The Business Case for Diversity: How Companies Keep Their Competitive Edge

For many businesses, diversity is a smart choice. But experts in the field agree that in coming years, diversity will be required of organizations to remain competitive in the shifting marketplace.

“The ability for an organization to remain competitive will be dependent upon its ability to mold to the changing workplace,” says Donna DeBerry, president of DRP International, a diversity consulting firm. This includes retiring baby boomers, an increasing number of women and immigrants, and generations X and Y, which tend to be more inclusive than their predecessors, she says.

Diversity in the workplace is the result of changes in U.S. demographics. Among these are shifts within the country’s racial and ethnic makeup. People of color have reached 104.6 million, or 34 percent of the total population, according to a May 2009 release by the U.S. Census Bureau. California has the highest number of Hispanics with 13.5 million, an increase of 313,000 in one year.

Source: U.S. Census Bureau

Source: U.S. Census Bureau

But the demographic shift that is creating a new customer base and workforce is not the only reason companies should incorporate diversity into their business strategy. Increased globalization, innovation, improved financial results and employee retention are all part of a growing business case for diversity.

The Business Case

“Embracing a culture of diversity helps to improve financial results,” says DeBerry. Diversity also strengthens a company’s brand, unifies the corporate culture and empowers stakeholders, she adds.

“It’s all about that innovation that happens with a diverse team of people,” she says. “They bring in diverse cultures, skills and talents to a team. There is a purity that exists in a group of people when you have all these experiences together.”

In today’s new economy, success requires a global perspective as well as knowledge of other cultures, says DeBerry. Whether doing business in the U.S. or internationally, she adds, people want to see others who look like them in their local businesses. Employees will work at companies where they feel welcomed and valued.

Marilyn Nagel, director of global inclusion and diversity for Cisco Systems Inc., says the link between innovation and diversity is clear. Companies that are more diverse regularly outperform companies that are not because they have stronger teamwork and a greater understanding of customers, partners and suppliers.

“This is a business issue,” says Lia Shigemura, assistant vice president for diversity, inclusion and training at ABM Industries Incorporated. “Clearly there is self-interest here as we understand that effectively managing diversity impacts business success.  [At ABM], if we successfully create this environment, our employees will more fully engage and offer ideas and solutions to help exceed our customers’ expectations.”

Successful Recruitment

When implementing diversity initiatives, recruitment and retention are two major areas of focus, DeBerry says. “Companies are scrambling for diverse talent,” she adds. “And when you talk about evolving and really getting it, the innate place it has to happen is in the workforce. It’s the core, and everything else will be a domino effect.”

But for many organizations, knowing where to look for women and people of color is the first obstacle, DeBerry says. “Ninety percent of the time they are not looking in the right places,” she says. “I think it’s fine to mainstream everything, but you will only get a percentage of the diverse talent you are looking for if you don’t widen the search.”

DeBerry recommends expanding a search beyond traditional or Ivy League colleges to historically black or Hispanic universities, partnering with organizations such as the National Council of La Raza or National Urban League, and using women and minority-owned executive search firms.

Northrup Grumman Corp. uses a “full-court press” when it comes to recruitment, says Sylvester Mendoza, the company’s corporate director of diversity and inclusion. They have a strong community relations program which has paid off—of the more than 120,000 employees, 25.5 percent are female and 31 percent are people of color.

Sylvester Mendoza

Sylvester Mendoza Northrup Grumman Corp.

Mendoza says they attend 10 national diversity engineering conferences annually, as well as other conferences hosted by groups like Out & Equal and Women of Color in Technology. They also work with kids in kindergarten through 12th grade to help ensure young people are seeking careers in science and technology. “We look at external and internal forces to come together and create a cohesive program that ensures we are viewed as a leader in corporate and social responsibility and inclusion,” he says.

