Investing in Diversity: Why It Matters In Achieving Impact
The conversation about equality and diversity in the workplace has been going on for decades. In recent years, organizations are more often hiring diverse groups of women, minorities, and even older people to meet a new standard. However, diversity also extends beyond gender and ethnicity to include socioeconomic background, religious and political beliefs, education, and sexual orientation. With all the buzz about diversity, we want to carry on the conversation to challenge the status quo about diversity or the lack thereof, not just because it is the hip thing to do but because creating awareness within this sphere is paramount to achieve impact.
Venture Capital’s Limitations
Despite increased attention being thrown towards diversity, more than 90% of tech investment goes towards all-male teams in Europe. Given this information, some difficult questions need to be asked.
We need to think about some important questions in terms of diversity such as: Why does diversity matter so much in the VC world? Are there any core benefits to being more diverse? How does this affect companies and their ability to achieve optimal financial returns? And, how does this make impact investments more…well, impactful?
Diversity Drives Numbers
Being diverse doesn’t just have a moral argument. It also makes good fiscal sense for companies to have diverse boards and teams. From a business perspective, research has shown that gender-diverse teams have higher sales and profits compared to male-dominated teams. Not only do these teams strengthen conflict resolution, but they also work to recognize differences so they can uncover similarities, thereby efficiently working toward common goals. Having women in the workplace might do even more than just boost the bottom line. Women, on average, have higher levels of emotional intelligence which in turn helps to create a well-rounded workforce.
McKinsey also reported that ethnic diversity has an even greater impact on the performance of a company than gender diversity. Ethnically diverse teams were found to be 33% more likely to perform better than their peers in the industry, which is a staggering figure.
“Companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns. And diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time.” — McKinsey Why Diversity Matters
Upon further reflection, these figures make economic sense. Members of boards that are wide-ranging in ethnicity, sexuality and gender are likely to bring a more objective and holistic perspective to a company’s strategy.
Added to that, if we can diversify our market, we become more representative of the communities and people that we wish to impact. In this way, we can be sure that we are not missing vital demographic sectors or audiences.
Walking The Talk
Diversity is a pivotal part of our working culture as we have set out to build an ecosystem that works toward solving global and environmental challenges and this means we are stronger together.
A highlight of our accelerator program is the peer-to-peer feedback — by having diversity within the companies founders are able to receive a wider critique of how to strengthen their mission, values, appeal and business models. Furthermore, this diversity will prepare founders and their teams to become true “World Citizens” — enabling them to take this experience and apply it to wherever their entrepreneurial journey takes them.
Making Diversity A Reality
Many businesses are beginning to adopt diversity measures to reap the benefits. On the other hand, many companies are simply doing so in response to public pressure. Regardless, business leaders must overcome these challenges if they wish to continue to succeed and glean the rewards that a more diverse workforce would bring.
When it comes to diversity, you can look at it from two sides: the equitable side and the impact side. Putting an equitable scope on diversity is dated. Essentially, this is when diversity is measured on a scale of numbers and achievements, only concerned about hitting a certain percentage point as to be “doing the right thing.” In today’s world, diversity has more to do with impact and the influence that diverse groups can have within a business. In hiring diversely, practice needs to be worthwhile rather than just to hit a percentage.
Diversity within impact can be beneficial due to many reasons:
· Avoids widening gaps between core staff and the leadership team.
· Avoids diversity for diversity’s sake. Diversity initiatives are meaningful.
· Multiple viewpoints in a company means that it has more chances of excelling in its field.
· Diverse companies are inspirational for those in the lower ranks who are from a minority background.
Being inclusive allows businesses to grow, innovate and eventually outperform their competitors.
Diversity is For Keeps
At the end of the day, it is imperative to remember that diversity does not just come down to the defined parameters of sex, age, gender, sexual orientation, race, and religion, among others. It also comes down to acquired knowledge, such as language skills or cultural knowledge and understanding. By being diverse in the way we operate as a business, the benefits can be huge. Companies and investors cannot become complacent. Striving towards diversity is an ongoing task and a job that can never be “checked off” the to-do list.
So, what are you doing to help achieve diversity & gender equality? If you’re in Norway or planning a visit in March, we suggest you check out Europe’s largest conference on diversity, SHE Conference, on March 6th! Use our special promo codes below for a discounted rate. For more information, go to sheconference.no.
