The business case for enhancing organisational diversity has never been more prominent. Pritika Bathija, MBA2024 writes as part of Wheeler’s International Women’s Day Campaign.
As businesses strive to navigate the complexities of diversity, equity, and inclusion (DEI), it becomes evident that a thoughtful, multi-faceted strategy is necessary—one that goes beyond numbers to genuinely embrace and celebrate diversity. By fostering an inclusive environment, addressing biases, and leveraging the richness of diverse experiences, companies can unlock the true potential of diversity.
The business case for diversity is the argument that diversity improves a company’s bottom line. The case has been corroborated be a multitude of research studies and leading voices in a variety of sectors. Causational studies[1] further demonstrate how social diversity in teams can cause a change in behaviour leading to enhanced creativity, breakthrough innovations, better decision-making, problem-solving and an improved bottom line.
Business and society have come a long way since the 1970’s Milton Freidman article[2], which opined that ‘the social responsibility of business is to increase its profits. Some critics advocate shifting from a business case for justifying diversity to a ‘fairness case’ – emphasising fairness and equal opportunity.
Yet, research by Georgeac and Rattan[3] reveals that neither strategy is optimal. Their study highlights how underrepresented candidates reported a reduced sense of belonging, heightened fears of stereotyping, and concern that they are interchangeable with members of their identity group when presented with the ‘business case’. Though the ‘fairness case’ fares slightly better, the most effective strategy was surprisingly simple: adopting neutral messaging. This approach moves away from needing to justify diversity at all and instead suggests that organisations should inherently value diversity, not as a strategic goal, but as a fundamental ethic.
Research from Thomas & Ely[4] reinforces this and outlines the importance of having the right diversity perspective for realising its benefits. When organisations perceive diversity to be important predominantly on the basis of providing equal opportunity to all, no link was found between diversity and work outcomes. When teams valued diversity mainly with the aim of accessing diverse markets, tension and concern was fostered. However, when teams valued cultural diversity because of the different life experiences, knowledge, and insights that could be brought to the task, group outcomes improved markedly.
Clearly, “taking an add diversity and stir approach” will not suffice; business processes and culture need to evolve too. Thomas & Ely share recommended actions that businesses can take[5]:
- Foster trust and cultivating an environment where individuals are encouraged to voice their thoughts freely;
- Address biases and dismantling oppressive structures;
- Welcome diverse perspectives and expressions;
- Leverage the unique insights and experiences tied to employees’ identities
Acknowledging the difficulties involved in implementing effective strategies for a nuanced challenge such improving diversity, many companies are making strides in the right direction. Moving beyond diversity to improve both inclusion and equity, they are working towards creating a more holistic DEI approach.
By investing in community support structures and a range of interpersonal trust building initiatives, Google has helped improve minority group’s sense of belonging. Their ‘Stay & Thrive’ program, has led to improved retention for women globally and Black+ and Latinx+ employees in the U.S[6]. With top leadership commitment to equity and inclusion, P&G’s DEI approach involves dissecting and understanding the patterns of inequality that hinder progress, thereby tailoring initiatives to specific regions and countries based on their unique demographic needs. This includes setting clear aspirations for gender representation globally and addressing racial and ethnic disparities in countries with significant discrimination patterns, like Brazil and the UK[7]. With the aim of nurturing a culture of growth and inclusive teaming, Bain has solidified its “Diverse Teams, One Bain” principle[8]. In order to promote inclusive behaviour, Bain is emphasising the importance of both experience sharing and practical experience among the leadership team.
The business case for diversity and inclusion is imperative for modern organisations for both ethical and practical reasons. Research continues to demonstrate that diverse teams lead to enhanced creativity, innovation, decision-making, and ultimately improved bottom lines. For emerging markets, these lessons are valuable. As businesses in a globalised economy, diversity and inclusion are essential elements for sustainable growth and competitiveness, and the holistic approaches by the likes of Google, P&G and Bain exemplify the commitment required to making meaningful progress. As businesses continue to evolve, embracing diversity and inclusion becomes more than a strategy, but rather a necessity for success.
References:
[1] https://www.scientificamerican.com/article/how-diversity-makes-us-smarter/
[2] https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html
[3] https://hbr.org/2022/06/stop-making-the-business-case-for-diversity
[4] https://web.mit.edu/cortiz/www/Diversity/Ely%20and%20Thomas,%202001.pdf
[5] https://hbr.org/2020/11/getting-serious-about-diversity-enough-already-with-the-business-case#:~:text=The%20Context,results%20in%20better%20financial%20performance
[6] https://about.google/belonging/diversity-annual-report/2022/retention/
[7] https://hbr.org/podcast/2021/08/moving-the-needle-on-dei
[8] https://www.bain.com/about/operating-principles/#:~:text=Diverse%20Teams%2C%20One%20Bain.,collaborate%20to%20overcome%20any%20obstacle
About the author
Pritika Bathija, MBA2024 is an Outreach and Communications Intern at the Wheeler Institute for Business and Development. Prior to joining London Business School, Pritika spent two and a half years as a Management Consultant at PwC, followed by four years in the impact sector in India. Having worked for both the Teach for India Fellowship and the Central Square Foundation, she has invaluable experience in education and innovation. She has a passion for business as a force for good, particularly in emerging markets.
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