Nagel says Cisco is also working on hiring outside of the industry so they aren’t always looking at the same pool of candidates, which is often not very diverse in the technology industry. Cisco has also instituted a program to recruit people of color as well as other young talent and support them through training and development for their first two years at the company. The program has been a “big success in retaining diverse talent right out of school,” she says.

Leading the Way

Having diversity at the top of an organization is not only a good idea, but it helps provide a trickle-down effect as well.

“Our objective is to create an inclusive leadership cadre of individuals at all levels because exponentially, that will create a diverse environment as leaders lead by example,” Mendoza says. “They will create inclusion that others will follow.”

Northrup Grumman attempts to select future leaders that have a diverse mindset, Mendoza says. They look at the emotional intelligence of individuals in the company, he adds.  This “intelligence” includes being inclusive in everything they do.

“Companies need to provide more exposure and opportunities to develop the talent of all individuals so they will percolate to the top,” Mendoza says. “As a corporation, there is a lot more work to be done and leadership is the key to continue our focus on people issues as well as the business at hand.”

Marilyn Nagel, Cisco

Marilyn Nagel Cisco

Cisco has implemented an executive talent insertion program where the company casts a wide net when a position is open. They also look for top talent who are women or people of color and figure out what kind of role they could have at the organization when there is not necessarily a position open.

The company has a policy of looking at their population at individual levels—managers, directors and vice presidents—to see how they are doing across the board. This helps them broaden their definition when hiring so they can look for people with different thought sets, Nagel says.

An Inclusive Environment

Once companies begin the road to diversity, they often have problems creating an inclusive environment for employees, says Carmen Carter, a diversity consultant and founder of the Women’s Multicultural Council.

“One big question is, what do you do with the people when you get them?” says Carter. “When we show up, our person shows up with us.”

Nagel says two practices Cisco has recently implemented include training for hiring managers and individuals who sit on interview panels. Before opening a new position, they develop their interview questions and learn to understand and get rid of their own biases.

One of the ways Mendoza helps engage employees is through employee resource groups. Northrup Grumman offers voluntary groups for employees of like gender, race and ethnicity as well as for veterans and those with disabilities.

The company has nearly 30 groups with more than 5,000 employees involved. The individuals are able to share concerns and needs within and outside the company. Each employee resource group has an executive who is involved and each establishes business-related purposes like assisting with recruitment and focus groups for products and services.

“This is one of the ways we get employees involved and engaged to give them a sense that the organization is interested in their work/life balance issues,” Mendoza says.

Lia Shigemura, ABM Industries

Lia Shigemura ABM Industries

Shigemura says it is important that ABM employees can speak up and are treated fairly within the organization. She says they train supervisors on skills and behaviors that manifest the company’s values, like asking for peoples’ opinions about work and paying attention to employees’ concerns.

“We can’t do a litmus test and find out what lurks in people’s hearts and heads,” she says. “But ultimately, we can—and do—demand leadership behaviors that reflect our value on diversity and inclusion.”

The Future of Diversity

The face of diversity will be changing in years to come, says DeBerry. Because of the shifts in the workforce, she adds, the message is changing from one of race and color to one of overall inclusion.

“It’s not going to be about raising a playing field,” she says “It will be where all are competing on the same playing field.”

For Nagel, whose company has 66,000 employees worldwide, diversity has a different face in every locale – something more companies may be dealing with as the economy expands globally. In India, the challenge is recruiting from certain geographic regions. In the United Kingdom, there is a focus on complying with legislation directed toward hiring people with disabilities. Diversity and inclusion in the future, she says, may not always look like progress to people in the United States, but in developing areas will be much more subtle and challenging.

“The bottom line is demographics are changing and the customer base is changing and there are talent shortages that exist domestically and globally,” Mendoza says. “Companies have to remain competitive and create a value proposition for why they are superior and the employer of choice.”

By Tammy Worth
November, 2009

Tammy Worth is a freelance writer from Kansas City, Mo.

Comments are closed.