Mix it up for the best result

Far from being a muddle, diversity plays a key role in corporate success, as Debbie Lovewell discovers


In a world where united teamwork is often the focus of HR, it might seem odd to deliberately employ a wide variety of people. But ensuring you have a melting pot of personalities and cultures can make a big difference to your business performance.

“It is about having greater access to different perspectives and sources of information, better understanding of customer needs, and better communication with customers because you are getting a more diverse group to inform that,” says Denise Keating, chief executive of the Employers’ Network for Equality and Inclusion, a membership and lobbying group.

Research by Catalyst entitled The Bottom Line: Connecting corporate performance and gender diversity, for example, found companies with the highest proportion of women on top management teams experienced 53 per
cent higher total return on equity and 66 per cent higher return on invested capital.

These findings are echoed by McKinsey & Company’s study Women Matter: Gender diversity, a corporate performance driver, which found the 89 European listed companies with the highest level of gender diversity in top management posts reported a 48 per cent higher operating result than the average for their sector and a stock price growth of 64 per cent compared to an average of 47 per cent.

Looking at age diversity, meanwhile, research by the Centre for Performance-led HR at Lancaster University Management School showed customer satisfaction levels to be, on average, 20 per cent higher in McDonalds restaurants that employ staff aged over 60.

Having different personalities is one of the biggest contributors to increased innovation

But achieving workplace diversity can be a complex task. Employers have to ensure they have the right kind of diversity and learn how to manage it.

Even defining diversity is not always easy. Dr Nic Hammarling, head of diversity at Pearn Kandola, a business psychology consultancy, says: “People often make the mistake of assuming diversity is just about the obvious stuff – gender, ethnicity etc. It is not. It includes non-visible differences as well, such as personality types. In fact, having different personalities is one of the biggest contributors to increased innovation and creativity.”

Non-visible differences, however, can be difficult to measure. The starting point is usually the visible; employers profile their workforce by gender, ethnic origin, disability and age. Sexual orientation and gender reassignment should also be considered, although it is more difficult to gather information on these. This data can then be analysed to identify an organisation’s current diversity levels and where any gaps may exist, with a view to finding out the reasons behind the company’s workforce profile.

Dianah Worman, adviser in diversity at the Chartered Institute of Personnel and Development , says: “Is it the way [the business] is recruiting people, is it making assumptions about the kind of people it needs, is it looking too narrowly in the labour market, is it setting out what it really needs from recruitment agencies, are these making assumptions on the organisation’s behalf, what is the recruitment process like and so on.”

Organisations should also look at diversity in relation to how employees are rewarded, which groups receive access to training, staff retention issues, work-life balance and flexible working practices, and how they manage employees who stay on past the traditional retirement age.

“Employers then have to make sure the [corporate] environment is one where people feel valued, that it is open and they can put their point of view across without being dismissed, and where they feel respected for their personal identity,” adds Ms Worman.

Online diversity training can help to boost understanding of the issue. PricewaterhouseCoopers (PwC), uses a programme to improve understanding of cultural diversity among its globally mobile workforce. It also recently asked all of its partners and staff to undertake mandatory bias awareness training to open their minds to difference, explains Sarah Churchman, HR director (equality and inclusion) at PwC.

Greater corporate diversity can lead to more palpable tension among some groups, due to increased differences in perspectives and opinions. To ensure they continue to work as a united team, Keating explains employers should “identify what the common goal is, identify what each person in the team brings to the party and hold people to account for playing their part in delivering that outcome”.

Team diversity can result in better outcomes for businesses. “Sometimes in a high-performing team there is more challenge and debate but the result will be more robust and more thought through. Diversity eliminates group think,” explains Ms Churchman.

Get it right and a diverse corporate culture can be a significant business asset. “In order to respond to today’s seriously competitive marketplace, businesses look for every way of getting an insight into being creative and innovative in order to reengineer themselves, keep things fresh and keep ahead. That’s exactly what this is about,” concludes Ms Worman.