Diversity makes good business sense
The CEO of the UK’s leading digital venture builder expounds on the need for diversity and inclusion in workplaces and how this can be achieved.
- Public struggles on gender-related issues within the workplace have real and immediate costs.
- There is empirical evidence that points to more gender diverse teams achieving higher productivity as well as improved business outcomes.
- A recent study showed that companies that have more diverse management teams had around 19 per cent higher revenue due to innovation.
Gender diversity is incredibly important at all levels of all workplaces for several good reasons – firstly there is empirical evidence that points to more gender diverse teams achieving higher productivity as well as improved business outcomes – from growth to profitability. It simply makes business sense. Secondly, the recent public struggles on gender-related issues within the workplace have real and immediate costs, such as lost stock value, lower market share as well as the long-term impact stemming from a loss of investor, consumer and employee trust.
But lastly and most importantly, is that in a world where I want to live – one of responsible capitalism that supports a progressive and inclusive civic society – we, as business leaders, should be striving to set the standard and ensure we better represent the communities we serve and the customers we sell to.
There is a wealth of evidence that achieving diversity – of thought, gender and culture – increases revenue. In Facebook’s gender bias training, they found that ‘businesses are more successful when they hire women: more collaborative, more profitable, more inclusive.’ And in research published by McKinsey from 2017, they found that companies that achieve gender diversity on their executive teams outperformed their counterparts by 21 per cent. For companies who were ethnically and culturally diverse, that number rose to 33 per cent. Examples like these confirm that there is a clear business impact of achieving diversity. We need to treat diversity like the imperative it is.
Just a focus on gender?
There is a risk that Diversity and Inclusion are seen as having a narrow focus on gender. I fear this can have a negative impact both on advancing the opportunities of gender diversity by inviting accusations of “are we still banging that drum?” and encourage defensive behaviour, “why is always about the women?” but also on excluding the whole spectrum of crucially important elements of Diversity and Inclusion.
Diversity is not just restricted to gender. In fact, it is all-encompassing and includes ethnicity, language, socio-economic status, religious and political beliefs, sexual orientation and physical disabilities. It is also not just about having a diverse workforce. It is about creating a safe and positive environment that represents the uniqueness of each individual; motivates and enables them to contribute their best, by way of ideas and efforts. Diversity is the richness and variety of the people that work for us. Inclusion is the culture we create where diversity naturally thrives. It is also not just about recruitment – diversity and inclusion practices should be seen as integral in retention, diversity of thought and innovation and culture-building activities.
Diversity and innovation
Diversity in all its forms makes business sense but is particularly important for the business of innovation. A 2018 study by Boston Consulting Group revealed that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance.” Companies that have more diverse management teams had around 19 per cent higher revenue due to innovation. Innovation, tech and start-ups are three words that are often put together. It, therefore, follows that diversity is far from just a new age tick-box metric and is actually an integral part of a successful scalable and sustainable business.
How to build an inclusive culture
However, building diverse teams is not an easy task. While companies can start implementing diversity and inclusion by focusing on one aspect of diversity – for example, gender or race – to accelerate diversity you must create the conditions for diverse teams to thrive. You need to build an inclusive culture. Fiona Young, Director of Diversity and Inclusion at one of Blenheim Chalcot’s portfolio companies, Hive Learning, says, “The general consensus is that while a targeted gender strategy can be a helpful place to start, whenever you focus on one group alone, you risk alienating everyone else which in itself can be detrimental. To be truly successful at building a diverse workforce in the long term, you must change culture so that everyone understands how to celebrate and be mindful of difference. You have to create behaviour change.”
The Inclusion Works digital toolkit by Blenheim Chalcot’s portfolio company Hive Learning helps companies like Dow Jones and Droga5 build an inclusive culture in their workplaces through putting in place a mobile-first peer learning programme that helps people understand how they can contribute to creating a more inclusive workplace. People learn how to debias their day to day behaviours – from the way they interview, to give feedback to how to stoke creative conflict. As a result, companies have seen around 90 per cent of people on the Inclusion Works programme learn clear actions they can put into action right away, with an over 76 per cent increase in employees taking action against bias.
For these types of initiatives to be successful, these need to be driven and supported by a company’s leadership team. A recent study conducted across 50 senior executives from Microsoft, Google, UPS, Amazon and others by Sage D&I found that nearly 54 per cent of respondents believe it is necessary to have more internal and external resources to support diversity and inclusion efforts in an organisation.
Despite the barriers to achieving it, the focus on diversity and inclusion should be viewed as a huge positive and an imperative. This will enable us to grapple with the most complex challenges that today’s world presents!
Kate Newhouse is the Chief Executive Officer at Blenheim Chalcot.