Most business owners and executives are aware of the social impact of diversifying their workforce and encouraging a fair and equitable workplace for everyone. Yet this doesn’t push diversity from a “feel good” program to one that has tangible benefits to an organization. If diversity can increase profits, reduce expenses, or help an organization to succeed there are benefits for any organization to encourage diversity.
Diversity helps organizations to succeed by increasing customer satisfaction, reduce costs associated with training & development, and improve profits through innovation and increased sales. Thus having a diverse work force in a global and diverse global market is a very solid business practice that few organizations can afford to ignore. Diversity = increased profits = reduced costs.
According to the 2005 Workplace Diversity Practices Survey from the Society of Human Resource Management (SHRM) a diverse workforce can reduce cost and improve profits (Diversity Pays, 2005). Responses from 400 human resource professionals indicate that 78% reported that diversity reduced costs and 74% stated that diversity improved profits.
The added benefit of increasing profits and reducing expenses is where most businesses want to be. By engaging in equitable projects companies can become more financial sound than their competitors. Yet knowing the economic advantages of diversity doesn’t tell us exactly why or how these gains are realized.
According to Richard Snead the President and Chief Executive at Carlson Restaurants Worldwide that retention of a diversified workforce is the number one predictor of profitability and customer satisfaction (Ruggless, 2004). His organization was able to reduce turn-over of its employees by 20% which was a total savings of around $700,000 a year in training costs.
The reason why Carlson Restaurants was able to decrease training & development costs is because people of minority backgrounds felt more comfortable working in an organization that respects their uniqueness. In such organizations managers treat employees fairly and with dignity that wouldn’t be available in homogeneous workplaces. In the end people are more satisfied with their work life and less likely to leave the organization.
Diversity also helps organizations to understand their customer needs better and provide better services. As customers become more diversified they prefer to deal with organizations that understand their wants and needs. By having a workforce that represents these customers’ backgrounds they are more likely to provide superior service within an appropriate cultural medium.
Finally, in a globalized world companies are often represented in more than one country. A business problem in a globalized world will require a global solution. This is more likely to happen if people with different faces, having different races from different places are included in the solution. Thus diversification is associated with being more innovative than monoculture companies.
Murad Ali is a two time book author, a Ph.D. candidate and a human resource manager. For more articles visit http://www.thenewbusinessworld.blogspot.com
| | Author Info: Murad Ali is a two-time book author, a human resource management professional, and a Ph.D. candidate. Please visit http://www.thenewbusinessworld.blogspot.com for more articles.
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