How many times have you heard someone say “think outside the box”? What does that mean? It’s easy to get caught up in the subconscious rigidity of our own ways of thinking, but there’s no doubt that a variety of viewpoints, ideas, and skills can make for a thriving, far more productive work environment. When more ideas and diverse perspectives come together, the opportunities to create better products and services, reach more markets and attract and retain top talent improve immensely. And the diversity that comes from a multicultural workforce can turbocharge those business benefits.
Capitalizing on a multicultural workforce may be hard work, but it’s also a surefire way to embody outside-the-box thinking. And that’s not all: Research has shown that well-managed multicultural workforces are more innovative, more creative, and as a result perform better – financially and otherwise.
Cultural Diversity Makes Financial Sense
In our Global Mindset Index Study, we found that businesses achieve far more of their strategic priorities when the workforce has developed the capacity to recognize and adapt to other cultures. We’re not the only ones to identify a link between culturally diverse workplaces and financial performance. For example, McKinsey found that companies with more racial and ethnic diversity are 35% more likely to have financial returns that exceed their respective industry norms, and those who lack diversity are less likely to see above-average returns.
Diversity in-and-of itself stimulates productivity through the coming together of various experiences, perspectives, and work styles. According to Forbes’
Fostering Innovation Through a Diverse Workforce survey, 85% of respondents agreed that a diverse and inclusive workforce brings together different perspectives and ideas is what companies need to successfully power its innovation strategy. A multicultural workforce can bring together the critical combination of diverse talents, ideas, and skills to successfully catalyze creativity and innovation.
In addition, culturally diverse workforces can help businesses garner valuable insight into global markets, making them more likely to successfully expand and find new clients. This also means businesses are more likely to create products and services that are respectful of and sensitive to the needs of other cultures. In fact, Harvard Business Review (HBR) found that teams with at least one member who share a client’s ethnicity are 152% more likely than another team to understand that client. In other words, diversity alone can differentiate a business from its competitors, leading to increased sales and profits.
And, don’t forget that organizations with effective diversity and inclusion strategies increase their chances of finding the best people for the job by “recruiting from a diverse pool of candidates.” Not only does the push for cultural diversity widen the playing field for recruiting top talent, it goes a step further: employees in inclusive multicultural workforces are more likely to feel respected and valued, and are less likely to leave. This mitigates the risk of turnover and helps reduce the costs of recruitment. For example, in the early 2000s Nextel determined that its diversity awareness training program saved the company more than $3.2 million in turnover costs in one year and had an ROI of 163% – i.e., for every dollar spent on the diversity training, Nextel gained $1.63 in net benefit.
Leadership Holds the Key to Success
Just like the business benefits that come from increasing gender diversity in the workplace, cultivating a culturally diverse workplace isn’t magic. It takes hard work and leadership. People naturally gravitate to colleagues with whom they share an affinity. So, they need role models to show the way along with evidence about the benefits, and recognition of positive outcomes for a cultural diverse workplace. Now, this next part may surprise you: A study cited in a different HBR article found that, “in fact, working on diverse teams produces better outcomes precisely because it’s harder.”
Their finding is based on a study among homogenous versus heterogeneous groups. “Among groups where all three original members didn’t already know the correct answer, adding an outsider versus an insider actually doubled their chance of arriving at the correct solution, from 29% to 60%. The work felt harder, but the outcomes were better.”
Of course, getting people to embrace work that feels harder takes time, effort, training – and above all else, leadership.
The success of a company’s diversity and inclusion efforts are in the hands of leadership at all levels, from C-suite and senior management, to line managers and team leaders. At the core, it’s essential to embark on a genuine journey. It’s been shown that hollow strategies like quota filling and blanket policies often backfire. In these cases, lack of sincerity is obvious and can actually introduce bias, instead of eliminating it. People need coaching and training for dramatic changes to work.
Instead, lead by example and with authenticity. For diversity and inclusion to be fully realized throughout an entire organization, senior management must walk the walk. It can start as simply as leaders allowing diverse voices to have equal airtime– an inclusive measure that makes a team twice as likely as others to “unleash value-driving insights."
And the buck doesn’t stop there. McKinsey found that in the United States, “for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.” Further, companies with multicultural leaders who have strong intercultural communication skills are 45% more likely to report yearly market share growth and 70% more likely to capture a new market, year over year, according to HBR.
As you can see, there is plenty of research showing a clear relationship between multicultural workforces and business success. As globalization brings the world together and continues to blur boundaries, it’s patently obvious that competing on the world stage means that now – more than ever – all companies must cultivate diverse, multicultural workforces. Without them, it’ll be challenging to think outside of that “old box” and discover new approaches that can meet the needs of the modern organization.
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