‘Diversity’ is, for many, a big, sometimes frightening buzzword, a compliance problem that needs to be managed. As a result, human resources departments dutifully note the race and sex of employees to publish in annual reports, and company boards often are criticised for being too white, too male and too old. But what do we really mean when we talk about diversity, and its benefits?
I’m not going to argue that companies should put into place properly compliant diversity policies. This is because in most jurisdictions it is illegal to discriminate against people on the basis of race, sex, sexual orientation and age. Complying with the law is simply a no-brainer.
Instead, I’m going to advocate something more meaningful and useful: ‘inherent diversity’, diversity as a concept, not a two-dimensional tick-box policy.
Organisations that are inherently diverse look beyond the easy, and actually quite superficial, categories of race, sex, orientation and age and instead seek to foster a workforce that has a wide range of different backgrounds, different experiences, different professional qualifications, and different philosophies.
But hiring a diverse workforce isn’t enough. These individuals need to be empowered and they need to be listened to, because organisations that do are likely to become more competitive and more successful. They will see it in their bottom line. They are more likely to thrive and prosper.
There really is a compelling business case for real diversity.
Inherent diversity vs confirmation bias
Increasingly, serious research is also making the business case for diversity. For example, in 2007 McKinsey gained headlines when it published a paper that compared the financial returns of large organisations with their diversity. The research found a strong correlation between diversity and higher returns.
Further research by New York-based Centre for Talent Innovation found that inherently diverse companies are much more likely to expand market share than those that aren’t. One explanation for this can be found in the concept of ‘confirmation bias’.
Psychologists have been investigating this for at least the last 50 years. Simply speaking, confirmation bias is natural tendency to interpret and favour information that confirms our existing beliefs. It is normal. We all do it.
But how does it apply to business? Let’s consider how these theories may play out in a typical professional services firm that forms project teams to do jobs for clients.
Project teams composed of similar types of people (and as we tend to hire in our own image, many teams are naturally quite similar in background) tend to agree more. Such teams tend to approach problems in the same way and they also tend to have a similar attitude to suggested solutions.
On the flip side, a team made up of very mixed bag of individuals will, if allowed to do so, disagree more. Team members are unlikely to interpret facts in the same way, or approach problems from the same direction.
So, that’s an argument against diversity, right?
No. It is certainly the case that a homogeneous group of well-qualified professionals that lacks diversity can operate perfectly effectively until it makes a mistake, and mistakes are part of life.
However, a diverse group of equally well-qualified and intelligent individuals is less likely to make mistakes. This is because they are less likely confirm each others’ assumptions and more likely to challenge them. That means that false assumptions are more likely to be identified.
But it also means that the diverse team is more likely to come up with more, and different, solutions to the same problem. The team is, therefore, more likely to come up with a range of effective solutions.
Put at its simplest, a homogeneous group creates the perfect conditions for confirmation bias to take hold which, at best, fosters complacency and does little to encourage originality.
Replicate that from a team to an organisation, and it is fair to suggest that diverse organisations are more likely to develop an edge on the competition.
Do we want to be comfortable, or do we want to be successful?
There is fair and credible evidence that diversity policies don’t make everybody happy. For example, a recent Harvard Business Review article report on a hiring simulation exercise indicated that pro-diversity messages signalled to a certain group that they might be undervalued or discriminated against. Some people feel more comfortable when in homogenous teams or organisations.
That is understandable. Indeed, one just needs to look at the newspapers to see how many people find deviations from the local norm to be threatening and undesirable. For many, lack of diversity makes many people more comfortable.
But the question one has to ask it this: if you are a manager, or a business owner, do you want your workforce to be comfortable? Sure, you want them to be happy, but comfortable? Really?
Businesses and economies thrive on innovation. They need disruption, and therefore they need disruptors. Challenging norms and pushing boundaries can be hard, but that is where the highest returns lie.
Truly global diverse cities like London, New York and Washington DC foster the disruptors and the innovators, to the benefit of the economy. Being in a disruptive and innovative environment can be challenging, but it can also be very rewarding.
So, while as human beings, we can all relate to those who crave the comforts of the familiar, if we want to work in diverse businesses, and live in dynamic economies, we need to stay diverse.
It is possible that regulations or policies, in the future, may make it more challenging for companies to keep their workforce truly diverse. This is a problem that businesses will have to overcome. If companies become more parochial they may begin to lose their edge.
Not only is there a strong business case for fostering diversity, it may well even be one of the most important issues facing us at the moment.
Dr Shireen Meer is associate director of Berkeley Research Group (BRG)