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Chloe Drew

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Diversity is the Key to Profitability

Posted: 07/30/09 12:40 PM ET

Perhaps no singular event in the past year has focused more of a spotlight on the issue of diversity than the recent Supreme Court confirmation hearings of Judge Sonia Sotomayor. In the era of Obama, it's significant that diversity remains such a source of controversy and contention in our society, particularly as it has been suggested that the election of the first African-American president represents a "post-racial" society, proof that laws and initiatives designed to increase opportunity may be unnecessary and obsolete.

We cannot afford to dismantle genuine efforts by corporate America to increase diversity. Yet, as the economy has suffered, diversity in key sectors -- from finance and law to media and consumer products -- has also declined. A recent report revealed that African-Americans are disproportionately affected by the economic downturn. In New York City, layoffs in the finance and professional services sectors have been abundant, and economists suggest that African-Americans have suffered in greater numbers because they had less seniority when layoffs occurred.

This trend is unsettling and unacceptable, especially when social scientists and economists point to the adverse consequences that such reductions have on the power and value of opinions, ideas, and input that make organizations and companies unique, strong and successful.

At a time of crisis, in the midst of the worst economic environment in generations, is it fair or even appropriate to demand that business leaders focus on diversity rather than solely profitability? Yes--in fact, you cannot divorce the two.

Diversity drives growth. Creating business opportunities for women and minorities at every level of management, in board representation and through government and corporate supplier diversity, is critical as it leads to a more competitive economic environment as well as stronger communities.

Diversity drives creativity. People from various cultural and ethnic backgrounds as well as both genders offer different perspectives that drive innovative thinking. According to Dr. Scott Page, author of The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, people from varied backgrounds are more effective working together than those who are from similar backgrounds, because they offer different approaches and different perspectives on developing solutions.

Diversity drives value. When describing the need for a continued commitment to a diverse board, Eric J. Foss, chairman and CEO of Pepsi Bottling Company, told The New York Times, "It's not a fad. It's not an idea of the month. It's central and it's linked very directly to the business strategy. That is the case in great times and in more challenging times....diversity allows our company to create more shareholder value."

This isn't about window dressing or checking boxes. Ensuring that people of color and women have access to senior leadership roles is just the start. Real diversity -- and the success that comes from it -- can only be the outcome of a comprehensive approach that improves the mix at every level of management. But experience has taught us that diversity doesn't just happen. Special recruiting efforts and programs to develop a culture that favors and facilitates diversity often require a significant investment of time, money and resources. In a troubled economy, it's particularly challenging not to let those efforts become stuck in a backwater.

We need an approach that suits the moment -- an integrated, multilevel strategy that recognizes diversity is key to profitability. So what can companies and organizations large and small do to engender increased diversity while managing the investment required to do so?

A commitment to diversity is paramount. Companies can promote progress through partnerships, leveraging relationships with external specialized professional/advocacy associations, and fostering internal ones to gather input from various parties. Companies can promote advancement, by focusing on recruitment and mentoring to build towards promotion at every level of management, including board leadership. And companies can promote a culture where diversity is an integrated and expected element of every strategy, from team development to succession planning.

Let's press forward with an agenda that inherently believes that diversity can and does add value to the achievement of excellence and improves America's competitiveness. If diversity is valued at the highest court of the land, then surely corporate America can continue its strategic efforts and investments to integrate diversity as a fundamental component of profitability.

 
 
 
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01:46 PM on 07/31/2009
Good luck finding physicists or chemists of African American descent... there are very, very few. That's a fact and it has everything to do with racism and its historic consequences being well and alive in the US. Having said that... to a business what matters is hiring a physicist or a chemist. The race of that person does not matter, only their ability to get the job done. Consequently it would be foolish to wait until the person of the right genetic makup shows up at the HR department...
04:09 PM on 07/31/2009
So that being the case, here's a hypothetical.

You are a hiring manager in your organization. You are looking for a physicist. You have one opening for one. You have whittled the thirty applicants down to three, based on their CV's. You feel the education and experience of these three make any one of them an ideal candidate. One's an Irish-American man, one a Mexican-American woman, and one an African American man.

Who gets the job? Why?

