by Mildred Tan, Published TODAY, 29 Oct 2012
To thrive and innovate in today's global economy, flexibility, creativity and imagination are required - qualities that can be nurtured only by a diversity of voices and viewpoints at the table. However, a wall of misconceptions still surrounds diversity, obscuring the true benefits that it can deliver.
The definition of diversity has evolved. Traditionally limited to characteristics like race, age, gender, ethnicity and religion, progressive organisations are increasingly considering a wider range of parameters, including socio-economic and cultural backgrounds, life experiences and personalities.
And what was once branded as a "human resources" term associated with fair hiring practices is now recognised as having the power to be so much more - for some companies which are competing globally and drawing diverse talents across markets to serve an equally diverse customer base, workforce diversity and inclusiveness have proven to be a competitive advantage.
According to the Ernst & Young report, Igniting Innovation: How Hot Companies Fuel Growth From Within, PepsiCo attributed US$250 million (S$305 million) of its revenue growth to new products inspired by diversity efforts. And in a study of 45 teams from five United States high-tech firms comprising people with different functional specialities, the teams worked more effectively with other internal teams and showed a higher rate of product innovation.
Yet, according to a separate Ernst & Young research conducted last year, even as global executives believe diversity of teams and experience improves both the financial performance and reputation of their organisations, many struggle with putting their beliefs into action. Common misconceptions are also hindering an organisation's ability to fully harness the power of diversity.
- Myth: Diversity requires lowering of expectations, standards
Perceived glass, colour, age and cultural ceilings often cause organisations to lower their performance standards and expectations in order to accommodate differences in diverse teams. This makes emphasising of differences as damaging as ignoring them.
The reality is that managing diversity is not any different from managing personality differences. It means that a leader needs to be fully aware of and understand the role each individual plays, and allow them to satisfy performance benchmarks and advance their careers based on merit.
- Myth: It is counter-productive
"Polite" organisations that strive for consensus may find diversity a cause for chaos. However, researchers are increasingly finding that open clashes of ideas can boost a company's energy and creativity.
"Most leadership experts argue that the best way to manage change is to create alignment, but our research indicates that for large-scale change or innovation initiatives, a healthy dose of dissent is usually just as important," said the authors of a Harvard Business Review article.
It is further argued that "a peaceful, harmonious workplace can be the worst possible thing for a business" because of the risk of groupthink and complacency. It is probably too easy to disregard the positive outcomes of healthy conflicts if managing contrary viewpoints are perceived as best avoided from the onset.
- Myth: It is HR's responsibility only
Diversity may be a people-related issue but everyone in the organisation needs to embrace and support it in their daily interactions. To that end, the CEO and management has to set the tone and identify key diversity champions from all functional levels to be held accountable for making diversity work.
Very often, committed leaders will also want to stay involved to see results. That means they will see to the implementation of pro-diversity practices and make sure relevant programmes are available to educate staff on the importance of inclusiveness. HR is central to ensuring that the momentum is sustained and key stakeholders remain engaged - but cannot be the party solely responsible for driving the diversity agenda.
- Myth: It is costly
In fact, the broader question lies in the cost of losing talent and missed opportunities. If an organisation constantly loses good candidates because of the lack of fair treatment and opportunity, the rehiring and retraining costs that come with high turnover may far exceed the planned budget. Thus, it is crucial to ensure that an effective employee engagement programme has a thorough integration component that considers induction training, a mentoring programme, learning and development, among others, to embrace the differences in a diverse workforce.
- Myth: It will improve performance and profits
This is perhaps the most dangerous misperception. Having greater diversity in your workforce is an important performance enabler and is only as effective as your ability to harness the mix of ideas for the best business solution. Diversity hiring must ultimately remain aligned with business objectives.
While the correlation between increased diversity and improved performance is evidenced in many leading multinational organisations, diversity is seldom the only factor that drives success, even if you disregard the enormous amount of effort that has been constantly invested to make diversity work.
As with any strategy or policy, execution hardly comes without challenges. A recent report by Ernst & Young found that many emerging market multinationals are struggling to build effective international management teams as they grapple with cultural differences, conflicting internal perceptions of talent management and difficulties in balancing global and local talent.
While the foresight to embrace diversity is a good starting point, the ability to navigate the issues in managing a diverse workforce for the benefit of the bottom line is what will matter.
Mildred Tan is the Managing Director of Ernst & Young Advisory.
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