Employers fail to reap the business benefits of workplace diversity

by 19 Sep 2012

Alison Tickner writes that although there is extensive awareness of the importance of diversity and inclusion within Australia, organisations have chosen to put all their eggs in one diversity basket.

The benefits of a truly diverse workforce have long been discussed in the business community.  In April 2012, a report by McKinsey  showed global businesses that are ranked in the top quartile of executive-board diversity receive a return on equity that average 53% higher than businesses in the bottom quartile.

Companies perform better when they have genuine employee diversity with staff from different backgrounds providing fresh perspectives, insights and expertise. Diversity isn’t about ticking boxes or being politically correct – it’s about building an organisation that avoids a herd mentality and delivers better business outcomes. Mercer recently completed a study on the diversity and inclusion strategies of employers in Australia and Asia, which revealed business leaders have a high level of awareness about the importance of workforce diversity but are failing to implement a range of strategies to meet critical business needs.

The findings demonstrate there is extensive awareness of the importance of diversity and inclusion within Australia with 70% of respondents believing their employer has a diversity and inclusion strategy in place. However, organisations have chosen to put all their eggs in one diversity basket with companies revealing their strategy is heavily focused towards gender equality (see below).  The results show Australian organisations are failing to tap into their most experienced and available talent: older workers.

When respondents were asked to identify the key diversity issues currently impacting Australia, leaders recognised the shift towards an older workforce (58%), yet they are failing to translate this to their business strategy and workforce planning. Avoiding investment to support the evolving needs of older employees will only exacerbate Australia’s current skill-shortage, as baby boomers drop out of the workforce taking their experience and knowledge with them. 

Improved diversity programs must be led by the top ranks of management - yet Mercer’s findings reveal leaders are failing to translate their words into action with many “talking the talk” about diversity and inclusion but in reality failing to “walk the walk”. Business leaders’ failure to enforce action from their managers will inevitably result in ineffective implementation. Improved communication of initiatives from the top down is vital to ensure these policies and initiatives become the norm.

An important element in this process is instigating cultural change within middle management, particularly around misguided perceptions that flexible strategies to promote diversity cannot be accommodated for most roles - in fact 74% of respondents in Mercer’s survey believe there are genuine barriers that prevent their organisation from implementing diversity and inclusion strategy. It’s vital leaders focus on aligning their diversity objectives with talent management strategies to drive real change and achieve successful performance outcomes.

The principles below provide a guide for employers to achieve effective diversity and inclusion strategies.

1. Increase leadership participation

Top leadership commitment can be secured when diversity and inclusion strategies are viewed as a business imperative and aligned with the overall business and workforce strategy.

2. What gets measured gets done

Because diversity and inclusion strategies involve a long-term investment, change will not come within a few months. It’s important to measure and track all levels of diversity within the organisation and make leaders, from senior to middle management, accountable for improvement in these metrics.

3. The business case: Focus on what matters as a start

For companies just starting to develop a diversity and inclusion strategy, targeting many topics will stretch resources too thin. For those who implemented their initiatives years ago, the question is how to ensure those practices are still relevant. The key in both cases is to focus on what matters most to the business. This means the strategy will be different for each company, so while gender balance, for example, may be an important business goal for one, it may not be for another.

4. Communication is key

Diversity and inclusion strategies can be important to both business success and branding, but only when the strategies are successfully communicated across the company will they succeed. Among the companies surveyed by Mercer, over 76% use their diversity strategy as a branding proposition because they see it as a competitive advantage. Having a diversity and inclusion strategy enables companies to not only attract and retain the best talent, but also to leverage that talent to target segmented customer populations and bring innovation and creative thinking to the business. To be most effective, diversity and inclusion should be embedded in all HR practices and policies and linked to business goals.


About the author

Alison Tickner is the Head of Leadership, Diversity and Learning Solutions (Asia Pacific) at Mercer