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Advantages and Disadvantages of Workplace Diversity

-  By Donna Hamlin, Ph.D.

The push for diversity is on around the globe today. Company work groups, executive C-suites, corporate boardrooms governments and regulators are calling for action: define policies and deliver practices that get results.

Diversity Defined

Diversity generally means recognizing, accepting and appreciating the differences among peoples’ differences in age, class, gender, ethnicity, physical and mental abilities, race, sexual orientation, religious or spiritual orientation, and status relative to public assistance (Esty).

Advantages of Diversity: Why Does it Matter?

An early study found companies with highly diverse teams in research and development laboratories produced higher numbers of commercial patents (noted by PARC Research Center). The correlation implied diversity contributed to creativity and effectiveness in productive ways. This caused managers professionals in organization development to experiment with composing diverse teams to see if results improved.

They did. Results show diversity in work groups yields greater productivity, competitive advantages and is a key component for effective people management (SHRM; Robinson). Moreover, diverse executive teams and corporate boards produce higher returns on equity, improved risk mitigation, higher return on sales, invested capital and corporate revenue results (McKinsey; Leeds University; Catalyst).

The underlying notion is straightforward: if you put people together who come from many walks of life and experiences to discuss a challenge, the richness of their perspectives will provide more opportunities for creative ideation. Discussions are more whole and decisions are sounder.

Added to these operational advantages is the value diversity brings to innovation in our global economy. The rate of innovation is on a steep incline (Estrin). To remain competitive, organizations and nations must invest in ways to accelerate innovation. Diversity in teams can contribute to higher quality and volume of innovation.

Many governments now recognize this and are creating legislative mandates to support diversity. Solving such complex global issues as world hunger, environmental concerns, financial crises, health care for aging populations requires a higher order of thinking. Government officers anticipate diversity can contribute to quality solutions. New regulatory mandates are emerging. US public companies must file in their proxy statements what their diversity policy is or explain why they don’t have one. Other countries have mandatory quotas for diversity. Norway requires 40% of board directors on public boards must be women. Malaysia recently mandated public companies must have 30% women in both their executive roles and their boards. The intention is to push for better results via diversity.

Disadvantages of Diversity: A Challenge

The potential advantages of diversity at work are compelling, however, they don’t come without thoughtful effort.

A company must have executives who can create a culture of respect and honor for differences for colleagues. It must create practices and train managers to competently supervise diverse work teams effectively. It must hire mature employees who are open to understanding and appreciating the many ways people may think or approach topics. It must evaluate progress and consistently improve over time. It must invest in leadership development to ensure managers have the skills to manage diverse teams well.

Employees must learn to both understand and appreciate how to work with others who are different from themselves. The critical factor for success of a diverse team is if its members truly respect each other. This takes commitment by the team members to deepen their understanding and to grow personally and professionally. It takes time to become proficient.

To do this well means a commitment and investment in training, hiring, coaching and corporate communication and company culture development. A company must have the integrity and financial ability to back its commitment with the budget to execute consistently and credibly.

A Valuable Investment

Based on results to date, the advantages of diversity clearly outweigh the disadvantages. As both team development and leadership development strengthen within well-managed diverse groups, overall company results improve. Those companies which take the challenge to heart have a stronger likelihood to thrive for the long-term. In today’s world, sustainable is smart business and good for all.

References

  • www.JohnSeeleyBrown.com
  • Judy Estrin, Closing the Innovation Gap www.theinnovationgap.com
  • Donna Hamlin, Is Innovation the Solution for Corporate Success? Helium.com 10/21/2011.
  • Esty, Katharine, Richard Griffin, and Marcie Schorr-Hirsh (1995). Workplace diversity. A manager’s guide to solving problems and turning diversity into a competitive advantage. Avon, MA: Adams Media Corporation.
  • Robinson, Kary-Siobhan. (2002). U.S. must focus on diversity or face decline in competitiveness.
  • Roosevelt Thomas, R. Jr. (2001). Elements of a successful “diversity” process. The American Institute for Managing Diversity. Available on the World Wide Web at http://www.aimd.org/articles/elements.html. Date visited, February 8, 2002.
  • Society for Human Resource Management. (1998). SHRM survey explores the best in diversity practices. Fortune 500 firms outpace the competition with greater commitment to diversity. The Society for Human Resource Management (SHRM). Available on the World Wide Web at http://www.shrm.org/press/releases/980803.htm.
  • Focus Consultancy; Diversity and Innovation : www.ec.europa.eu
  • Adams, Gray and Nowland; Does Gender Matter in the Boardroom? Cited by www.lead-women.com Leeds University Study Shows Diversity on Boards Cuts Risk by 20%, the Times of London, cited by www.lead-women.com.
  • Catalyst Report: Diversity Improves Return on Equity; cited by www.lead-women.com
  • EU Considers Quotas for Women on Boards, The New York Times, 3/2/2012

 
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