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Chloe Drew Headshot

Diversity is the Key to Profitability

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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.