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 natural diversity that comes from a multicultural workforce can turbocharge those business benefits.
Cultivating a genuine 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 culturally diverse workforces are better engaged and their organizations 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 top strategic business priorities when they’re better at recognizing and adapting to other cultures’ work styles and behaviors. And we’re not the only ones to identify a link between culturally diverse workplaces and financial success. 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 a company requires to successfully power its innovation strategy. A multicultural workforce organically breeds the indispensable combination of diverse talents, ideas, and skill sets to successfully catalyze creativity and foster 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 solely by being open to “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 therefore less likely to leave. This mitigates the risks 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 yearand had an ROI of 163% – i.e., for every dollar spent on the diversity training program, Nextel gained $1.63 in net benefit.
Leadership Holds the Key to Success
But 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 are accustomed to others who are “like themselves”; they need role models, evidence about benefits, and recognition of positive outcomes for them to be open to, appreciate and, ultimately, value people who are different. 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 becauseit’s harder.”
Their finding is based on a study among homogenous versus diverse 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 mustwalk 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, research data showing a clear relationship between multicultural workforces and business success is piling up – and the pile is high! As globalization brings the world closer together and continues to blur boundaries, it’s becoming clearer and clearer that competing on the world stage means that now – more than ever – all companies must demand diverse multicultural workforces to help them really think outside of that old box and discover new approaches that are truly global!