NOTE: ALL THREE ARE OUTSTANDING CANDIDATES.
07:45 PM on 07/31/2009
If I am trying to hire a physicist, chances are I won't get thirty applicants. Chances are that I won't even get three. There is even a chance that the best suited applicant I can find will be from Europe or Asia... You see, physics is the same in the whole universe. But physics is very diverse, so while there are hundreds of thousands of physicists, no more than a handful will have roughly comparable expertise in their specialties. And to find those you have to think larger than "We put an ad out there and let the HR department screen the 300 applicants.". We are not talking about a janitor position here. Science recruiting, and to a lesser degree engineering recruiting, is very specific and bound to the problem that needs to be solved.
07:45 PM on 07/31/2009
Now, I had to deal with a hiring scenario a couple years ago. Three engineers. A 50+ year old Texan, a young Indian guy and an older, more experienced Indian guy. The older Indian guy was highly experienced but not even interested in the job after he learned that there were no formal specifications and that he had to make things up along the way. He bailed out before we could even interview him.

The young Indian guy was not experienced enough and the code snippets he showed me looked questionable and of low quality.

The old Texan guy, OTOH, had me after a few minutes in the interview. He knew exactly what I wanted him to do, he was obviously capable of doing it by himself, completely unsupervised and he had tons of experience. I picked the old guy... and he delivered 105%.

Why do you think the tall man with the big hat got the job? Because he was white? Or because he had what I was looking for?

In other words, you will NEVER find three people with the same qualifications in reality.

In any case, both of the two Indian engineers could probably have delivered, too, but it would have taken more hand holding.
10:20 AM on 07/31/2009
"A-Players Only -- Motivation Speaker / Coach" as Mr James Jacobus describes himself -- Well maybe he might consider a little less "Player" and a lot more brains before falsely selling himself as any kind of creditable anything -- According to verified
http://jimjacobusbankruptcy.blogspot.com/
08:04 AM on 07/31/2009
As usual, many people miss the point when it comes to a discussion concerning diversity. What makes America great is its diversity. Before Pat Buchanan tells me about the innovation of white people, understand this: there is no "white" culture. There ARE, however, English, French, German, Irish, Scot, etc, cultures. So, among so-called "white" people, there is already an incredible amount of racial/ethnic diversity. This diversity has kept the U.S. on the cutting edge of innovation and industry through most of its history.

Diversity programs seek to expand what's already there to bring more voices to the discussion. To open new markets and exploit more talent from new sources. Obviously, when selecting someone for hire/promotion, competence and experience are paramount considerations, but if you have 50 applicants for 5 openings, what else is brought to the mix must be considered to ensure the long-term profitability of an organization.
12:35 AM on 07/31/2009
I'm all for diversity, but I'd like to see the empirical evidence - maybe showing that the top 25 companies in terms of profitability in the USA are also the most diverse and much more diverse than, say, 100-125. My guess is that some of the most profitable companies are tech outfits populated to an extreme amount by white, male technoids who probably rate not very high in terms of social consciousness. ExxonMobil is, of course, the most profitable company in the USA (and world) in terms of total profits and it is not especially diverse. Every business leader would rather have a extremely competent black (or woman) vs. an average white (or man). But they want extreme competence rather than color and gender to be the real key.

Can we see the data behind this argument?
09:04 AM on 08/01/2009
I always find it amusing how people sometimes confidently claim that the're 'all for' something before asking for evidence of the existence of the thing they just declared they were all for! I suspect you will not find the 'evidence' you are looking for because you have already predetermined what will count as 'evidence', thus deligitimizing any findings that falls outwith your specification. The USA has never had a female President or until 2009, a Black one. Using evidence that meets your specification, it is logical to conclude that no woman or Black person need ever run for President because the previous 200 years are ample evidence that they are less competent/qualified/suited to that role than white males. We both know that the statistics are not that simple and that there are huge inequalities and a parade of 'isms' affecting the outcomes for people other than white males. I expect you would find the same underlying inequalities behind the 'top 25' figures you seek. It would be impossible to know if the success rate of the top 25 was the result of racial homogenity or simply a 'clustering' of networks of the most priviledged and least discriminated against people, who happen to be white and male.
09:03 PM on 07/30/2009
Diversity is the key to life, not business or profit. That is why humans will fail this experiment. I enjoyed the responses from the business approach. Soon, those responses won't be worth the oxygen to speak them. Worldwide, the cat is out of the bag in regards to the ponzi scheme. The magic show will run out of illusions. Don't believe the hype. Diversity is the key to survival for humans. Otherwise, consider yourself a target, maybe even for profit.
03:40 PM on 07/30/2009
Sorry, I think I'd have to put competence, competitiveness, drive, and intelligence above diversity if you want to be profitable.

