Commentary

Diversity and inclusion: Why it also makes business sense

A better balance of men and women in leadership positions could lead to higher profitability in scientific enterprises, argues Akshay Kumar*.

doi:10.1038/nindia.2019.167 Published online 18 December 2019

© Pixabay

A woman scientist suffering from severe post-natal depression requested her organization to let her work from home for a while. The request was not entertained as her reporting manager thought it was a “weakness of the mind”. In another instance, a female scientist was hired and paid 10% less than her male colleague for the exact same job in a lab.

A person with disability was hired under the mandatory quota reserved for disabled people in India, but his employers were evidently awkward, and the colleagues constantly looked down upon him “for getting it easy”.

Such stories of discrimination or hardship for being the “other” are common in organizations. Almost every individual or employee has a story to tell along these lines.

Diversity, inclusion, engagement

In simple terms, diversity is inviting everyone to the party. Inclusion is inviting them to dance along. And engagement is allowing them to select their own music. 

‘Diversity and inclusion’ present a strong social agenda, to make this world a fair place for all; but they are also extremely crucial for the success of businesses and enterprises. The biggest motive as well as challenge for any organization is to create growth. Growth is spurred by differentiating oneself from the rest. That calls for innovation, which comes from diversity. To embrace diversity, organizations need an inclusive approach.

The concept of diversity encompasses acceptance and respect. According to the University of Oregon, it is the understanding that each individual is unique, and that individual differences are recognized. These differences could be of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies.

The university defines inclusion as the exploration of these differences in a safe, positive, and nurturing environment. Inclusion is about understanding each other and moving beyond simple tolerance to embracing and celebrating the rich dimensions of diversity in each individual.

A study looking at the relation between diversity and firm performance suggested a significant statistical relation between enhanced diversity and increased organizational performance. The UNDP-supported report1 recommended that organizations foster diversity, provide equal access to good jobs, discourage discriminatory employment practices and invest in creating ladders for women to rise in job ranks across. This can curtail occupational segregation and unlock significant productivity gains and economic growth, the report noted.

Challenges

The most obvious challenge in the diversity and inclusion journey is that it is a slow moving process. While it is relatively easier to frame or amend policies, rules and representations, the key factor that needs change is mindset, and this involves significant effort and time. Mindset is very subjective and needs constant titration.

‘Diversity fatigue’ is also very common in many organizations that have been practicing diversity and inclusion for a few years now. Diversity efforts must be consistent and need constant reinforcements. These efforts are also labelled as ‘clichéd’ by some, and such situations need to be handled tactfully. The global non-profit Catalyst, which advocates equal workplaces for women, explains diversity fatigue as the feeling of being overwhelmed, disheartened, uncertain, or even fearful when talking about diversity or while working in this space. There are organizations which start the diversity agenda with a lot of enthusiasm but overlook the fact that the real change in the space takes time – years, sometimes even decades. Over a period of time the enthusiasm loses steam, due to disheartening short term results or sometimes even opposition by cynical people.

Though slowly, the conversation around diversity and inclusion is changing. Governments, media, training industry and organizations are constantly creating benchmarks to address gender differences and mindsets. Many companies now give benefits and opportunities to women employees to overcome challenges such as a gap in career, safety issues and infrastructure problems. Leading multinational organizations worldwide, including in India, are encouraging returning women to use the ‘work from home’ culture. Many organizations allow bringing kids to work and encourage using in-house crèches.

Despite all this, why is it that women leaders in top positions still face profound challenges and chronic stress? With support, when women fail in achieving success, feelings of guilt (for losing out on family responsibilities) and low self-esteem (for not making it in their careers) start creeping in. How much of this is due to the environment and how much due to the archetypical makeup of the woman’s psyche? How does one discern and differentiate? The key perhaps lies in integration of different aspects and dimensions of a woman's life — physical, emotional, spiritual, professional, social, and relationships. Each aspect much blend into and support the others, creating a comfortable space for women to grow, prosper and contribute.

Losing money in an unequal world

According to the World Bank2, countries are losing up to US $160 trillion in wealth every year because of differences in the lifetime earnings between women and men. Another McKinsey study says empowering women to excel at the workplace could add up to US $ 12 trillion to the world economy3.

