The Benefits of Diversity

The issue of diversity has gained in prominence recently in recruitment, the charity sector and in society as a whole.  The Chartered Institute for Personnel and Development (CIPD) have written on the ‘compelling’ case for diversity and inclusion. But what exactly are the benefits to employers of diversity among their staff? The evidence is mixed, it’s not a simple case of more diversity causes better performance, but there are studies that shed light on this important issue.

Best individuals or best team?

Having a team composed of the best individuals has often been seen as the way to create successful groups. However, Scott E. Page (and others) have demonstrated that the blend of individuals involved in these teams, across thought, background, and experience, can lead to more varied, and better, knowledge and problem-solving ability.

Roger Kline has outlined that ‘merit’ and ‘diversity’ are not alternatives. Rather, successful teams ‘need both good performance and diversity’—the latter being ‘crucial to ensure a good mix of knowledge bases, analytical tools, mental models, different perspectives, experiences and information.’ When it comes to problem-solving, diverse teams often do better than homogenous teams of high performers.

Better performance

Some evidence indicates that diversity is associated with performance. Diverse companies often perform better, and diverse teams tend to make better decisions. In the private sector, teams with more equal numbers of men and women tend to be more profitable than male-dominated teams. Charities that are diverse may better reflect those who use their services.

The widest pool of talent

Research from the Credit Suisse Research Institute from 2012 showed that companies with at least one woman on the board outperformed their peers with no women on the board by 26% over the previous six years. One of the main reasons for the improved performance is that an employer ‘that achieves greater gender diversity is more likely to be able to tap into the widest possible pool of talent.’

Work from the CIPD on the psychological contract highlights that good employment practices are attractive to potential employees.  They want to feel valued at work and to be able to perform to their fullest potential. Inclusive workplace cultures matter for employees, so the more welcoming an employer is perceived to be, the more likely they are to apply to work there.

CIPD research: A mixed picture

The CIPD has written on diversity and organisational performance. The research shows that it is hard to establish a clear causal link between diversity and performance, in part because there is such diversity of diversity. Rather ‘some evidence exists to support the idea that businesses benefit from equality and diversity, but not across all types of business.’ In fact, what works in one situation may not in another.

While the CIPD cautions that it is not as simple as saying diversity equals better performance, they also point to why diversity is beneficial and when. More culturally diverse teams may be more creative, for example.

The CIPD says that, on diversity and inclusion, ‘the moral case should be sufficient’. But there are practical reasons for diversity and inclusion, as well as moral ones. Treating all employees and potential employees fairly, allowing them to ‘thrive at work’ and have ‘equal access to jobs that positively benefit them’ allows an employer to make the best use of all employees, not only some. Indeed, the CIPD highlights the benefits of diversity and inclusion for staff retention, satisfaction and wellbeing. These hold up even when links between diversity and organisational performance are not definitive.

Culture matters

Just having a diverse team isn’t enough though. For the benefits of diversity to be realised the culture must be inclusive. This makes sense, as treating diversity as a tick box exercise but not listening to all the different people involved, is limiting.

Just adding a small number of people who are ‘diverse’ or ‘different’ is not enough. That is tokenism. A ‘token’ person can be seen as the representative for all people ‘like’ them, who are treated as nothing more than their demographic characteristics, rather than their knowledge or expertise. Instead, as behavioural economist Professor Iris Bohnet has shown, a critical mass is required.

What to do

The business case for diversity and inclusion is not definitive in the sense of saying that more diverse organisations always work better. Instead, the CIPD says the case for diversity and inclusion must be ‘holistic’. This means considering ‘organisational benefits of diversity (such as enhanced employer brand, contribution to society, and reputation) alongside the benefits for individuals.’ They stress that diversity alone is not enough to succeed, all teams need the necessary levels of support.

Instead of looking at candidates in a vacuum, recruiters can look to build blended teams. Lori Nishiura Mackenzie, JoAnne Wehner, and Shelley J. Correll suggest interview panels might ask different questions such as:

• How does this person’s approach improve discussions and decisions?
• What skills and experiences are missing that this person has?
• What has this person learned from their experiences? Can they take risks and persevere through difficulties?

The CIPD highlights the importance of getting the right data to inform strategies and practice. Multiple small initiatives are not the way to create more diverse and inclusive workplaces, instead a holistic strategy is required. Using targets to increase diversity is likely to mean that the targets get met, but that nothing else changes. The ‘how’ and the ‘why’ are important.

When seeking to recruit, there are certain things all employers should consider doing:

• Make the job advert public.
• Share the advert widely.
• Use a gendered text decoder.
• Avoid jargon.
• Post a salary.
• Use anonymous recruitment.

These won’t be a silver bullet, but they will help. Read more about diversity in our Diversity Hiring Guide.