Diversity and profit: there is a link

A more diverse workforce can create challenges and complications for managers but “makes for greater rewards" Prof Ian Williamson tells the World Congress of Accountants (WCOA).

A more culturally and demographically diverse workforce drives an organisation to be more relevant, innovative and ultimately more profitable, the World Congress of Accountants (WCOA) heard.

Professor Ian Williamson, pro vice chancellor and dean of commerce at Wellington’s Victoria Business School, said that in a business environment facing severe talent shortages, diversity was the solution not only to shoring up staff numbers but had significantly positive impacts on organisational performance.

Williamson quoted US research from recruitment firm Korn Ferry, which forecast an Asia-Pacific shortage of 47 million skilled workers by 2030, creating US$4.2 trillion in “opportunity cost.”

When organisations thought about disruption they usually focused on changes in technology, customer preferences or the competition landscape, but the biggest disruptor was in demographic changes and social issues.

“Human capital will become the scarcest factor,” he said.

Diversity breeds innovation

More diverse workforces, said Williamson, were better at the “invention process” and generated more creative ideas.

There was also more “devil’s advocacy” so that ideas were also challenged; this led to “better invention.”

Williamson said he had observed four types of attitudes among organisations to workplace diversity: some organisations were resistant and viewed it as a cost, others took a compliance approach while a third approach was legalistic and moralistic, where organisations believed they were obliged to embrace diversity.

Organisations in this third category were committed to “do the right thing when it is convenient, but when it is inconvenient they find it is not so easy to do”.

Related: See CPA Australia’s full WCOA 2018 coverage here

A fourth, and more productive approach, was to integrate diversity as an organisation-wide strategy.

“I believe these organisations have an increasing competitive advantage,” said Williamson.

How diversity impacts profit

He told WCOA an anecdote from his own business experience as a manager of supermarkets in America’s Midwest.

As a manager of multiple supermarkets in different towns and cities, he had observed the performance of stores where a diverse workforce had served the needs of a diverse community.

These stores had been significantly more profitable than others where the staff was comprised of a narrow demographic, but needed to serve a diverse customer base.

“These stores with a homogeneous workforce could never understand what customers wanted and didn’t know what to put on the shelf,” Williamson said.

“By far the most successful store was the one with a diverse workforce and diverse customers, because it could do more for more people.

“If you serve a wide variety of people you will need to have a diverse workforce.”

A more diverse workforce created challenges and complications for managers but “makes for greater rewards”.

Workers, for example, were motivated by different rewards and incentives. US studies suggested that accountants were motivated by financial rewards, while those in IT put a greater value on work variety.

Female workers were more motivated by working environments where there were social rewards.

“This suggests that the way to manage this diversity is to offer a diversity of rewards,” Williamson said.

“Don’t assume you know what they want or [that] they want the same things as you.”

He suggested a “buffet” approach where organisations could offer credits for overtime and bonuses, allowing employees to select from options around financial remuneration, flexible work and time off to suit themselves.

“Diversity is part of the growth agenda,” says Professor Williamson.

“The hiring, and managing, of diverse employees enables firms to better serve their communities and there is a link between diversity and performance.”

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