoticed in policies and practices that continue to benefit employees from dominant social groups, making those from historically disadvantaged backgrounds feel less valued.

Even positive diversity interventions that may be necessary to boost equality can easily be subverted by a dominant majority who continue to argue the case for the “best candidate” regardless of ethnicity or gender. It is therefore essential to consider how unspoken norms and patterns of discrimination may be deeply rooted in an organisation.

Some of these pitfalls can be addressed by focusing on what is known as a “positive inclusion climate”, which makes employees feel their social identities are valued and celebrated as a source of insight and skill. These kind of working conditions have been shown to reduce levels of conflict and staff turnover.

Creating such a climate of genuine inclusion is the next step for companies like BT which have already recognised the commercial, social and ethical benefits of diversity. It won’t be easy, but executives and HR departments have a key role in championing and implementing such policies.

Their vision and commitment is vital in promoting an environment of respect, fairness, justice and equity. But organisations also need adequate systems and procedures to support inclusion.

This article is republished from The Conversation. Read the original article.

Marianna Fotaki is Professor of Business Ethics and teaches Governance and Corporate Responsibility on the suite of MSc Business courses. She also lectures on Ethical Issues in Contemporary Business on the Undergraduate Programme.

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