We’ve all heard that diversity is crucial for successful organizations today. But what is diversity, beyond the surface level? How does it benefit your organization? Dr. Tracey Rockett – our professor of management practice who teaches classes about teams, leadership, innovation and more – recently led a webinar answering those questions.
June 29, 2021
What is diversity?
Diversity simply means differences. When we talk about diversity, we're typically talking about surface-level or inherent characteristics: things that you're born with, like race, ethnicity, gender and age. On the flip side, there's acquired or deep-level diversity, like your education, skill set or religion. Both are important to bringing the richness of diversity to the workplace.
So where do we stand? It can be difficult to tell in terms of deep-level diversity, which is often less apparent and more difficult to measure. In terms of surface-level diversity, we are improving, but slowly. Ethnic representation on executive teams has doubled since 2014 to about 13% in the U.S. and U.K. Gender diversity is up about 5% over the last five years globally at 15%. It’s estimated to take an additional 30 years for the U.S. to reach gender parity on executive teams.
Why is diversity important?
The research is clear that having a strong diversity initiative pays off. Companies in the top quarter for ethnic and cultural diversity outperform those in the bottom by 36% in profitability and by about 25% when it comes to gender diversity. But why is that?
- Diverse teams focus more on facts. Diverse teams tend to be more objective when considering information, because they know they're coming at problems with diverse lenses and can't just rely on opinion to sway others. They also spend more time analyzing those facts to determine what’s important for the project or organization as a whole.
- Diverse teams are more likely to capture new markets. Diverse teams are more likely to have connections in – and personal knowledge of – diverse markets, knowing how to reach those audiences. They are 45% more likely to report growth in market share and 70% more likely to capture new markets.
- Diverse teams are more likely to innovate. Companies with more women are more likely to introduce new innovations in a two-year period; businesses with diverse leadership teams are more likely to develop new products. This is for several reasons: their diverse perspectives lead them to share more information and explore new ideas, and their diverse networks offer more connections.
“In my EMBA program, it was really awesome that we were able to be partnered with folks from different industries, different backgrounds, different education levels and to hear from everybody. And the result was better decision-making.” – Reyna Sanchez, EMBA class of 2021
It takes a critical mass of diversity.
To glean the most benefit from a diverse workforce, it helps to reach a certain level of diversity. For instance, companies that are about one-third female outperform those with 10%-30% on their teams, and those outperform companies with less than 10%. Why? Women are more likely to speak up, share their perspectives and be heard when they are not the only women in the room.
How do you practice diversity?
Obviously, it centers around selecting, training and promoting diverse leaders in your organization. But how do you even get to the point where you can?
- Have a support structure. People from different backgrounds or situations may also have different challenges, so look for ways to help them overcome those challenges. For instance, during the pandemic, women exited the workplace at far greater rates than men did and, even now, are not rejoining the work force at the rates that men are. Why? Because of child care and education needs. You could help your employees across the board by offering a flexible work schedule, a work-from-home policy, or even a policy not to have meetings after 3 p.m., when parents (i.e., mothers) have to pick up their kids.
- Coach and champion diverse employees. Your employees don’t merely need mentors to act as sounding boards or offer advice; they need champions who are invested in their success and can help push them forward. It’s often difficult for underrepresented groups to find champions, as potential champions are unconsciously more likely to choose someone who looks like them, thinking “That guy reminds me of me when I was his age I’m going to help bring him up the ladder.” Overcome this tendency by consciously working to champion those who don’t look like you, who might need support or connections. Look for ways to connect potential champions with younger employees by identifying deeper-level traits they may have in common, like their functional roles or personal interests.
- Rethink the requirements to get to the top. What measurements do you consider for hiring and promotion, and are they really reflective of value brought to your organization? For instance, there’s this idea in some organizations that you have to work 70 hours a week to be promoted – the boss sees you coming in early and working late every night. But are those people really more productive than others? Are they actually putting in more hours than the employees who go home at 6 p.m. (and might be continuing to work remotely)?
“One of the things that we've done on our teams in the program is giving everybody the space to have a voice, knowing that people have different schedules, people have different needs, people have different family structures. And you work with them on those, within reason, because it can lead to better performance for all of them.” – Sean Richards, EMBA class of 2022
Tracy shared another example from her consulting work:
“A few years ago, I worked with a local police force that was struggling to recruit and retain women. We did some digging and discovered that women tended to outperform the male officers on the written test and could pass most of the physical test, but they struggled with one challenge: the chin-ups. I asked, ‘Well, do you need that? Do you ever have a situation, like in the movies, where your officers are jumping across buildings and having to pull themselves up?’ And the chief said, ‘Well, no, that never happens.’ So I asked, ‘Well, why is that a requirement?’ And it turned out it was just an artifact, an old requirement nobody ever challenged. They removed that one requirement, and their ability to hire women increased immediately.”
The upshot: Diversity leads to innovation in your company, but to get to that point, sometimes you may need to spearhead innovation in your own internal policies first.
The Neeley EMBA program has made diversity a priority since the beginning – the more perspectives each student is exposed to, the more insight they can bring back to their workplaces. The program has maintained close to 30% female students in recent years, and the class of 2022 is 50% minority. We also focus strongly on deeper-level diversity, such as personality types, industries and functional roles. Learn more about how the group project design creates diverse collaboration and how Neeley tailors the program for every individual.
We discussed much more in the webinar that wasn’t covered here. Be on lookout for our next preview webinar so you don’t miss a thing.