The Business Case for Diversity Management

Does having a workforce with diverse backgrounds, experiences, and ideas that is managed well, have an impact on the firm's profitability? Well, the answer is a definite yes!

The financial impact of diversity do vary somewhat between firms, depending on several factors (including geographic location and who the customer is), but overall, the monetary impact of diversity is relatively easy to demonstrate. The following are the prime factors that can be used to demonstrate the impact of having a diverse workforce.

Click here to view an explanation on how diversity can affect the business.

Click here to download the printable explanation for how diversity can affect a business.

In summary, what is the business case for diversity?

Cost argument – as organisations become more diverse, the cost of doing a poor job in integrating workers will increase. Those who handle this well will create cost advantages over those who don’t.

Resource acquisition argument – companies develop reputations on favourability as prospective employers for women and people of colour. Those with the best reputations for managing diversity will win the competition for the best personnel.

Marketing argument – for organisations, the insight and cultural sensitivity that members with roots in other communities bring to the marketing effort should improve these efforts.

Creativity argument – diversity of perspectives means less emphasis on conformity and will result in an increase in creativity.

Problem-solving argument – heterogeneity in decisions and problem-solving groups potentially produces better decisions through a wide range of perspectives and more through critical analysis issues.

System flexibility argument – the system will become less determinant, less standardised and therefore more fluid. Increased fluidity should create greater flexibility to react to environmental changes.

Legal requirement – The Act on employment and occupational equity requires organisations to conduct an organisational audit which includes information on employment, pay and benefits by race, gender and disability.