Why Diversity Is Good For Business

 

Singapore has always prided herself on being the poster-child of diversity and inclusion. Recent news, however, indicates that workplaces here don’t quite reflect that. According to the newly released Kantar Inclusion Index, Singapore is the 2nd worst country in the world for workplace diversity and inclusion practices. It’s cause for serious concern, considering the very real benefits of a diverse workforce.

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There’s no reason why Singaporean workplaces shouldn’t reflect the true diversity of Singaporean society, especially since there’s a strong business case for it. Its impact on the bottom line, for instance, is clear. A study by Boston Consulting Group found that companies with more diverse management teams have 19% higher revenues due to innovation.

To solidify the importance of diversity at work, managers must understand the various mechanisms through which diversity affects the bottom line. Hence, here are three essential benefits of diversity in the workplace.

P.S. Unlock the full benefits and potential of workplace diversity; sign up for SSA Academy’s WSQ course on managing cross-functional and culturally diverse teams today!

 

1. Idea generation

In any given innovation or creative process, one of the most critical stages is idea generation. This is when people brainstorm and come up with as many ideas as possible, regardless of practical considerations. Here, divergent thinking reigns supreme; the higher the openness to experience, the better. Teams that can pull on and derive insights from multiple perspectives tend to fare better at this stage.

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Demographically diverse teams have a clear advantage in this regard. Since they’re made up of people from all walks of life, they’re better suited for idea generation. Indeed, according to the Harvard Business Review, diverse teams generally come up with “a wider range of original and useful ideas.”

 

2. Problem-solving & decision-making

Once there are enough ideas on the table, the process of weeding begins; teams progress to discussing which ideas to implement and which to shelve. Here, too, diversity comes into play.

According to research published in the MIT Sloan Management Review, demographically homogenous teams generally suffer from poorer decision-making. The less diverse the team makeup, the more prone people were to overconfidence biases, groupthink, and human error.

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As it turns out, familiarity breeds stagnation, which is cancerous to innovation.

Think about it; belonging to a relatively homogenous group of people at work is likely to push you into complacency without you even realising it. In such situations, people tend to assume they’ve each done their due diligence and are more immediately trusting of each other. Consequently, according to MIT Sloan School Professor Evan Apfelbaum, “there seems to be an inflated sense of confidence… [they] may not be considering all the perspectives.”

 

3. Empathy

If innovation is the lifeblood of a company, empathy is its heartbeat.

Empathy is crucial to excellence in leadership, collaboration, and, most importantly, innovation. What companies often miss about innovation, though, is that it’s not done for its own sake. Apple, Netflix, and other innovative gargantuan companies succeeded not because they focused their innovation efforts on profits, but on providing value.

You can’t, however, provide real value to your customers without first empathising with them. As Microsoft CEO Satya Nadella put it, “Innovation comes from having a deep sense of empathy.”

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If you don’t put yourself in the customer’s shoes, you can’t understand their pain points, needs and wants, and how these pertain to your product.

When you’re part of a diverse workplace, empathy is a given. With so many different perspectives and experiences under one roof, people naturally start empathising better with one another to get along and thrive together.

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