The Business Case for Organizational Diversity

The Business Case for Diversity

The articles in this module so far have focused on how organizational diversity makes eminent sense from legal compliance and value based perspectives. The discussion so far was about how organizations must embrace diversity as a value based imperative and for furthering corporate social responsibility.

This article examines the business case for diversity and finds that not only do organizations have to pursue values they also have a strong business case for encouraging diversity. The reasons for this are to do with the increasingly heterogeneous nature of the customer base, the globalization imperative that makes diversity a precursor to growth, the looming talent crunch which translates into recruiting diverse teams as a way of avoiding it, and finally the changing imperatives of corporate leadership that confronts decision making in an increasingly uncertain world.

The Heterogeneous Nature of the Customer Base

It is no longer the case that the customers are made up of monolithic wholes that exhibit consistent and uniform patterns of behavior. On the other hand, the customer base for many companies has splintered into ethnic, racial, gender and other segmentations which means that organizations have to encourage diversity in their workforce to tackle the aspirations of the fragmented customer bases.

A New Mix of Employees is needed for Globalization

The fact that many companies are growing at scorching pace outside of the developed markets means that these companies need to have culturally, racially, and ethnically diverse employees in the target markets and hence they need to encourage diversity. The point here is that there is a premium on employees who can understand these markets better and hence there is a need for these employees to be recruited.

The Looming Talent Crunch

We had previously discussed how diversity casts the net wide and results in better talent. Combined with the looming talent crunch among the traditional employee segments, companies would be left with no choice but to recruit a workforce that is as diverse as possible and which results in the companies gaining competitive advantage over their rivals. The point here is that it is no longer values or CSR imperatives that drive diversity based practices. Instead, there is a compelling case to be made for economic and business imperatives as the drivers to encourage diversity.

The Changing Nature of Corporate Leadership

Given the global odds that corporate leaders face in these times, decision-making is no longer linear or sequential and hence, the corporate leaders need to have as diverse a team as possible to ensure that they intuit and sense the market better than their competitors’ sense. The need of the hour is to go beyond traditional notions of corporate leadership and instead, draw upon a set of diverse inputs and suggestions that encourage multiple viewpoints and multiple perspectives.

Finally, diversity is not only needed from legal and ethical or social expectations and instead, as this article discussed; there are compelling business reasons for encouraging diversity. The point to be noted is that diversity makes for eminent business sense and hence, it must be hardwired into the organizational DNA. We shall discuss this in detail in subsequent articles.


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