Diversity in business is not a word that gets most people that excited. It generally provokes more of a defensive reaction or a rolling of the eyes like when the word 'compliance' is mentioned. However, enlightened companies are putting a huge focus on diversity, primarily because it is benefitting their profitability.
Many failed companies, such as Enron and Lehman Brothers, have suffered from groupthink – a phenomenon where people set aside their personal believes to achieve harmony in a group. Dr John Coates found that young men who dominate trading floors have large gains in testosterone and cortisol levels rise which can cloud their judgement. He argued that Lehman Sisters may have done better than Lehman Brothers! The Catalist report report in 2011 found a 53% increase in return on equity for companies with higher representation of women board directors. Companies are seeing such data and taking note. Dell, for example, have developed an excellent program for men called MARC (Men Advocating Real Change), which has seen great results.
Our customers do not all look and think like us. How can we possibly understand what they want or how they want to buy it, if we do not have a varied workforce? Diversity can be about gender, ethnicity and age, as well as many other things. IDEO, a design firm, have hired a ninety-year old woman Barbara Beskind and say that designers think differently when she is in the room. They have started to look at who their customers are and have a team appropriate to this.
Millennials, those born between 1980 and 2000, will make up 75% of the workforce in ten years’ time. They have always had access to the world through the internet and their smartphone. They have grown up with diversity, expect it and will choose diverse companies. Given the number of millenials, you can't afford to ignore what they will want in the ideal future organisation. So diversity is good for business – it will attract more talent to your organisation and encourage innovation.