11/11/2020 The Value Of Diversity In The Workplace

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HIRING EMPLOYEES

The Importance Of Having Diversity In The Workplace

Recruiting from a diverse pool of people can bene t the company as well as its employees, says science.

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Image credit: Shutterstock.com

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Vaibhav Joshi

Octubre 25, 2018 4 min de lectura

Even though considering differing opinions and opposing points of view during a brainstorming
session can be frustrating, the process almost always seems to lead to an elegant and feasible solution.

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According to research, the same principle can be applied at work—studies show a diverse workforce
can boost employee performance as well as that of the company as a whole.

Better Performance

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The more diverse the board of a company is the better, suggests a study conducted by McKinsey.
Examining the performance of 180 publicly traded companies in France, Germany, the United
Kingdom, and the United States over the period from 2008 to 2010, their researchers found that
companies with more women and foreign nationals as part of senior teams performed much better
than less diverse boards.

For companies that ranked in the top quartile of executive-board diversity, the returns on equity were
53 per cent higher on average than those in the bottom quartile. Similarly, earnings before interest
and tax (EBIT) margins were 14 per cent higher at the diverse companies as well.

A similar study carried out by Credit Suisse Research Institute backed up their ndings. Published in
2012, the Credit Suisse report revealed that companies with at least one woman on the board have
outperformed their this with no women on the board by 26 per cent over the last six years. This was
seen uniformly across all fronts, including returns on equity, debt to equity ratios, price/book value as
well as average net income growth.

In a release related to the study, Stefano Natella, Co-Head of Securities Research & Analytics said,
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“This in-depth study provides investors with striking evidence that greater gender diversity is a
valuable additional metric to consider when evaluating investments. The results of our analysis are
irrefutable and for the rst time offer a global view of this topic and a compelling explanation of why
gender diversity adds value.”

Better Problem Solving

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Having a diverse group of people attacking a problem could lead to a multi-pronged attack that results
in better problem solving, suggests a 2006 study conducted at Tufts University. Published in the
Journal of Personality and Social Psychology in April 2006, the study involved 200 participants on 29
mock juries.

The researchers found that panels of white and black participants performed better than all-white
groups by a number of measures. "Such diverse juries deliberated longer, raised more facts about the
case, and conducted broader and more wide-ranging deliberations," said lead author Samuel R.
Sommers. "They also made fewer factual errors in discussing evidence and when errors did occur, those
errors were more likely to be corrected during the discussion."

While his study was set in a courtroom, Sommers also talked about the implication of the study’s
ndings in other situations."Because the study examines group decision-making in a realistic setting,
the ndings have potential implications for a variety of contexts--from the classroom to the
boardroom, or wherever a premium is placed on fact- nding and reaching a good decision," he said.
"Diverse groups show a number of advantages and bene ts when it comes to this type of decision
making."

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Better Business Decisions

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Researchers from Columbia, MIT, University of Texas-Dallas, Northwestern, and a few other
prestigious universities looked at stock-picking in ethnically homogenous and diverse groups. In their
study entitled ‘Ethnic diversity de ates price bubbles’ published in PNAS in December 2014, they
focused on experimental markets in Southeast Asia and North America.

The ndings of the study revealed that the nancial decisions of the more diverse groups were 58 per
cent better than those of the homogenous groups, which led to fewer bubbles on the market. “In
homogenous markets, overpricing is higher and traders’ errors are more correlated than in diverse
markets. The ndings suggest that price bubbles arise not only from individual errors or nancial
conditions but also from the social context of decision making. Informing public discussion, our
ndings suggest that diversity facilitates friction that enhances deliberation and upends conformity,”
wrote the researchers.

Better Exposure

In a study published in Scienti c American in 2014 looked at 1.5 million academic papers and found
that papers written by diverse groups are more likely to receive citations and had higher impact factors
than those whose authors belonged to the same ethnic group. They also found that people of similar
ethnicities are more likely to collaborate on papers more often, but the nal product was much more
impactful in the diverse groups. “Diversity jolts us into cognitive action in ways that homogeneity
simply does not,” says the Scienti c American report on the study.

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