Dealing with hard reality

The advocates of diversity in the workplace can lay claim to one very substantial achievement: they have made the complicated issues of difference and exclusion into subjects that senior figures in business, government and public sector feel comfortable talking about, and sometimes even addressing. That was never destined to happen to poor old equality. It is thus common enough to hear business leaders extolling ‘the business case’ for diversity.

Organisations prepared to allow diversity to thrive can expect more creative thinking, new customer segments, better staff motivation, and a perception of greater social legitimacy, or so the theory goes. Diversity supplements the moral imperative of equality with the imperative of rational self-interest. And by doing so, it appears to win more converts in the business world.

Yet the idea that there is a well-established ‘business case’ for diversity involves an extravagant sleight of hand which has tended to go unchallenged – even by the notionally savage and fearless national press. Why? Because everybody would very much like it to be true that being fair confers benefits – that justice is not solely its own reward. Such is the strength of feeling on this that even raising doubts about it will bring people to question the doubter’s motivation. To which the only response is that selectivity with the research, however awkward it may be, degrades the debate, and assumes that managers and businesspeople are basically simpletons.

So what does the research actually say? It says that diversity is complicated, the research is limited, and that what there is points to no clear conclusion.

There are, of course, impressive studies which give diversity the big tick. In speeches to business audiences, Trevor Phillips, chairman of the Commission for Racial Equality, habitually refers to a report from the European Commission, published in November 2003, which looked at the costs and benefits of diversity initiatives among 200 companies. The report found that diversity broadened management capacity, improved innovation, widened access to talent, and reduced staff turnover – as well as the more questionable advantage of “avoided litigation costs”. The British government and bodies such as the London Human Resource Group have also produced thoughtful testimony on corporate diversity’s behalf.

The trouble for the business case starts occurring when the field of study is widened to look at the overall picture presented by the diversity literature of the past 10 years. But who dares to do such a thing? Step forward the Chartered Institute of Personnel and Development (CIPD) – an organisation that remains fully signed up to the business case.

In Diversity: Stacking Up the Evidence, published in 2004, independent researchers examined 49 separate studies, only to decide it is “impossible to conclude whether diversity does bring net business benefits”.

The evidence is patchy. There is a preponderance of research into racial diversity and age, but far less into gender, sexual orientation, disability, and religion – let alone any of the more recherch concepts such as ‘personality diversity’ or ‘value diversity’. Equally, there are plenty of studies into how it affects work groups, but very few on a company’s overall performance, on customer relations, on sales, or on management costs.

Racial diversity is associated with improved group performance and innovation. However, it may also have a damaging impact on group communications, and could possibly lead to more conflict.

The researchers say there are probably benefits in customer communication flowing from diversity. Yet a more diverse workforce may involve more managerial time, and thereby add to costs. The CIPD hopes evidence for the business case may accrue over time.

Helen Williams, an occupational psychologist at Leeds University Business School, has also done extensive reading on diversity. As someone deeply committed to the equality agenda, her research has not always yielded happy conclusions. In task-related activities, greater diversity brings innovation. But it can also make teams less cohesive, and less able to make decisions.

“Organisations should engage with diversity – for fairness reasons as much as anything. But ‘the business case’ is complicated,” she says.
So what happens if we try and move beyond the notion that there is a simple good news story from diversity? Will businesses lose interest? Will they become more exclusive, less tolerant of difference in all its multiple forms?

This is obviously the worry of many diversity campaigners. Simple messages are easier to sell, and if they have to lower their standards of proof to encourage more businesses to overcome institutional resistance to difference, so be it. On this, the ends justify the means, they will probably think.

I disagree. It is an insult to the intelligence of managers to portray the business case as being so one-sided. Letting the sleight of hand endure testifies to a contemptuous, despairing attitude towards the people they are trying to influence that will eventually do the advocates of diversity no favours. Their cause would be more credible if it was couched in the language of risk: diversity is good for creativity, but not necessarily for team unity, for example.

But if the business case disintegrates, will we really be much worse off? Organisations will become more diverse as society becomes more diverse. The guiding principles which should aid this process of adaptation are fairness, respect and the obligation to enable everyone to give their best. These ideas never wobble.


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