Why your organisation needs more diverse thinking

We review the evidence-based benefits of diverse teams.  

For anyone still unconvinced that diversity is now a rock-solid source of competitive advantage, look no further than last year’s public spat between IBM and Microsoft over the latter’s hiring of diversity guru Lindsay-Rae McIntyre.

McIntyre was accused by IBM of violating a non-compete agreement when she accepted a job as Chief Diversity Officer with Microsoft. The suit, filed in the US Federal Court, argued that she had in-depth knowledge of IBM’s “diversity data, strategies and initiatives”, and took trade secrets with her when moving to a similar position at Microsoft. 

As recently as 10 years ago, it’s unlikely that IBM would have bothered pursuing McIntyre, and would have been more concerned about trade secrets held by the likes of the CFO, CTO or CMO. But with the financial, productivity and innovation-boosting benefits of diversity increasingly understood, the fight over McIntyre can be seen as evidence that diversity finally matters, even among the male-dominated tech giants.

How does diversity lead to competitive advantage?

In this article we’ll review four key benefits of diversity, backed up by the latest research.

Types of diversity

Types of diversity may include age, gender, physical ability, sexual orientation, racio-ethnicity, language and religion. More recently, this list has broadened to include social diversity; qualities, mindset, perspectives and backgrounds.

Diversity definitions, goals and targets are unique to every organisation and should reflect the cultural richness of the communities they serve.

Benefits of diversity

1. Diversity grows profitability: The latest diversity research from McKinsey, Delivering Through Diversity, found that:

  • Top-quartile organisations for gender diversity on their executive teams are 21% more likely to experience above-average profitability than companies in the fourth quartile.

  • Top-quartile organisations for ethnic/cultural diversity on their executive teams are 33% more likely to experience above-average profitability than companies in the fourth quartile.

2. Diversity drives creativity and innovation: A recent study by BCG found that companies with above-average diversity scores reported 45% higher innovation revenue than companies with below-average diversity.

The reasoning is clear: having employees with diverse backgrounds means that you’ll have a broader pool of perspectives and experience to draw upon, leading to “out-of-the-box” – or diverse – thinking. But leaders need to create the right environment to tap into this potential. Researchers from HBR recommended the following six behaviours to unlock innovation:

  1. ensuring that everyone is heard

  2. making it safe to propose novel ideas

  3. giving team members decision-making authority

  4. sharing credit for success

  5. giving actionable feedback

  6. implementing feedback from the team.

HBR’s researchers found that leaders who give diverse voices equal airtime “are nearly twice as likely as others to unleash value-driving insights, and employees in a ‘speak up’ culture are 3.5 times as likely to contribute their full innovative potential”.

3. Diversity leads to better decision-making

The poorest decision-making comes from a team of like-minded thinkers, or a team which defaults towards following the strongest (or loudest) voice in the room. Better decisions come from teams with multiple perspectives, diverse thinking, and constructive conflict.

Including diverse employees in decision-making at all levels dramatically increases the likelihood of better business decisions. Research by Cloverpop found a direct link between inclusive decision-making and performance:

  • Inclusive teams make better business decisions up to 87% of the time.

  • Decisions made and executed by diverse teams delivered 60% better results.

4. Diversity helps attract top talent

Take a look at your team. Has your organisation inadvertently created a homogenous workforce? Recruiting diverse talent unlocks a wider talent pool, attracting candidates who may not currently regard your organisation as an inclusive destination. After all, no leader wants to limit their pool of potential hires to a particular age group, gender, or ethnicity.

In much the same way that reflecting the cultural diversity of your community will attract more customers, having diverse team members on-board will enable you to attract more diverse talent. Forbes contributor Laurence Bradford gives the following tips for attracting diverse talent:

  • Blind resume screening

  • Ensure job descriptions have inclusive wording

  • Emphasise value-based hiring.

Where does Australia sit in terms of Diversity & Inclusion?

McKinsey’s Delivering Through Diversity revealed Australia leads the way among surveyed countries when it comes to women in the workforce, yet the results demonstrate there is a long way to go. Women make up 40% of company employees in Australia, yet only 21% of executive teams and 30% of boards are female. 

When it comes to cultural diversity, the challenge also lies in representation at the senior level. A study by the Australian Human Rights Commission  found that despite Australia’s rich cultural mix, this diversity is not reflected in Australian corporate leadership. Within ASX200 companies, “Over 75% of CEOs are of Anglo-Celtic heritage, 18% have European heritage, 5% are from a non-European background and no CEOs whatsoever have Aboriginal or Torres Strait Islander heritage”.

A recent report by Diversity Council Australia on the phenomenon of the bamboo ceiling revealed that while 9.3% of the Australian labour force is Asian-born, only 4.9% make it to the senior executive level. Similarly, only 1.9% of ASX 200 senior executives are Asian born, despite 84% of surveyed Asian talent saying they plan to advance to very senior roles.


Talk to Six Degrees Executive to learn how hiring diverse teams will benefit your organisation.