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Article 6: What is the "Business Case" For Diversity?


The following are a few key factors that make diversity initiatives important to businesses for reasons beyond social or moral responsibility. They should be included in any argument you make on behalf of the business case for diversity at your organization: 

Diversity initiatives can improve the quality of your organization's workforce and can be the catalyst for a better return on your investment in human capital. One of the biggest budget items in your organization is the amount it spends on human resources in the form of salaries, benefits, training, development and recruitment. In order to get a healthy return on your investment (ROI) in human capital and maximize your competitive advantage, it is important to recognize that the workforce will grow in the number of women, people of color and immigrants each year. Also, employees of all groups now expect more from organizations-from nondiscriminatory, hostile-free workplaces to flexible schedules and benefits, childcare and family-friendly policies. Your ROI is reduced when commitment and productivity are lost because employees feel disregarded, time is wasted with conflicts and misunderstandings, and money is spent on legal fees and settlements. An environment where all employees feel included and valued yields greater commitment and motivation. It also means fewer resources spent on training, turnover and grievances. 

Capitalize on new markets; customer bases are becoming even more diverse than the workforce. Just as the workforce is becoming more diverse, so is your market. 
  • "Minorities" are the majority in six out of the eight largest metropolitan areas of the Unites States.
  • The combined African-American, Hispanic-American and Asian-American buying power is more than $750 billion dollars. 
  • Women are the primary investors in more than half of U.S. households 

Without a doubt, those employees who mirror the customers you serve can literally and figuratively speak their language, which benefits your organization. Diverse employees can understand your customers, identify their needs and suggest potential new markets. Purchasing agents and other decision makers in client organizations are becoming increasingly more diverse and they will be more apt to strongly consider varied sales teams rather than homogenous ones. Also, potential client companies often ask about an organization's diversity record before making a commitment to do business. As product markets continue to grow both domestically and internationally, few companies can expect to gain access to this kaleidoscope of customers without recruiting and retaining a staff that reflects the diversity of the marketplace. 

Recognized diversity initiatives and diversity results will attract the best and the brightest employees to a company. As the value of diversity continues to grow in the business community and elsewhere, recruiting and retaining talented potential employees who are diverse is becoming even more important to organizational success. Your organization's future depends on the quality of your employees today. Managing diversity well aids your recruitment process. Because it is often a precursor to what kind of career opportunities and situations await them, recruits now commonly ask about an organization's diversity initiative and factor that into their employment decision. Qualified and interested candidates are usually attracted to employers who are able to show that they are committed to developing and promoting a wider array of people. One way of doing this is to make the list of one of the guides that highlights America's best companies for talented minorities, e.g. The Best Companies for Minorities, by Lawrence Otis Graham and Fortune Magazine's 1998 Listing of the 50 Best Companies for Minorities. Because public perception of a good organization is an important intangible asset, making it onto a listing such as those mentioned above or winning an award such the Catalyst, Vanguard or Exemplary Voluntary Efforts (EVE) awards, is great publicity! 

Also, successful diversity initiatives help companies protect themselves against employment-related lawsuits. Although Denny's Restaurants, owned by the Advantica Corporation, had to experience and settle several costly discrimination cases to begin to see the value in managing diversity, the organization is now on track and serves as an example of what other organizations should strive for in the way of diversity. Today, the individual with the largest number of Denny's franchises is an African-American. 

Increased Creativity. One byproduct of capitalizing on differences is creativity. Historically, some of the most creative periods in civilization have emerged when people of different backgrounds had contact. The Renaissance grew out of the meeting of East and West during the Crusades. And, America's energy and inventiveness have been due in part to the diversity brought about by being a nation of immigrants. In your organization, employees from varied backgrounds can bring different perspectives, ideas and solutions, as well as devise new products and services, challenge accepted views and generate a dynamic synergy that may yield new niches for business opportunity. 

Flexibility ensures survival. Diversity is a training ground that requires hard work, commitment to business ideals, and an ability to learn how to handle change by adapting to new situations and learn from people who are different from ourselves. Because change is the only certainty ahead, making adaptations required by diversity keeps an organization flexible and well-developed. Strengthening the ability to respond to changing environments and demands is a strategic business imperative that is critical to ensuring organizational viability. 

Consider the following questions when preparing the business case for diversity in your organization: 

  • What are the demographics of your customer/client base? (e.g. age, income, gender, education, ethnicity, etc.) 
  • How many languages are spoken by your customers/clients? 
  • In how many countries does your organization operate?
  • How much does employee turnover cost your company? 
  • How much does your company spend annually on recruitment? 
  • How much have discrimination/harassment suits cost your organization in the past year (in both legal fees and settlements)? 
  • How frequently does intergroup conflict arise? 
  • Is there a high level of turnover among certain employee groups? 
  • Are your policies and benefits attractive to potential diverse recruits? 
  • Is your organization losing top talent because people do not feel valued, included or heard? 
  • Do all employees feel that their talents and skills are well rewarded? 
  • Is there some career advancement possibility for employees and a focus on developing people internally? 
  • Is diversity reflected in your procurement policies and among your suppliers?
Lastly, if your organization is small- to medium-sized and wanting to develop a diversity plan, but is also constrained by limited staff resources and a limited budget, consider the following strategy for designing and implementing a diversity plan. Instead of taking on diversity in its entirety, break it into several parts. Select two to three key areas in your organization needing improvement relative to diversity and focus on these. Determine where your diversity work and efforts will have the most impact. Work diversity (relative to these 2-3 areas) into the systems and policies that are already in place at your company. 

Areas of focus could include recruitment and retention, enlisting the support and buy-in of your CEO and senior management, developing a mentoring program, increasing employee awareness and value of diversity (training), increase employees' diversity skills (training) or carefully analyzing where your organization is on the diversity continuum. Ask yourself the question, "What outcome do I want to achieve?" to help guide you to an area(s) of focus.

http://www.shrm.org/diversity/businesscase.asp


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