As part of a growing awareness that gender, age and cultural diversity in an enterprise make economic sense, managers are increasingly embracing a variety of benefits that a broad demographic mix can bring and aim to link this to a company’s innovation strategy.
Through what is often called the business case for diversity, senior executives are working to turn different experiences, perspectives and backgrounds within their own organizations into a spark for innovation. With the number of qualified men stable or falling in many professions, women’s chances are increasing. “We need all the available talent,” says Viviane Reding, European commissioner for justice, fundamental rights and citizenship. “We cannot afford to ignore women.”
The latest research illustrates this trend: according to a recent study by Forbes Insights, executives see a broad demographic mix as critical to their success on a global scale, and a majority agree that employee diversity fosters innovation in the workplace (
Global Diversity and Inclusion, 2011).
US corporations Mattel and PepsiCo have found ways to engage groups of their own employees for advice on culturally sensitive product development and product launches. PepsiCo sought guidance with guacamole-flavored Doritos, and the senior management of Mattel, the toy company, brought together a group of African-American employees to advise the marketing team on the launch of a new line of dolls targeting African-American girls. The group made suggestions on the name of the line, the look of the products and even the names given to each individual doll.
A PRAGMATIC APPROACH
These efforts are something a host of policy-makers and academics would applaud, and something they are trying to encourage in other companies. In her role at the European Commission, Viviane Reding has championed a more diverse workforce as a means to keep Europe’s economies competitive. “Our wealth in Europe is our cultural diversity,” she says. Reding is a strong supporter of quotas for women on the boards of European companies. She calls for them as a pragmatic approach to boost a corporation’s bottom line rather than as part of a feminist agenda. Indeed, a report by Credit Suisse recently concluded that having a woman on the board can help a company’s stock perform better (
Gender Diversity and the Impact on Corporate Performance, 2012). And since women make 80% of purchase decisions in a family, their perspective can be a valuable market insight for a company.
Reding promotes diversity in the corporate world as a potential solution to demographic challenges in Europe, namely an aging workforce and a shrinking pool of qualified workers. “If we want our societies and economies to continue as they are now, we need women – because we simply don’t have enough men,” she said.
AGE DIVERSITY AND KNOWLEDGE RETENTION
In addition to cultural and gender diversity, having employees of a wide range of ages can be a competitive advantage if companies set the right parameters and adapt their policies to a changing demographic, says Sam Greenfield, an employer engagement specialist at the Sloan Center on Aging & Work at Boston College. Greenfield researches how companies manage different generations in their workforce and says that firms are starting to realize the benefits of having older, more experienced workers in their team. “Companies are looking at how best to engage their older employees because they now see the value of retaining them instead of spending money to recruit new, younger people,” says Greenfield.
Senior management must make its commitment to gender diversity more visible, and one way is with a compelling business case, says the latest Women Matter report by McKinsey. The 2012 report says the need to hire the best and brightest is reason enough, but cites other reasons: to sustain client relationships with customers that employ a high number of women; to offer insights about female purchasing behavior; or to improve the company’s reputation on the market.
Specifically, companies offer older workers flexible schedules to spend more time with their grandchildren or a chance to transfer to a warmer climate during the winter months. They are also adapting their training approach for the older generation. Greenfield says, “We can’t simply assume that as someone turns 60, he or she is likely to slow down.” To avoid a cultural gap between older and younger employees, the insurance company The Hartford has set up a reverse mentoring program in which younger employees advise their older counterparts on matters of new technology and social media.
Still, the success of such programs depends on how they are implemented. Workplace diversity programs require a nuanced approach, partly because diversity indicators can be deceptive, says Amine Ouazad, an assistant professor of economics and political science at the business school and research institute INSEAD. Who is to say, after all, that having an older woman and a younger man working at the same company means those two individuals approach problems with a different mindset? “There are many dimensions of diversity, many of which are overlooked,” says Ouazad. “There’s social and economic diversity and diversity in educational backgrounds. People cannot be defined by a single dimension.”
Demographically diverse teams are likely to perform better. © Alamy