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January 22, 2016

Organizational Diversity: The Differentiation Is In The Difference

Posted by Shamita Chatterjee (View Profile | View All Posts) at 4:15 AM

Culture Café - Turkey [Source: https://www.youtube.com/watch?v=9lA2AjlXTVE]

In an increasingly multicultural and globalized business environment, workplace diversity is a competitive advantage. Over the years there have been many studies that have established a correlation between diversity and stock market performance, return on equity, and innovation.

As markets become more heterogeneous in terms of culture, ethnicity and gender, it becomes imperative for businesses to build teams that are representative of their customer base. Beyond demographic diversity, organizations should also foster cognitive diversity so they can benefit from the broader worldview, thinking processes, beliefs and value systems of their employees. And finally, a strategic focus on diversity would help organizations recruit from a wider and deeper talent pool and enhance the value of their human capital.

Diversity, then, is no longer about compliance or compassion. It is, as I mentioned earlier, about competitive differentiation and advantage. Diversity strategies must therefore focus on two critical factors, among many others.

The first is ensuring alignment with the existing organizational culture. Or vice versa. Diversity can only thrive in a culture that is proactively committed to managing it as an enterprise asset. It is therefore essential to assess how ready the existing culture is to embrace diversity and then orchestrate the diversity strategies along with those for cultural transformation. Unless diversity is embedded in the vision, values and beliefs of the business, most strategies will at best yield very limited and tactical organizational benefits.

The second is alignment with business goals. Unless leaders are able to clearly articulate the business imperative for diversity it will be almost impossible to define or measure the ROI of its strategy. Sometimes the imperative could be as straightforward as the need to enter a new market or address a significant change in the company's existing customer base. In other cases, it could be to raise the level of creativity and innovation within the business. It is therefore extremely important that an enterprise defines the performance metrics of its diversity strategy in terms of tangible business outcomes.

Take the example of a global consumer packaged goods company that featured consistently on the DiversityInc Top 50 list. The company had successfully created resource groups to generate new ideas for products targeted at underrepresented groups. And yet, its diversity rankings continued to flatline. It turned out that the company had not defined the key performance metrics of the resource groups. Without a tracking framework, it becomes quite difficult to commit the resources required to tweak or expand the program.

Also in order to achieve long-term success, diversity programs need the full commitment and support of top management. Their commitment and vision for diversity has to be effectively communicated to the entire workforce to ensure buy-in at all levels of the enterprise. Needless to reiterate, they also need to have formal structures in place to allocate resources, define accountability and monitor and manage the diversity program as it evolves.

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