How companies mistakenly try to use diversity
What comes to your mind when companies talk about diversity? Or even better, what did you think about when you saw all their Twitter accounts changing into rainbow logos this June?
I, personally, felt really happy when I saw diversity initiatives not only in companies in Brazil, but also in companies from the town where I live, Florianopolis. But when you stop to really think about it, don’t you have this annoying little thought in the back of your head saying that this is just a new trend and maybe one day it will pass?
Well, I certainly have thought that the way some companies tackle diversity feels forced. To paraphrase a great sketch from CollegeHumor, it seems like diversity is in. And, as it’s said in the sketch, this is a very dangerous way of putting things, as it implies that someday it may be out.
There are really simple examples that show companies buying into the ‘diversity as a trend’ way of thinking; concepts like ‘Pink Money’ (or ‘Pink Dollar’ for the us) show this way of using minorities’ fights to tap into new markets. Forbes has recently posted an article that exposes companies that actively tried to undermine LGBTQI+ rights, but still changed their logos. This type of utilization of minorities, although somewhat beneficial as it raises awareness, does not show how diversity is putting its roots into the work market.
If the only diversity thread happening in the work market was that companies were realizing that supporting the causes of minority groups would lead said groups to use their products (omg who would have thought), I would agree that diversity is only a passing fad! But, fortunately, this subject has many branches.
How can companies effectively use diversity
In an increasing pace, analysts are realizing that having a diverse workforce is not only desirable, but practically a necessity. And this is not an obscure factoid, this is completely backed by numbers. If you ask any stock broker how to effectively invest your money, he will tell you to diversify your investments; but how does this apply to a company’s workforce?
Studies performed across the globe by the consulting giant McKinsey have shown that companies in the top quartile of racial or ethnic diversity outperform the average competitor by 35% (this value is calculated in Earnings Before Interest and Taxes). And that’s not even the whole story, companies in the bottom quartile underperform. There is an almost linear equation between racial and ethnic diversity and performance.
This is one of the awesome things about this subject. It’s a mathematical fact that a diverse workforce with a diverse leadership leads to an increase in competitivity in the national market. It’s not only someone theorizing about productivity because of some sort of social justice, it’s a straight up mathematical fact.
I agree that correlation does not imply causation, just like your average engineering student would; but this is a study made in over 1000 companies in 12 countries. On top of that, it uses a data set that showed nearly linear results, so it’s undeniable that there is a relation between diversity in a company’s workforce and administration, and a better result in financial performance.
How can you define diversity
I have said the word diversity exactly 10 times in this article. I know it has an intuitive concept, but I feel like it’s important to state that, although the numbers in McKinsey’s ‘Diversity Matters’ report are about specific minorities like gender, ethnicity and race, diversity is about every other characteristic that makes us unique. The smallest minority is the individual, and every person with a different background will have a different perspective on an issue.
As such, a company that fosters diversity allows its employees to express themselves as they feel, building a work environment that encourages its employees to share their ideas, which in turn, shields the company from decisions ruled by groupthink. This type of administration will lead to a workforce with different religions, generations, sexual identities and orientation. For this to happen, it is common to pair the word diversity with the word inclusion; a phrase that I really like that explains the difference between diversity and inclusion is: ‘diversity is being invited to the party, inclusion is being offered a piece of the cheesecake’ (maybe I altered it a bit, sue me).
This means that a company that wants to invest in diversity, needs to have it in its very core. Diversity must be written in caps in the very culture of a company and its people. It will have no effect to hire looking for the most diverse backgrounds and then subdue your employees into accepting a given opinion and holding on to theirs. This set of companies must make it redundantly clear that any commentary is valid, and any attempt at silencing someone would be far beyond acceptable.
I hope you reached the same answer that I have for that initial question. So, is diversity a passing fad? No, it is not! Diversity is everywhere. We live in a diverse world and that is a simple fact. No one will outperform their peers because of phenotypic characteristics, and restraining your workforce because of a bias that you most likely don’t even know you have (unconscious bias, look it up) will only lead you down a road of under performance.
And in this line of thought, taking minorities that fight for their freedom to live their lives as they please, and using their causes for 1 month and then forgetting about them for the other 11 is a social disservice; and if you, my dear reader, is one of those minorities, research the companies you want to support, you may find yourself donating to the very people that would have you thrown out of your way of life.
Last but certainly not least, if you would like to know a little better how Cheesecake Labs deals with diversity, I strongly recommend reading this post by one of our collaborators, the amazing Celso Mateus.
Thanks for giving me some of your time, and being interested in this subject. If you want to read more about it I’ll leave some posts and videos that strongly influenced me in the references.