Accounting firm Deloitte found4 that when an organization has policies and practices which increase the feeling of inclusion (experiences of fairness, respect, value and belonging, psychological safety, and inspiration) by 70 per cent, it leads to 17 per cent increase in team performance, 20 per cent increase in decision-making quality, 29 per cent increase in team collaboration and can even enhance the profit margin by 34 per cent.

Is there a business case to be made to back inclusive initiatives? For 30 years since the 1980s, women have held 50 per cent of all middle management positions in Fortune 500 companies5. Yet, over the past 30 years, the percentage of women advancing to senior management positions has remained low. In 2010, only 15 per cent of senior executives were women. Between 1996 and 2009, the number of women CEOs remained the same at around 3 per cent. The figure came up to 9 per cent in 2016 and is the same till date.

Long term studies have shown strong correlations between a better balance of men and women in leadership positions and high profitability6.  The 25 best firms for women outperformed the industry medians on all three measures of profitability – profit margins, asset values and stockholder equity.

India has one of the largest opportunities in the world to boost GDP by advancing women’s equality —$770 billion of added GDP by 2025 — but this would require comprehensive change7.

The contribution of women to India’s GDP is 18 per cent, one of the lowest in the world, reflecting the fact that only 25 per cent of India’s labour force is female. More than 70 percent of the potential GDP opportunity comes from increasing women’s participation in the labour force by 10 percentage points8

The scientific workforce

The situation in the scientific community is similar. In a study, Yale University researchers asked 127 scientists to review job applications of male and female students with identical qualifications and found that the faculty members – both men and women – consistently scored a male candidate higher9.

An analysis of patent applications by the Yale School of Management researchers found that applications of women inventors' were less likely to get approved than those of men10. But if an examiner couldn't guess an inventor’s gender from their name, that difference went down. The researchers argue that eliminating the disparity is crucial to increasing innovation in the economy. The study also showed that white scientists are preferred over Hispanic and colored ones with substantial published data.

Inclusion, therefore, is non-negotiable. Simply because it makes more sense – both as a human as well as a business proposition.

Today, we see immense turmoil and chaos in the world around us. But when we look at the infinite possibilities and unique strengths of diverse people, as well as that of the human mind, the elegance is evident. Diversity of the human mind is so fundamental and yet so absolutely exquisite. A just and equitable world for all is like perfect poetry.

Diversity is a proven driver of innovation and development of new ideas. With inputs from a diverse set of backgrounds, perspectives and experiences, a system can expect substantial increase in engagement, productivity and wellbeing.

[*Akshay Kumar is a Senior Diversity Consultant for Ask Insights, a Visiting Professor at IIIT Delhi University & Consultant &Head Artemis Hospital]


References

1. Joshi, R. Does gender diversity improve firm performance? Evidence from India. (2017) Report

2. Wodon, Quentin T.; de la Brière, Bénédicte. Unrealized potential: The high cost of gender inequality in earnings. The cost of gender inequality. Washington, DC: World Bank (2018) Report

3. Woetzel, J. et al. How advancing women’s equality can add $12 trillion to global growth. McKinsey Global Institute (2015) Report

4. Bourke, J. & Dillon, B. The diversity and inclusion revolution: Eight powerful truths. Deloitte Review (2018) Article

5. The global gender gap report. World Economic Forum (2015) Report

6. Adler, R. D. Women in the executive suite correlate to high profits. Harvard Business Rev. 79 (2001) Report

7. The power of parity: Advancing women’s equality in India, 2018. McKinsey & Co. (2018) Article

8. Woetzel, J. et al. The power of parity: Advancing women’s equality in Asia-Pacific. McKinsey Global Institute. (2018) Report

9. Moss-Racusin, C. A. Science faculty’s subtle gender biases favor male students. Proc. Nat. Acad. Sci. USA (2012) doi: 10.1073/pnas.1211286109

10. Jensen, K. et al. Gender differences in obtaining and maintaining patent rights. Nature Biotechnol. 36, 307–309 (2018) doi: 10.1038/nbt.4120