The Competitive Advantage of Diverse Perspectives
Derven, Marjorie, Talent Development
Numerous trends have converged to make diversity and inclusion (D&I) a business imperative. Organizations are increasingly global, and changing demographics are transforming the way they attract, retain, and develop their talent. In addition, slowing growth in developed countries has propelled expansion to emerging, previously untapped markets, and customers require innovative solutions.
What it means
Internally, D&I promotes capturing the best available talent and creating an environment in which diverse perspectives encourage innovation and improved decision making. Externally, it focuses on understanding ethnic, cultural, religious, and other differences to better capture market share.
With compelling evidence that a focus on D&I will improve bottom line results, organizations ignore this at their own peril. Over a 10-year period, DiversityInc.'s Top 50 Companies outperformed the Dow Jones Industrial Average by 22 percent and NASDAQ by 28 percent, according to Catalyst. Dramatic results from McKinsey & Company that demonstrate the impact of executive-board diversity in the United States, France, Germany, and the United Kingdom show that companies that ranked in the top quartile for diversity had returns on equity that were 53 percent higher, on average, than those for the least diverse companies.
Changing perspectives on D&I
Understanding about D&I has shifted within the United States from an early emphasis on reducing legal risk and accommodation to a broader view of enhancing differences for advantage. Elizabeth Nieto, global chief diversity and inclusion officer for MetLife, which operates in more than 40 countries, has seen this evolution first-hand.
"In the U.S., we've evolved from being legislation- and compliance-focused and ensuring access to educational and work opportunities, to viewing diversity and inclusion as a competitive business advantage," she says. "Globally, customers have changed and companies need to adapt and serve a broader sector of clients and communities or they will disappear from the marketplace. Businesses need to ask themselves, 'Who is making the purchasing decisions? Do we understand their emerging needs?'"
With globalization as a key driver for business success, coupled with seismic demographic change, being successful in D&I requires knowledge of differences outside of U.S. borders. Ernie Gundling, president of Aperian Global and editor of Global Diversity, says, "We need to broaden our definitions of D&I, which has a very different meaning globally when compared to a U.S.-centric perspective. It's essential to look at diversity and inclusion through the lens of each country."
In addition to race, ethnicity, and gender (core elements of diversity in the United States), other factors such as age, socioeconomic status, educational background, and religion may play a role in different countries that are equally if not more critical. Using Japan as an example, Gundling explains that with its "extremely low birthrate and a population that has already begun to shrink, a defining diversity factor is generational. There is a major disparity between older and younger members of society that has an impact on consumer behaviors, workplace attitudes, teamwork, and appetite for risk taking."
Terry Hogan, co-author of What is Global Leadership? and director of Citi Talent Management at Citigroup (which operates in 160 countries), sees complexity as a crucial competency today to adapt and thrive. Hogan, who delivers leadership development that promotes these attributes, says, "Organizations thrive on leaders who have the capability of solving complex problems and recognizing opportunities. When people understand their own assumptions, mental maps, and cultural dictates, they become more capable of understanding and including others' ideas. …