The business case for diversity in the workplace is now overwhelming

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Vijay Eswaran, Executive Chairman, QI Group of Companies

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We live in a complex, interconnected world where diversity, shaped by globalization and technological advance, forms the fabric of modern society. Notwithstanding this interconnectedness, there is also growing polarization – both in the physical and digital worlds – fuelled by identity politics and the resurgence of nationalist ideals.

Not surprisingly, our workplaces tend to mirror the sociocultural dynamics at play in our lives outside work. Having built and scaled a multinational enterprise over nearly two decades, I’ve learned that diversity in the workplace is an asset for both businesses and their employees, in its capacity to foster innovation, creativity and empathy in ways that homogeneous environments seldom do. Yet it takes careful nurturing and conscious orchestration to unleash the true potential of this invaluable asset.

In this era of globalization, diversity in the business environment is about more than gender, race and ethnicity. It now includes employees with diverse religious and political beliefs, education, socioeconomic backgrounds, sexual orientation, cultures and even disabilities. Companies are discovering that, by supporting and promoting a diverse and inclusive workplace, they are gaining benefits that go beyond the optics.

Business has the transformative power to change and contribute to a more open, diverse and inclusive society. We can only accomplish this by starting from within our organizations. Many of us know intuitively that diversity is good for business. The case for establishing a truly diverse workforce, at all organizational levels, grows more compelling each year. The moral argument is weighty enough, but the financial impact – as proven by multiple studies – makes this a no-brainer.

Disruption and innovation

The coming together of people of different ethnicities with different experiences in cities and societies is a key driver of innovation. The food that we eat every day is a result of this blending of cultures. The most successful musical genres, such as jazz, rock’n’roll or hip-hop, are the products of cultural amalgamation.

If we look at the most innovative, disruptive and prosperous urban centres in the world – New York, Dubai, London and Singapore – they all have one thing in common. They are all international melting pots with a high concentration of immigrants. Research shows that there is a direct correlation between high-skilled immigration and an increase in the level of innovation and economic performance in cities and regions.

Singapore makes a great case study. This tiny South-East Asian island nation, with a population of just over five million, is today one of the globe’s heavyweight financial centres. It scores highly in international rankings for areas as diverse as education and ease of doing business, and has been recognised as the world’s most technology-ready nation. Singapore is also highly multicultural, with an ethnic mix of people of Chinese, Malay and Indian descent, and large populations of different religious faith groups including Buddhists, Christians, Muslims and Hindus.

When Singapore achieved independence in 1965, its founding fathers instituted measures that would not leave racial harmony to chance. Singapore aggressively promoted racial and ethnic integration. One important measure was its housing policy, which ensured that every public housing complex followed a national quota of racial percentage. This forced people of different ethnicities to learn to live with each other, and broke up all the ethnic ghettos that were prevalent at the time of independence.

These seemingly autocratic measures have served the small island nation well in producing a well-integrated populace that values meritocracy more than race or religion. Singapore’s ethnic and religious diversity has proven to be an asset to the country, and the result is relative racial harmony – something the US would do well to learn from.

In neighbouring Malaysia, my home country, ethnic, cultural and religious diversity has always been promoted. By the time I was 18, I could speak five languages and had friends from the Chinese, Indian, Malay and Eurasian communities, who between them hailed from several religious backgrounds. Malaysia has one of the world’s most diverse cultural and ethnic mixes and has outperformed most of its regional partners, with a high annual GDP growth since its independence. The multilingual workforce has given us Malaysians an edge in the workplace.

Diversity and business performance

There is substantial research to show that diversity brings many advantages to an organization: increased profitability and creativity, stronger governance and better problem-solving abilities. Employees with diverse backgrounds bring to bear their own perspectives, ideas and experiences, helping to create organizations that are resilient and effective, and which outperform organisations that do not invest in diversity.

A Boston Consulting Group study found that companies with more diverse management teams have 19% higher revenues due to innovation. This finding is significant for tech companies, start-ups and industries where innovation is the key to growth. It shows that diversity is not just a metric to be strived for; it is actually an integral part of a successful revenue-generating business.

