Workplace Diversity

By BSR Staff

Executive Summary

Workplace diversity refers most broadly to the protection, respect and inclusion of the entire package of attributes that each employee contributes to the workplace. While companies initially paid the most attention to those characteristics that were protected by legislation -- e.g. race, sex, religion, national origin, sexual orientation, age, disability -- businesses are increasingly building company cultures that respect life experiences, language, talents, skills, thought processes and personal styles as well. Different skills, experiences and backgrounds in the workplace can help foster and drive business growth, innovation and success.

While companies are retaining an internal focus on attracting and retaining a diverse workforce and fostering a culture of inclusion, they are also adding an external focus that recognizes the diversity of their customers and vendors and the communities in which they operate. Companies are developing broader, more far-reaching strategies that rely on the input and expertise of diverse workforces to compete in increasingly global and varied markets. Furthermore, they are recognizing that a global diversity commitment might translate into unique programs in different parts of the world. These trends are likely to intensify as global commerce continues to bring different cultures, values and practices into contact with one another.

Business Importance

While at one time many businesses linked workplace diversity to legal compliance or to simply "doing the right thing," companies today are finding that workplace diversity truly drives business success.

Changing Customer Base

As the consumer market becomes increasingly global and diverse, companies must ensure that their workforces and their marketing strategies reflect these changing demands. Many companies have found that by concentrating on workplace diversity and inclusion, they are better able to reach out to diverse markets. Safeco Insurance, for example, generated growth of 8% or more in written premiums from diverse markets over three years after initiating a company-wide focus on workplace diversity in 2001.

Links to Stronger Financial Performance

While it not clear to what extent strong workplace diversity programs actually drive better performance (or rather are a signature of well-run, successful companies), there exists strong empirical linkage between attention to workplace diversity and business success. In a 2005 study conducted in conjunction with Standard & Poor's (S&P), DiversityInc magazine found that its Top 50 U.S. Companies for Diversity outperformed the NASDAQ and Dow Jones Industrial Averages, and was competitive with the S&P 500, over a one-year period.

Improved Innovation and Productivity

Anecdotal information from numerous companies -- including Shell, Intel, DuPont, General Motors and Pitney Bowes -- shows that a more diverse and team-based workforce helps generate new ideas and increase revenues. Recognizing input from people of diverse experiences and perspectives has sparked many companies to improve innovation.

Decreased Vulnerability to Legal Challenges and Costs

Companies that have established workplace diversity programs and management systems to address and resolve potential discrimination and harassment issues are less vulnerable to lawsuits and multimillion dollar penalties.

Enhanced Reputation

Customers, potential employees, investors and the community are increasingly paying attention to workplace diversity as part of a company's overall corporate social responsibility. Public recognition through lists such as Fortune's "Best Companies for Minorities" and DiversityInc's "Top 50 Companies for Diversity," as well as more specific ratings like the Human Rights Campaign Corporate Equality Index and the NAACP's Report Cards and Consumer Guides, allow potential employees, customers and investors to incorporate a company's diversity reputation into their decision on whether to interact with the company.

Key Developments

Increased globalization and a broader, more inclusive definition of "diversity" are among the key factors affecting companies’ approaches to workplace diversity.

Companies Are Moving Beyond Compliance

Increasingly, companies are viewing workplace diversity as a key component of business strategy, rather than an human resources or compliance issue. Whether it is because they seek to attract and retain key talent, spur innovation, or reach out to diverse markets, workplace diversity is showing up as a strategic issue for a growing number of companies. In 2003, Toyota identified workplace diversity as a key business imperative; in addition to impacting its employment practices, its Diversity Strategy affects retail, procurement, advertising and philanthropic operating plans.

