1. Enhancing business culture
D&I and a firm’s culture are truly interdependent and interlocked. An organisation that is committed to D&I, will find that it positively influences culture, fostering problem solving capabilities and innovation. A lack of diversity at board level can result in missed opportunities.
More diverse teams can unlock innovation, which consequently leads to stronger organisational performance. They can drive superior financial performance, get more from their talent and ensure greater productivity.
2. Minimising risks
Greater diversity, particularly at senior management level reduces governance issues that could make the entire organisation more vulnerable to risk. Diversity provides greater opportunity for delivering good customer outcomes with better customer service.
Where governance risks exist, this could lead to serious ethical failures. That could be because employees are afraid to call out inappropriate behaviour; or because unethical conduct has been normalised within a corporate micro-culture.
Within specific control functions like risk management, low levels of D&I may lead to weaker and less resilient operations. A homogeneous and less inclusive workforce may not be as imaginative at proposing solutions or envisaging alternative scenarios. This could translate into potential regulatory, legal, compliance, reputational and business risks.
Megan Butler, Director of Supervision, Investment, Wholesale and Specialist at the FCA, recently stated that firms which promote gender diversity limit their exposure to conduct-related risks. This becomes a motivating factor for them to ensure gender diversity at the highest levels.
3. Building stronger, more connected teams
Diversity could also lead to better risk management outcomes by helping prevent group thinking and reducing unconscious bias. For example, mixed-gender teams can better manage group conflict compared to homogenous teams. The result is stronger bonding and interconnectivity between team members.
4. Delivering stronger performance
A diversified workforce leads to better employee satisfaction and engagement. This could help drive greater productivity and profits. By understanding customers better and designing products and services accordingly, culturally diverse organisations can better target marketing efforts at audiences from different social, ethnic and racial backgrounds. This could potentially lead to an increase in profit and a better return on investment for marketing efforts.