I have a confession to make. I am fed up with all the talk about the business case for diversity. Why are we demanding a higher level of justification for diversity than for any other business strategy? We must realise that this search for the ultimate business case is illusory and about as much use as looking for the pot of gold at the end of a rainbow.
It is clear where the business case is strong, where it is flawed and what we need to do to move beyond it. There are four areas where the case is strong: recruitment, selection, talent management and flexible working.
Fair play
It is indisputable that if you widen the net from which you recruit, you have a better chance of getting good candidates, as you will be tapping into the talent from all groups and communities.
Having attracted good people, you then need valid, reliable, fair selection procedures. Psychology literature dating back 70 years shows that fair selection procedures lead to significantly better performance. Over the past 20 years, more emphasis has been placed on fairness of processes, and the benefits have been reaped by many.
Once the people are in, you need to identify, nurture and promote talent. Talent, by its nature, is scarce. By ensuring people are appraised, treated and managed fairly, you have a better chance of ensuring talent gets its rewards.
Finally, research has consistently shown that, managed properly, flexible working is effective.
Other arguments are flawed. Complying with the legislation is important, obviously, but defensive. The demographic argument that ethnic minority groups will account for 50% of the growth in the labour force in the next five years is certainly valid, but somewhat opportunistic – another recession would make this position redundant.
And the argument about reflecting our customers is double-edged: what if your customers are white and male?
There are some well-founded arguments, but some people, particularly senior managers, will argue that they are doing fine and do not need to change.
But why should this be the case? Why should logical, rational people resist the evidence so vehemently?
To understand this we need to understand the concept of organisational prejudice. At its simplest, it is about ‘in-groups’ and ‘out-groups’. The in-group is typically the majority, but always the one with the most power. The out-group is typically the minority, always with the least power.
The ins and outs
The in-group determines the organisational culture and what will or won’t be taken seriously. Diversity is often one of those things that the in-group dismisses as an irrelevance. So you end up with a self-fulfilling prophecy. The in-group says: “I don’t believe there is a business case for diversity, so I won’t change.” By not changing, the in-group keeps the culture the same so the benefits are not obtained.
Research by Pearn Kandola shows that if the in-group – senior management, for example – changes its behaviour, the benefits can be substantial.
It has developed diversity competencies for senior managers and assesses people on these in specially designed programmes. Follow-up work at a retail bank has shown that the effects on the business can be dramatic. For example, staff absenteeism fell by 45%, staff turnover was reduced and more women were promoted. In another organisation, the evaluation showed that employees felt more valued. All of this demonstrates increased staff engagement which, in turn, leads to better business performance.
So for those organisations which have introduced the necessary changes in systems and processes, the next big step is to look at the culture. Real changes in culture occur when the in-group reflects on its behaviour and makes the necessary changes on a personal as well as an organisational level.
This is tipping the business case on its head. Rather than identifying the benefits, to persuade our leaders to change, they need to change to get the benefits.
The real point about diversity is that it is values driven. It is about the way we want to run our organisations. And if it is about values, then the search for the ultimate business case is not only fruitless, but pointless as well.
Binna Kandola is senior partner at occupational psychologist Pearn Kandola
For more on diversity go to www.personneltoday.com