But that's just me. I'm silly that way.
09:06 AM on 08/01/2009
You obviously see them as completely separate and competing things.
02:14 PM on 07/30/2009
Either you are completely clueless, or, more likely, not a business owner. A business is not a social experiment. It's a way for an owner/stockholder to make a profit. Whether it's a small business or a large corporation, the intent is to maximize profit. And a workforce that helps achieve that goal is what that business looks for. Just because someone wrote a book that calls for more diversity doesn't mean that it's thesis is true. The talent and skill levels of employees is what makes a business work and succeed, not what their skin color, sex, or religion is. And it's a bit ironic that you post an article about diversity on this site. Take a look at all the contributors, you don't see many non-white faces. Very hypocritical.
08:46 AM on 08/01/2009
Societies are by their very nature social experiments. Organisations from families to corporations are part of society, ergo they are smaller social experiements and simultaneously part of the larger social experiement. You seem very threatened by the fact that most of the contributors are not white. Are you saying that you know which ones are more/less objective about this subject based on the color of their skin? You seem to be labouring under the misconception that skin color determines a person's views and therefore everyone who looks the same believes the same thing. Would you be more comfortable with the views expressed if the contributors were all white or evenly split by race? Examine your motivations...if you dare. What race am I? Can you tell by what I've written? Your comment is full of exactly the sort of insidiuous reasoning that inhibits change for the better in areas such as equality and diversity because it questions the existence and business consequences of inequality despite much credible evidence that both are real.
01:36 PM on 07/30/2009
I can't speak to other industries, but you did mention law. In my experience, it is pretty much impossible to graduate law school as a minority without a job waiting for you. I'd love for graduating in the top twenty percent to carry a similar guarantee, but it doesn't.
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The Albany Kid
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01:57 PM on 07/30/2009
As a minority with a law degree (and a law license), I have to respectfully point out that many Black law grads (for various reasons) find themselves without law-related jobs and *with* mountains of student loan debt after law school. At least this is the case where I live; perhaps things are different where you are.
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The Albany Kid
From the 518 to the 651
12:57 PM on 07/30/2009
Interesting article...as a Black male and as a Dem, I agree with most of it.

One disturbing point (disturbing insofar as it does have some intellectual gravity) I've heard far-Right Wingers raise is that relatively homegenous nations like Japan and China show that diversity isn't really a necessary factor for prosperity. Obviously, these are the sort of folks who tend to distort phrases like "Celebrate Diversity" into "Celebrate Subversity". Anyone have any thoughts on that?
03:56 PM on 07/30/2009
A diverse gene pool means a greater chance of survival from diseases. Look what happen to the the Indians when the Europeans made first contact. In places like Haiti, the native Indian populations almost became extinct because they were getting sick and dying because of the different disease that the explorers imported. That is why among other reasons Africans were import to the New World because they could withstand the European's diseases. A diverse society is just healthier and stronger in the long run. So to make that happen you have to give opportunities to everyone. Some people have posted about what makes a company successful but I am concern about what makes the human race successful.
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The Albany Kid
From the 518 to the 651
04:22 PM on 07/30/2009
Excellent point!
12:49 PM on 07/30/2009
Translation:

"Fire white people because they are white."
08:12 AM on 08/01/2009
Your translator is either broken or stuck on stupid.
12:32 PM on 07/30/2009
diversity is the key to profitabilty? Tell that to the bank.
12:30 PM on 07/30/2009
There are millions of ways to be diverse without involving "race" or "culture". And no, it isn't appropriate to "demand" it of companies using force (e.g. the govt.). If what you believe is true, then "diversity" is what all companies will pursue freely without coercion, because investors will demand it. Because make money for ownership is why companies exist.
08:24 AM on 08/01/2009
Your hypothesis ignores two very real and important factors: institutional racism and the pursuit of maintaining the status quo.

As for the supremely ignorant statement below:

"diversity" is what all companies will pursue freely without coercion, because investors will demand it. Because make money for ownership is why companies exist.'

Do you mean that they will do this in the way the big banks were careful with our money and didn't bring the global economty to its knees out of pure greed? Or how they didn't sell risky subprime mortgages to predominantly poor Black people? Is that what you mean? You don't live in the real world. The world's top neurosurgeon and undeniably one of the smartest people on the planet is a Black man called Benjamin Carson. Why are there no top Black bankers on Wall Street? By your logic, it must be because Black bankers is NOT what investors want and this is the only area in which your logic works. Organisations in the 'for-profit' sector are useless at self-regulation at the best of times and they will somehow do the right thing voluntarily on the issue of diversity?