Questions continue about the value of diversity and inclusion (D&I). Too many business leaders still wonder why major companies and organizations focus on integrating these principles and practices into governance, business, and workforce management. Once viewed primarily as a “U.S. thing,” many corporations worldwide are actively working to capture the competitive business advantages promised through greater focus on diversity.
Interestingly, the U.S., once considered the leader in workplace diversity, is losing that status. According to a new report on 50 countries sponsored by Forbes Insights, U.S. companies ranked 9th behind nations including Norway, New Zealand, Iceland, Australia, Switzerland, the Netherlands and Canada.
No longer just the “right thing to do,” diversity should be approached as any other area of business, i.e. quality, safety, sustainability. Real benefits are documented. The 2011 McKinsey & Company study “Diversity Wins!” examined board diversity of 180 publicly traded companies in the U.S., U.K., Germany and France. Positive financial impact was clear: companies with the greatest diversity achieved on average 53 percent more ROE (return on equity), and 14 percent higher EBIT (earnings before interest and taxes) than the least diverse companies.
Below the Board level, a survey by E&Y/ Economist Intelligence Unit reported that the majority of 1,050 global business leaders expressed strong belief that diversity of teams and experience improves financial performance and organizational reputation.
Some of the forces driving D&I include:
- Strength and growth of emerging or developing markets, particularly Asia, India and Latin American, with unique cultural norms, languages and talent demands. Companies headquartered outside these important growth markets recognize that they cannot impose cultural standards and succeed. Deep cultural competence will be critical across leadership teams and, equally important, managers and leaders must reflect the demographics of these markets and be in positions of influence.
- Generational differences. For the first time, many companies are faced with workforces with four generations. Different values and behaviors in the workplace can impact business outcomes if not recognized and addressed. Studies conducted by Society for Human Resource Management and CNN Moneyreported:
- 35 million in the U.S. are over age 65, representing the heart of today’s management.
- About 20% of midlevel corporate employees report to a boss who is younger, which should accelerate as Baby Boomers delay retirement.
- 47% of younger workers complained older managers were resistant to change and micromanaged.About 33% of older respondents felt younger workers’ informality, need for supervision and lack of respect for authority were problematic
- Increasing presence and importance of women – Much has been written about women in the workplace. According to the U.S. Bureau of Labor Statistics, 58 percent of women over age 16 participated in the labor market in 2011, comprising 46% of the U.S. labor force. In 2009 in Canada, women’s labor force participation was 62 percent, followed by Sweden and the Netherlands at 60 percent. Women often seek the flexibility of entrepreneurial businesses, and The Center for Women’s Business Research indicates that a growing number of women are starting companies in non-traditional industries such as construction and finance. At Avon, where our mission is to be THE company for women, and we are proud that women hold 37 percent of the Vice President and above positions, including CEO, CFO and Executive Chairman, and 46 percent of Executive Director and Director roles.
At Avon, we know a part of our business success is a genuine and intentional focus to reap the benefits of diversity and inclusion. What do you think about diversity helping to improve business?