When the dust settled in the aftermath of the 2008 global financial crisis, something intriguing emerged: some of the companies which had placed a higher priority on diversity and inclusion managed to weather the economic storm best.
Research published in the Journal of Business Ethics found that during the GFC, banks with female CEOs were more stable and held higher levels of equity capital.
More recently, in analysis from 2019, McKinsey showed that companies in the top bracket for gender diverse executive teams were “25 per cent more likely to have above-average profitability” than companies in the bottom diversity bracket.
Furthermore, employees with a strong sense of belonging are over six times more likely to be engaged, according to research by Glint’s State of Diversity and Inclusion (D&I) report.
In fact, about 200 studies have found that diverse and inclusive organisations offer better financial results, affirming that it makes clear-cut business sense.
In the years since the GFC, the momentum has only grown around instituting policies and practices aimed at fostering and driving diversity and inclusion. But then the COVID-19 pandemic hit, triggering the greatest economic crunch in more than a century, with gains around diversity coming under threat as businesses scramble to ride out this storm.
According to research from LinkedIn Talent Solutions, uncertainty surrounding COVID-19 means many organisations are considering or have initiated hiring freezes, while talent is also more likely to stay where they are. Essentially, they’ve hit pause on their “diversity initiatives”.
At first glance, this might make sense as companies race to slash costs. But, not only is now a critical time to maintain workplace diversity, it could also hold the key to which businesses will survive (or even thrive) in this turbulent climate.
Progress under threat
In the five years before COVID there had been a 71 per cent increase in the global growth of diversity roles, according to LinkedIn data. Australia was boasting a particularly impressive track record on this front, consistently ranking amongst the world’s top hirers for diversity roles.
However, that success is now at risk with companies marshalling people and resources to meet the more pressing, day-to-day challenges of responding to the COVID catastrophe and to safeguarding the health and wellbeing of staffers.
It is an issue that leaders across the Asia-Pacific region are clearly grappling with, with a 77 per cent increase in the number of LinkedIn posts about the issue in June 2020, compared to last year.
Aside from resources and organisational support being directed away from diversity and inclusion during the pandemic, there are other factors at play.
For example, according to the LinkedIn Talent Solutions research the diversity of the talent pool may also be under threat as workplace automation escalates in response to the pandemic, with women and minorities disproportionately bearing the brunt of this shift.
Additionally, recruiters are focusing more and more on existing talent – internal mobility – rather than hiring new talent.
Plan of success
Business leaders should note that more diverse teams could play a crucial role for companies fighting to ride out this current economic disaster.
The secret lies in the fact that teams drawn from more varied ethnic, gender, sexual and ability backgrounds tend to possess exactly the right qualities that businesses will need to draw on. Success at this point in time demands creativity, innovation and resilience, all qualities that diverse teams display at a far higher level than others.
According to Adam Gregory, senior director for Asia-Pacific at LinkedIn Talent Solutions, it is widely recognised that diverse teams win due to their “ability to innovate, [and] to make decisions more effectively and quickly.”
Gregory advises that one simple way to keep diversity on the agenda is to embrace flexibility.
“That might mean what were traditionally roles done by one person could now become job sharing, or promoting a more flexible working environment where people can work from home at certain points during the week to accommodate childcare situations and schooling,” he says.
In Gregory’s personal experience, “to drive the best business outcomes, you need to be constantly challenging yourself. And you cannot do that unless you have people with different perspectives and different views of situations.”
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Source: Thanks smh.com