Thoughts on Corporate Diversity

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Diversity has been touted and praised for a long time. One might think that with all the data and success stories published on the value of diversity, companies would embrace the concept and take advantage of it. Not so quick. While many of the great companies like Novartis, PwC, Marriot, and others strive for diversity at every level, others lag far behind. Below is a quick guide to remind boards on this powerful and often untapped resource. 

Why Diversity? 

“Being around people who are different from us makes us more creative, more diligent and harder-working.”  -Katherine W. Phillips

Creative: Diverse minds have unique perspectives that lead to the “out-of-the-box” thinking. No wonder that the world’s most innovative companies cherish and live by the diversity principle. It’s hard to come up with a unique solution when you work with people who have the same knowledge and thought patterns.

Diligent:Working with people from different backgrounds is like stepping out of a comfort zone and trying new things. It can be scary, as a diverse group of people might less likely to agree with all we propose and most likely to challenge us. Diversity is also a great system of checks and balances. We tend to be more accountable to a diverse group of professionals. 

Hard-working: What happens when you combine creativity and diligence? The company works not only harder but smarter. The bottom line increases. Diversity is all about making business more successful and sustainable. It shouldn’t be misused as a fancy trend to follow.

Could there be too much of diversity? Diversity, like any other tool or concept, should be used to serve the company goals, and not for window-dressing. As long as companies don’t compromise quality and purpose just for the sake of diversity, they are on the right path.  

Diversity as We Know It

Diversity comes in different forms and dimensions. The most familiar are:

Ecosystem Diversity

Is there any other type of diversity that boards need to consider? Yes, there is! Recent emerging trends show that there is an equally important and often underestimated element to diversity – ecosystem diversity. Ecosystem intelligence tracks the social ties of a group of companies’ board directors, management teams and other stakeholders.

SONEAN, a German strategy consulting company that operates internationally, pioneers a new approach to ecosystem intelligence. SONEAN analyzed 4500+ social ties that connect 395 managers and directors of Germany`s largest 30 listed companies. As SONEAN states in its recently published paper: “A special focus is dedicated to the role of network diversity, i.e. the unique ties that executive (managers) and non-executive directors bring to the company and thus provide greater social capital.”

Diversity should be considered beyond standard dimensions discussed in the graph above. Network diversity of directors and senior managers has a significant impact on the company’s ability to innovate and make better decisions. Companies with broader social ecosystems (more diverse and less interrelated social ties) bring in a greater perspective, more objectivity and connections.

Embracing and celebrating diversity has been on boards’ agendas of top performing companies. Studies, research and performance history of many companies proves that diversity pays off in multiple ways.