The Importance of Diversity in Your Company Culture

Promoting cultural diversity in the workplace is more than just the title of a feel good workshop your human resources department sponsors once a year. Because businesses inevitably compete in the global arena, it’s essential to have diverse perspectives in your company culture. Diversity can help to create a climate of respect and prevent your company from making mistakes, and it can also lead to growth and higher earnings by fostering innovation, flexibility and creativity.

Diversity Fosters a Culture of Respect

When a company’s culture is monolithic, it’s easier to hunker down in the bubble and think your views are universal. In an environment like this, the few people who do have different social, economic or cultural viewpoints will likely be dismissed even when they present valid insight regarding the consumer.

Kieran Synder shares a startling statistic in an article for Fortune about why women leave the tech industry. Twenty seven percent of the 716 women surveyed cited discomfort with the monolithic company culture as their reason. One woman said she felt “pretty sure” she was the only black person her colleagues had ever spoken with. These women didn’t think they were being overtly discriminated against; they simply felt that they didn’t fit into an otherwise homogenous work environment. That perception was strong enough to force many of them out of the tech industry even though they enjoyed the work and were successful at it.

In some cases, discomfort leads to the creation of policies that make it harder for women and minorities to succeed, such as the lack of maternity leave or an unwillingness to accommodate special requests. Homogenous company cultures also encourage the harassment and scapegoating of minority members, and that can spiral into a pervasive culture of blame where problems never get addressed because members of the workforce find ways to deflect their mistakes through diversionary tactics.

Having a diverse workforce serves to protect your company from such a toxic work environment by fostering compassion and consideration of different points of view and preventing individuals from being singled out and marginalized. This, in turn, can lead to greater workplace productivity, higher retention rates and stronger morale.

Diversity Encourages Innovation

Ask most European academics why they want to study in the United States. They will likely tell you that it’s because American universities aren’t burdened by centuries of a homogenous culture that values hierarchy and tradition and stifles research projects that challenge the established order. The diversity of U.S. universities, which attract the best researchers from around the world, creates an environment that fosters innovation and creativity.

Studies of successful businesses confirm what academics already know: Innovation is good for a company’s productivity and, ultimately, its profit margins. McKinsey & Company reports on a study of 180 companies in nations around the world and found that companies with top-team diversity perform 14 percent better than the least diverse companies.

In a Forbes interview with Ekaterina Walter, Neil Lelane, who worked for 23 years to establish the company climate at Progressive, points out that diversity helps a company to identify new products and services that would benefit their customers. Likewise, having a disparate workforce helps to build even more diversity, allowing companies to cast a wider net when searching for new talent.

A Lack of Diversity May Signal Other Fundamental Problems

Writing in the New York Times, Dan Lyons discusses the phenomenon of “bro culture,” which has been well-documented in Silicon Valley start ups and elsewhere. As he defines them, “bro CEOs” are young men who excel at raising capital but have a tendency to stall out because they don’t create a sustainable business model. Bro CEOs hire women, but they rarely promote female colleagues, Lyons notes, and “minorities and older workers are excluded.”

Lyons points out that the absence of diversity signals other underlying problems. By surrounding themselves with workers who mirror and support their frat brother ethos, these companies create a corporate culture based on “reckless spending and excessive partying,” which can lead to personnel complaints and PR difficulties such as the ones that have come to haunt Uber. The frat brother ethos also makes it easier for bro CEOs to burn through their start-up capital without investing back in the business itself.

Diversity can protect against the development of a destructive echo chamber that allows the CEO to make poor decisions.

The Bottom Line

One reason companies fail to diversify may be that they believe that hiring people who look and act like them is the same as hiring people who share core values. Diversity may feel like a core value, but it isn’t. Core values, like integrity and efficiency, are shared by all cultures and genders; in order to have the same values, people do not need to come from the same cultural background.

A strong company hires individuals who share its values but come from different walks of life. It can be difficult to get colleagues, even in a diverse workforce, to move outside their own cultural perspectives and limited world-views that result. In this sense, diversity is an ongoing challenge that requires constant work, modeling and management. Nevertheless, embracing diversity as a cultural movement is the best way to build a business that has the flexibility, creativity, and insight to prosper in the 21st century. As Steven Covey put it, “Strength lies in differences, not similarities.”

The Vail Centre offers continued education certification programs run by some of the most skilled educators in the Ivy League system. From July 23–26, the Yale School of Management offers its university certification program in Diversity and Inclusive Leadership, which teaches key interpersonal skills like improving emotional intelligence, understanding unconscious bias, gaining organizational support for building diversity, and learning how to lead change. Interested parties should contact Todd Wallis at todd@vailcentre.org.