For the last decade, the importance of diversity within the workforce has been a predominant conversation in business, with many companies implementing D&I policies and reshaping their hiring structures.
However, diversity in UK companies is still not where it should be. According to Deloitte’s Women in the Boardroom report:
Only 19.7% of employees on company boards are women, and for every 100 men promoted to managerial roles, only 86 women are promoted to the same roles.
Moreover, according to the most recent data from the UK Government Race Disparity Unit, ethnic minorities are underrepresented at the senior level in UK companies. Only 10% of directors of FTSE 100 companies are from ethnic minority backgrounds, and ethnic minorities make up only 6% of top management positions across all UK companies.
So, why are we still falling behind when it comes to diversity in the workplace?
Making the economic argument for diversity
Whilst we understand that diversity in the workplace is a positive thing, it can be hard to quantify its exact value. In order for executives and hiring managers to intensify pushes to hire a diverse workforce, the exact benefits of diversity within the workforce needs to be fully understood.
Diversity hiring is defined as the practice of including and involving people from a range of different social and ethnic backgrounds as well as different genders, sexual orientations, and ages. Diversity can also refer to different educational backgrounds, disability statuses and professional and personal experiences.
Diversity is not simple to define, let alone implement. Despite this, we do know that in terms of economic value, it is hugely beneficial. Why? Because some data suggest diversity increases innovation.
Innovation is the practice of creating something new; this can refer to creating a new product line to increase revenue or to creating new business practices which create efficiency within the company.
Innovation is crucial for companies to stay ahead of competitors and for them to become leaders in their field - a much-needed function in today’s turbulent economy.
Amazon’s spirit of innovation
One of the best examples of innovation is the creation of Amazon Prime. Launched in 2006, Amazon Prime is a subscription-based service that offers consumers numerous benefits, including faster delivery times, better-priced deals, and, more recently, a video streaming platform.
The service transformed online shopping, prioritising efficiency and choice, and cementing Amazon’s reputation as a leader in the field of e-commerce. In 2023, globally, 60 million to 80 million people were members of Amazon Prime.
Amazon itself does champion diversityin its operations, and even writes on its site:
"Amazon’s ability to innovate on behalf of our customers relies on the perspectives and knowledge of people from all backgrounds."
Diversity is not just a buzzword; it is a crucial element for business to thrive, it provides a strategic advantage through fostering innovation and creativity.
The relationship between diversity and innovation
At first, it may not seem that something as routine as hiring practices can spur widespread change and innovation within a company.
However, studies by Deloitte have found that companies with inclusive cultures are six times more innovative and agile. Companies spearheading diversity are also 35% more likely to achieve better business returns. Moreover, it has been found that firms with more than one woman on the board have higher ROI returns and better average growth than all-male boards.
The reason for this is not because minorities are intrinsically more innovative. It is because having a workforce with diverse perspectives brings unique information and understanding to the table, which allows blind spots to be called out and spurs creativity.
Making the business case for diversity is not a new concept. In 2019, a Wall Street Journalinvestigative report found that:
“Diverse and inclusive cultures are providing companies with a competitive edge over their peers.”
Having diversity in the workplace causes biases to be questioned and issues to be re-evaluated from a new angle. This means that companies can change, innovate, and understand different needs. In fact, it has been found that if a team member shares an ethnicity with a client, the client’s needs will be understood 150% better.
As the world becomes increasingly interconnected and globalised, companies which embrace diversity have the competitive advantage of understanding and catering to diverse markets.
Diversity and innovation statistics
Examples of diversity in the workplace: Procter & Gamble
An example of a diverse workforce is Procter & Gamble (P&G).
The organisation currently has 48% female employees and 51% non-white employees. Its focus on diversity has led to innovative ideas. Most notably, the diverse perspectives within the company led to the creation of Pantene’s Gold Series line of hair products for women with curly hair. This has become one of its most popular lines, achieving 20% year-on-year growth in 2019 and winning the Allure Best of Beauty Award.
Diversity is a crucial element for business as it can provide strategic advantage through fostering innovation, whether that be acquiring new businesses or increasing market shares.
Understanding business as an ecosystem
To understand the impact of diversity on business, it is useful to use the illustration of internal business structure as an ecosystem.
Often, business is thought of as a machine. If all the cogs are well-oiled and well-organised, the business will run smoothly. However, this understanding of business cannot accommodate the power of perspective – in fact, a business run as a machine is rigid, vertically hierarchical, and focused internally on efficiency. As a result, often, it is unable to adapt and navigate changes and evolving markets.
Business is better understood as an ecosystem.
Ecosystems compete for survival, and to survive, they must adapt and change with the conditions that surround them. Failure to adapt means extinction. As Charles Darwin said, “it is not the strongest or the most intelligent who will survive but those who can best manage change”.
A business that works as an ecosystem recognises its external environment as it considers the broader ecosystem of customers, suppliers, regulators, and societal factors in which it exists. It uses a horizontal hierarchy and recognises the dynamic nature of organisations. This sort of business is responsive, flexible, resilient, and adaptable.
Of course, this won’t suit every business, but many can benefit from this organisational structure.
In an ecosystem, diversity plays a fundamental role in maintaining balance, resilience, and innovation. Diversity contributes to the richness and vitality of the ecosystem, and varied perspectives and insights allow for and encourages adaptation and innovation.
What the future looks like
For companies to adapt, change and innovate, they need fresh perspectives which can bring new information and understanding. And one way to achieve this is through a diverse organisation.
Companies that prioritise diversity in their workforce are better positioned to adapt to changing conditions, connect with a diverse range of clients and customers, and prioritise creative thinking within their operations.
Additionally, it is crucial for companies to recognise the societal impact of inclusivity, which often begins with the hiring process.
Overall, diversity is not just a moral imperative; it is also a business imperative.
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