While most of these studies are conducted in the western world, Asian countries are engaging in the equality debate at their own pace. Cultural shifts over the last 40 years mean that South-East Asia currently has a female workforce participation rate of 42% – higher than the global average of 39%.

According to the 2018 Hays Asia Diversity and Inclusion report, improved company culture, leadership and greater innovation were the top three benefits of diversity identified by respondents. However, there was a perception among a significant proportion of participants that access to pay, jobs and career opportunities for those of equal ability could be hampered by factors such as age, disability, ethnicity, gender, family commitments, marital status, race, religion and sexuality.

More than ever, flexibility and versatility are becoming the key to success for individuals, companies and countries alike, and a culturally diverse environment is the best way to acquire these qualities. Assumptions need to be challenged, conversations need to be had and corporate culture needs to be updated so that the modern workplace can accurately reflect and support the population of the region.

The millennial quotient

By the year 2025, 75% of the global workforce will be made up of millennials – which means this group will occupy the majority of leadership roles over the coming decade. They will be responsible for making important decisions that affect workplace cultures and people’s lives. This group has a unique perspective on diversity. While older generations tend to view diversity through the lenses of race, demographics, equality and representation, millennials see diversity as a melding of varying experiences, different backgrounds and individual perspectives. They view the ideal workplace as a supportive environment that gives space to varying perspectives on a given issue.

The 2018 Deloitte Millennial Survey shows that 74% of these individuals believe their organization is more innovative when it has a culture of inclusion. If businesses are looking to hire and sustain a millennial workforce, diversity must be a key part of the company culture. This 2016 survey shows that 47% of millennials are actively looking for diversity and inclusion when sizing up potential employers.

Women in the workplace

Gender equality remains a major issue in the corporate world. Despite an abundance of research confirming that companies with more women in the C-Suite are more profitable, there is still a gender gap in the vast majority of companies. Women remain significantly underrepresented in the corporate pipeline, with fewer women than men hired at entry level, and representation declining further at every subsequent step.

Companies need a comprehensive plan for supporting and advancing women. This requires a paradigm shift in the corporate culture which will include investing in employee training and giving employees greater flexibility to fit work into their lives.

A survey conducted by Pew Research Centre lists several areas where women are stronger in key areas of both politics and business. Survey respondents noted that women are:

Forward-thinking companies should be looking for ways to employ and empower more women at work – not just as a moral obligation, but also as a sound business strategy. McKinsey’s most recent Delivering Through Diversity report found corporations that embrace gender diversity on their executive teams were more competitive and 21% more likely to experience above-average profitability. They also had a 27% likelihood of outperforming their peers on longer-term value creation. Different perspectives on customer needs, product improvements and company wellbeing fuel a better business.

It has been estimated that closing the gender gap would add $28 trillion to the value of the global economy by 2025 – a 26% increase. Put simply, companies and societies are more likely to grow and prosper when women gain greater financial independence.

Taking a stand

It is important for corporations to step up and advocate for diversity and tolerance on a public platform. A great example of this is Nike’s support of American football quarterback and rights campaigner Colin Kaepernick. More than a marketing exercise, it showed the world that one of America’s best-known corporations was willing to stand alongside one man in his battle against racial injustice and intolerance.

Procter & Gamble’s (P&G) ‘We See Equal’ Campaign, which was designed to fight gender bias and work towards equality for all, depicted boys and girls defying gender stereotypes. The company has a history of promoting the issue, and also records 45% of its managers and a third of its board as women. P&G’s clear dedication to equality within its own workforce meant that the campaign came across as authentic and as a genuine push for change.

There is much to learn from leaders in diversity and inclusion, but it is important to remember that every company’s initiatives will look different. Diversity means different things to different people, and organizations must apply those definitions to their companies accordingly.

Diversity and inclusion cannot be a one-time campaign or a one-off initiative. Promoting them in the workplace is a constant work-in-progress, and should be maintained and nurtured to guarantee effectiveness. Empathetic leadership is key to this transformation. For real change to happen, every individual leader needs to buy into the value of belonging – both intellectually and emotionally.

The business world must come together and be more engaged and vocal than it has been to promote the message of a diverse and tolerant society. It is an uphill battle, but peace, prosperity and advancement depend on it.