Thinking Diversely: The myth of the business case for diversity

By Felix Wong

In recent times, it has become fashionable to articulate the business case for diversity. In the corporate world, with its emphasis on key performance targets and tangible achievements, this seems to make sense: competing priorities demand justifications if senior managers are to include them as business goals.

Those familiar with this topic have probably seen – and perhaps even quoted – the research. For example, Deloitte’s 2017 research paper found that organisations with inclusive cultures are 2x as likely to meet or exceed financial targets, 3x as likely to be high performing, 6x more likely to be innovative and agile and 8x more likely to achieve better business outcomes. They put it simply: “Diversity + inclusion = better business outcomes”.

Except, it’s not so straightforward. What the research actually shows is that there is a correlation between diversity and higher performance. As any scientist or lawyer will tell you, correlation is not the same as causation. Sure, McKinsey’s 2018 extensive research indicated a strong correlation, but that is not the same as saying enhanced diversity automatically leads to better business results. 

An inconvenient truth is that many of the most successful, long-established companies in the world rose to prominence and delivered excellent profits for decades without diversity. Based on their many years of business results, one could say that there is a correlation (and arguably causation) between non-diverse organisations and high measures of success.

There are of course myriad reasons to demand diversity (and inclusion) in business. Companies operate in ever more complex, diverse societies and organisations should reflect this. Fail to do so, and you risk incidents that at best cause reputational harm and at worst impact the bottom line in expensive lawsuits, lost custom or the loss of key, sometimes senior personnel. New employees increasingly decide where to work based on their perception of an organisation’s inclusion policies, and non-inclusive cultures cause existing employees to be disengaged. All of these are much harder to express in the P&L column of the annual accounts, however and this is why it’s hard to articulate a business case for diversity.

But so what if the business case is hard to make out? Aren’t the other reasons to support diversity enough? Why wouldn’t any of us want to work in the most varied environment we can, with the opportunity to develop working relations and friendships with people who come from different backgrounds to us, with all the richness that this brings? 

Indeed, it could be argued that implicit in the need to justify a business case for diversity and inclusion measures at all is a suggestion that equality and inclusion are not, in and of themselves, important to the organisation. Consider the logical extension of this line of reasoning: Is an organisation that needs to be convinced of a business case for diversity and inclusion one in which you want to work for?

Diversity, Equity and Inclusion (DEI) is not a business case. It is our moral responsibility to ensure these basic principles shift from being an after-thought to a standard operating practice. We have reached a stage in the maturity of DEI where organisations that don’t acknowledge that they lack sufficient diversity and inclusion are being left behind. Those that do acknowledge the issue must commit resources to create equity - and be prepared to be judged on their efforts and transparency . Evidence of action is required from individuals, from leaders as well as at an organisational level. After all, what is an organisation without its most important asset: the diversity of its people.