The Business Case For Diversity

When Dian Griesel sits down for her weekly staff meetings at DGI Comm in New York City, she’s always grateful for the variety of the employees around her. “Our ages run from 25 to over 60,” says Griesel, president of the public relations firm. “We come from all races, walks of life, education and backgrounds. Each of our employees brings something unique to the table.”

She believes that since their “public” is diverse, so should the workforce be. “I can’t count how many times my staff and I have sat at a table to discuss a client crisis situation or a product launch and how invaluable it’s been to have all different viewpoints,” she says. “It benefits our firm yes, but more importantly it benefits our clients. We are ten steps ahead of them because we’ve already weighed every possible angle.”

Diversity has become a business imperative that affects the bottom line. A growing body of research shows that companies with a diverse blend of employees outperform their peers. Companies in the top quartile for gender or racial and ethnic diversity are 35% more likely to have financial returns above the national industry medians, according to a McKinsey study called Why Diversity Matters.

More Options For Customers

Another study, from the Harvard Kennedy School, made a clear case that diversity benefits startups. In the study, 500 business students were randomly assigned to 45 groups to start a venture. Teams with lower percentages of women had lower sales and lower profits than teams with a balanced gender mix. Profits increased as the share of women increased up to 50%, but then leveled out.

A study by Katherine Phillips, a professor at Kellogg, found that adding even one employee from a different background can get people out of their comfort zones and thinking differently about a situation.

Having diversity has kept DGI Comm fresh and edgier than if it didn’t have younger employees. Griesel says: “It gives us more options to present to our clients. We do have clients who come to us and ask us to target certain age groups and we are able to do that successfully.”

Entry-Level Diversity

The good news: Small businesses have a diverse ethnic and gender blend of entry level employees, according to a study by the Small Business Majority. About seven out of 10 small businesses have at least one female employee; a quarter have at least one Hispanic employee; 6% have at least one American Indian or Alaskan native employee; and 5% have at least one Asian or Pacific Islander employee.

That said, the picture wasn’t as rosy when it came to employees above the entry-level point. In that case, 35% of higher-level workers are women, 9% African-American, 8% Hispanic, 2% American Indian or Alaska natives, 1% Asian Pacific Islanders. However, nearly a third of small business owners in the survey plan to increase the diversity of their upper-level employees in the next few years.

How to Diversify

Rieva Lesonsky, writing in SmallBizDaily, provides three suggestions for diversifying a small-business workplace:

Find new sources of job candidates.

Reach out to people outside your general social circle and share job openings on sites or with organizations that cater to minority, female or disabled workers.

Encourage employees to recruit friends and acquaintances.

Diverse entry-level employees who reach out to others in their social circles will likely bring more diverse job candidates into your orbit.

Recruit outside your local area.

Since urban areas are often more diverse than rural or suburban locations, reach out to nearby cities.

Keep in mind there are also challenges to managing a diverse workforce. As Pennsylvania State University researchers note, “Managing diversity is more than simply acknowledging differences in people. It involves recognizing the value of differences, combating discrimination, and promoting inclusiveness.”

Employees must feel secure they have a chance to express their views and will be listened to. Employers need to be aware of their own personal biases, as well. It’s not necessarily a simple or easy process. However, small businesses that embrace diversity can potentially expect a rush of new creativity, productivity and a happier workforce.

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