Don’t discount the diversity dividend

We tend to hear the word ‘diversity’ and think of political correctness, quotas or ‘social awareness’. It’s a term potentially covering difference in gender, culture, age, sexuality and language.

When we look at increasing the diversity of a company board, or its senior management, we too often adopt a yawn-inducing tone of obligation. Like it’s about a moral decision rather than a business one.

But perhaps we’ve got that wrong.

Diversity in business – while yes, bringing its own set of challenges – is being rightly seen more and more as an advantage in multicultural societies, where we’re catering to younger generations who increasingly see the world as without real geographical boundaries.

We can travel as much as our income will allow; we can marry someone on the other side of the world we met online; we can conduct a business with those on a different continent. We can even learn another language through a $5 app.

A transnational world

We are also seeing a new group of global citizens – ‘transnational migrants’ – who have fluid ethnic identities and a complex sense of home.

But if you take a look at the board and senior management of Australia’s biggest companies and institutions, they rarely reflect the diversity of our modern society.

New Zealander law expert Mai Chen spoke at the Women World Changers Summit I recently attended in Melbourne. Ms Chen is Managing Partner at Chen Palmer, Professor at the University of Auckland School of Law, Director of BNZ and a best-selling author.

Her topic was superdiversity – a term referring to the proportion and number of ethnicities in one place. Melbourne, she noted, is one of the world’s most superdiverse cities with 26% of our population born overseas and originating from more than 150 countries (source: Victorian Multicultural Commission, 2015).

That’s not even taking into account second generation Australians (born here but with at least one parent born overseas) which in 2011 made up 20% of the population. Such statistics suggest that the homogeneity present in our top leadership positions is not so much ‘natural’ but habitual. Is it really meritocracy or is it the power of the status quo?

Diversifying diversity

Also mingled with the term superdiversity is the idea of a diversity of diversity. This refers to individuals who tick more than one box on the ‘diversity’ checklist, for example women of mixed ethnicity, disabled migrants or aging LGBTIQ people.

The people who once were marginalised by the term ‘minorities’ could potentially, collectively, become the majority as more and more people migrate and inter-marry.

What does this mean for business?

In Ms Chen’s ‘Superdiversity Stocktake’ report released last year she talks about the implications of superdiversity for business and the government in NZ.

On the topic of migrants, she outlines this advantage: “Businesses will only retain market share if they win more diverse customers. Migrant customers, including tourists, represent a significant, untapped revenue stream for some businesses.

“The advantage of migrant customers is that they are new in New Zealand, so businesses do not have to win them away from competing businesses.”

The report cites several case studies showing the success of diverse workforces, when properly cultivated. One such example is Beca, a 3000 strong professional services consultancy in the Asia Pacific region.

Beca is 100 per cent employee-owned, and as at 2015 had more than 50 nationalities and 70 languages represented among its staff.

During the 2000s, Matt Ensor – the current business director at Beca – actively recruited staff from Asia to meet demand from a boom in global engineering. The percentage of migrants in Beca’s team went from almost none in 2002 to approximately 50 per cent a few years later.

To meet the challenges involved in a culturally diverse workforce, Mr Ensor developed a tailor-made development program for staff outlining nine ‘cultural mysteries’ that make employees successful in a New Zealand business.

“The team became the most successful of its type in New Zealand, and is now a talent magnet that attracts the best transport engineers in the world,” the report said. Mr Ensor still works at Beca and externally promotes the benefits of effective cultural diversity leadership practices.

Checking in on gender diversity

When it comes to increasing the number of women leaders in business we have made good strides in Australia, and across the world, but there is still a lot of ground left to cover.

More and more companies are seeing the benefits of having female representation on their boards, or having women head up their teams. This changes the conversation from what businesses ‘should’ care about to what they need to care about for their success.

In this AFR article on CEO bonuses relating to diversity quotas, Group Executive at Investa, Michael Cook, claims some people believe bonuses for meeting diversity quotas are patronising.

“We have diversity targets and we are reaping the benefit, but we don’t use bonuses,” Mr Cook said. “I think our senior female staff would be offended if we were to introduce ‘bonuses’ to increase diversity.

“It is condescending and totally disingenuous. Some of our young top performing women are tired and bored by the debate. They don’t want Prince Charming on a white horse. They want opportunity, training, career development and a fair go.”

Ms Lloyd-Hurwitz told AFR in a separate article that, “all the research tells us that diverse teams make better business decisions. We’ve got to be, as an industry, a lot more open to different points of view and inclusion. It’s not just gender, its background, education, sexual orientation, where people come from.”

What continues to present barriers to the progress of women across professional industries is pay inequality, lack of diversity in senior positions (creating a self-perpetuating status quo) and the old ‘boys club’ culture that still dominates a number of industries.

It’s all about the customer

Coming back to the heart of the discussion as far as business goes, Ms Chen emphasised again and again in her Women World Changers Summit: “It comes back to KYC: Know Your Customer.”

No matter where you are or what you are offering, your customers are not just one gender or one ethnicity – if, in fact, they ever were.

If you cater to a mostly European and mostly male demographic, because that’s the composition of your top brains trust, you are set to lose out.

Superdiversity is likely to become less ‘super’ and more the norm.