How ethnic diversity leads to business success

By 2038, Auckland is projected to be a super diverse city, with Europeans making up 47% of the population, more than a third Asian, and Pacific and Māori around 20% of Auckland’s residents respectively.[1] With over 213 ethnicities represented within our population, Aotearoa New Zealand is becoming increasingly diverse.[2] Yet, problematically, not all of our workplaces are responding to the advantages that ethnic diversity brings to organisations. Research by Kantar TNS for M2Woman magazine revealed that just 15 percent of senior business leaders of think they should be taking more action towards promoting diversity.[3]

In this article we look at some of the advantages of ethnically diverse workplaces, as well as examples of organisations who have been succeeding in this area.

Ethnically diverse leadership drives profitability

Using 2014 data, McKinsey and Company found that companies with the most ethnically diverse executive teams are 33 percent more likely to outperform their peers on profitability.[4] It offers up the following analysis on the business gains to be made under diverse leadership:

Our research confirms that gender, ethnic, and cultural diversity, particularly within executive teams, continue to be correlated to financial performance across multiple countries worldwide. In our 2015 report, our hypotheses about what drives this correlation were that more diverse companies are better able to attract top talent; to improve their customer orientation, employee satisfaction, and decision making; and to secure their license to operate.[5]

Increased innovation through diverse perspectives

Research by the Hamilton Project concludes that highly-skilled immigration increases innovation.[6] On this point Kantar TNS executive director Emma Eichbaum has made the following observation: “Diverse environments where all staff feel like they have a voice have been shown to be more innovative. Non-diverse environments on the other hand can lead to a lot of “group think” and act as somewhat of an echo chamber for ideas.”[7] Eichbaum’s view is supported by a Forbes survey: “respondents overwhelmingly agreed that a diverse and inclusive workforce brings the different perspectives that a company needs to power its innovation strategy”.[8]

Problem solving and targeting products for diverse customers

Higher levels of ethnic diversity in the workplace can increase revenue by 15 percent.[9] Sudipto Das, contributor to Entrepreneur Magazine, explains why ethnically diverse workplaces may be able to solve problems better than their less diverse counterparts:

People from diverse backgrounds think, learn and react differently. They often possess different sets of exquisite skills and traditional knowledge, acquired and perfected over time in distant and different parts of the world.[10]

Diversity can help workplaces to build products which relate to diverse audiences. Marketing expert Ettore Fantin-Yusta gives the example of the growth of online sharing service Napster which worked with a diverse group of developers. “Their young age and diverse backgrounds allowed them to develop for an audience that no large corporation could despite several attempts.”[11]

Examples of organisations promoting ethnic diversity

In 2018, Forbes highlighted four large offshore companies who are championing positive diverse and inclusive workplaces: Accenture PLC, Medtronic PLC, Diageo PLC, and Gap Inc.[12]But closer to home, how are organisations faring in terms of diversity in New Zealand? In terms of public sector success, the Ministry of Defence won a supreme award in the 2018 Diversity Awards New Zealand. This was for its Sexual Ethics and Respectful Relating Programme taught to all staff and designed to make difficult conversation easier in a traditionally hierarchical and masculine organisation.[13]

Telecommunications company Spark is one example of a private company with an active diversity and inclusion policy.[14] This includes cultural events, an LGBTQI+ forum, and specific professional opportunities for women and Māori. Former CEO, Simon Moutter was interviewed about a speech he gave at the 2017 Global Women 1 Day for Change summit, in which he spoke of the importance of change for diversity and inclusion coming from within the company.

Moutter says though his speech was focused on gender, it lifted the cover off the issue of diversity and inclusion within Spark in a range of areas, such as ethnicity, sexuality, religion, and gender. Traditional routes and processes such as strategies and access points were discarded in favour of a movement by the people, for the people, and Spark experienced an explosion of inclusivity, he says.[15]

What we can do as individuals?

While there are obvious business advantages to having more diverse workplaces, perhaps there is also a more apparent social imperative. As individuals we can all contribute to the experience and values of other in an increasingly diverse New Zealand society. Somalia born and New Zealand raised community activist Guled Mire summarises this well:

[W]e all have a part to play in shaping a much more inclusive, diverse, welcoming, humane Aotearoa. […] Reach out to those who come from a different background. Try to get to know them and hear a bit about their story. That can go a long way in helping shape the society we want for our future generations.[16]

 

About Dr Anita Perkins – Anita is a Wellington-based researcher / writer with expertise in culture, environment and international relations.

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