Sometimes research studies come along and fulfil a very useful role—proving the obvious. This is one of them, so it is to be greatly welcomed.
What the researchers say: While some may see corporate diversity initiatives as nothing more than glitzy marketing campaigns, the latest research shows that companies that hire a more diverse set of employees are rewarded with a richer pipeline of innovative products and a stronger financial position.
A variety of businesses large and small have launched initiatives to attract a more diverse and inclusive workforce. But no one has measured how diverse business practices impact a company’s bottom line. In this paper published in the journal Financial Management the researchers attempt to measure diversity’s impact on Corporate America.
The study showed that companies that promote a diverse workforce and a culture of inclusion, specifically attracting and retaining minorities, women, the disabled and LGBTQ employees, were more efficient in generating new products and patents. They found that diverse hiring practices increase the pool from which a firm can recruit talented and creative employees. The wider the range of views and backgrounds, experiences and expertise the company attracted, they concluded, the more innovative the company was to solve problems. A diverse, inclusive culture attracts and retains talent and boosts employee morale, the research found.
The team scoured and analyzed data on publicly traded U.S. firms, looking at new product introductions, patents and other company milestones. They showed that pro-diversity policies enhance future firm value by spurring innovation.
“Top corporate leaders, academics and policy makers have long been wondering about the real economic benefits of corporate diversity policies,” said the lead researcher. “Many didn’t see how hiring a more diverse workforce positively affected shareholder value. Now we have strong evidence that creating a more diverse workplace today results in more innovative outcomes for companies tomorrow.”
Her findings also showed that companies with pro-diversity policies weathered the 2008 economic downturn far better than those without them.
So what? This is an important paper because it shows that companies need to concentrate on hiring not just more of one set of “minorities” but rather people from a broad range of backgrounds and experiences.
Too many businesses have been fixated just on hiring more women. But women from the same socio-economic and ethnic background as the men will solve nothing as far as innovation is concerned (though increasing the number of women at senior levels is good in itself—if only because they make better leaders).
What now? Businesses should look at their hiring practices and ask themselves: are we getting the broadest range of viewpoints, experiences and talent that we possibly can?
Oh, and by the way, as the latest research on biased AI has shown—junk the multiple data-based machine hiring and use what humans have that machines never will have, an almost infallible gut judgement.