Broader Interpretation of Diversity

Where once "diversity" tended to refer to visible characteristics like sex, race or age, companies are starting to define diversity more broadly to include beliefs, skills and talents, life experiences, thought processes, and working styles. By doing so, companies gain at least two advantages: (1) diversity becomes multi-dimensional, rather than "us" and "them," and as such becomes relevant to all employees, not just those in so-called minority groups; and (2) companies are able to leverage the strengths, talents and input of all employees, thus fostering innovation.

Increasing Globalization Affects Employees, Sales and Approaches

As markets become progressively more global, companies around the world recognize the need to hire a diverse workforce and understand the needs of diverse consumers. At the same time, companies must balance global policies with local practices. German technology company Siemens AG developed overarching guiding principles for workplace diversity, but tailors its individual diversity programs to fit the countries in which it operates. Consequently the programs in Germany, Hong Kong, Brazil and South Africa each reflect the national policies and employee needs in those countries, while adhering to Siemens’ global principles.

Women Might Be "Opting Out"

Whether voluntarily or because of unsupportive company cultures, there is growing evidence to suggest that professional women are leaving large companies, either to become full-time mothers or to start entrepreneurial ventures of their own. An October, 2003 New York Times article cites the statistic that "the number of businesses owned or co-owned by women jumped 11 percent since 1997, nearly twice the rate of businesses in general." The same article points out that "[o]f white men with M.B.A.'s, 95 percent are working full time, but for white women with M.B.A.'s, that number drops to 67 percent." This trend has significant implications for companies seeking to create inclusive cultures that benefit from and create opportunities for women, especially in the leadership ranks. In a February 2005 report, the U.S. nonprofit Center for Work-Life Policy (CWLP) surveyed 2,443 U.S. women finding that four out of 10 women with higher degrees take a break from work at some point in their careers. Of those, 93 percent want to return to work but only 74 percent are able to find jobs. CWLP announced that it had convened 19 global firms -- including BP plc, Cisco Systems, Inc., Pfizer Inc. and Unilever -- to form a taskforce to address the loss of talented, educated women from the U.S. workplace (also referred to as the "hidden brain drain") especially after they take breaks from work.

Implementation Steps

The specific issues that will drive a successful workplace diversity program vary widely by company, based on each company's strategies, competitive advantages and demographics. Several characteristics of successful workplace diversity programs are outlined below; the key is to develop a customized program that reflects company needs:

• Define Workplace Diversity Broadly and Inclusively: Recognize the numerous ways people are different, have different perspectives and add value;

• Make Workplace Diversity a Corporate Value: Identify workplace diversity as one of the company's core corporate values and express these values in the company's mission and/or statement of values;

• Link Workplace Diversity to Company Strategy: Analyze and evaluate the company’s business strategy to understand how workplace diversity can contribute to the company's competitive advantage;

• Balance Global and Local Needs: Recognize the need to balance a company-wide philosophy with the unique needs and cultures of employees in different parts of the world. As appropriate, develop customized workplace diversity programs to reflect local perspectives and starting points;

• Communicate: Explain and communicate the company's commitment to workplace diversity to all current and prospective employees, customers, suppliers, stakeholders and the public on an ongoing basis;

• Ensure Diverse Representation: Reflect workplace diversity in the company's board of directors, management and workforce;

• Implement Broad Education Programs: Educate and train board, management and all staff on workplace diversity issues on an ongoing basis;

• Include Workplace Diversity in the Planning Process: Incorporate workplace diversity goals into the strategic planning processes, and hold managers responsible for specific objectives;

• Hold Employees Accountable: Define and include workplace diversity performance as part of the annual performance evaluation and compensation review for all employees;

• Involve Employees: Encourage the formation of affinity groups and cross-functional workplace diversity councils and task forces;

• Measure Success: Identify key workplace diversity metrics and track the company’s performance on an ongoing basis. Incorporate workplace diversity questions into regular employee surveys to understand whether policies and programs are effective. Develop plans to fill gaps and ensure continuous improvement. Communicate and celebrate milestones and achievements.

Source : Business for Social Responsibility