Why Diversity Is Good for Business

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Monica Eaton-Cardone

There's a lot of discussion going on right now about representation, especially in business leadership. We have more at stake than fairness and creating a level playing field, though; Fostering a more diverse workplace is vital for our long-term success.

The United States is rapidly developing into a more diverse country. By 2060, U.S. residents identifying as white, non-Hispanic individuals will represent about 44 percent of the total population, compared with 62 percent today. In contrast, minority communities in the country are projected to grow considerably. The number of Hispanic and Asian individuals in the country will more than double, growing by 115 percent and 128 percent, respectively. The fastest-growing group, though, will be those identifying as more than one race, with 226 percent growth by 2060.


 
The changing population is good for business
This long-term trend could be great news for U.S. businesses, as data consistently shows that diverse organizations outperform their more homogenous competitors. One study from the American Sociological Association revealed gender-diverse companies were 21 percent more likely to show above-average profitability. That same data produces even stronger returns when we look at ethnic diversity, with two-thirds of teams having "medium and high levels of racial diversity" reporting higher-than-average profitability. In contrast, the most gender- and ethnically-uniform teams surveyed were 29 percent more likely to underperform.
 
When you have a diverse group of people, you're drawing on a broad range of backgrounds, experiences and perspectives. That allows for more dynamic and creative thinking, which produces better long-term results.
 
You also want your team to be able to relate to consumers, which is hard to do if your team doesn't reflect who the consumer is. A more representative team will be able to get into the headspace of your buyers and understand how to reach them in a way that a less-diverse team can't manage.
 
Embracing a diverse workplace pays dividends now, and it's only going to become more critical as our demographics continue to shift.
 
Make business reflect the country
Unfortunately, a lot of key sectors of our economy have glaring issues with representation. For example, women of color hold just 11 percent of all science and engineering jobs in the United States, despite representing 35.3 percent of the total female population. That's less than half of where it should be, assuming proportional representation based on the population. It's even worse in senior positions, with women of color holding just 5 percent of higher management positions, and 4 percent of board seats.
 
If there's a silver lining here, it's the fact that more minority women are taking matters into their own hands and starting their own firms. But even then, we still face the fact that the majority of venture capitalists are white men, and fewer than 3 percent of all venture-backed companies are female-led.
 
Overall, we're falling behind in terms of diversity in key sectors. That will eventually translate to a loss of America's competitive edge as a force for innovation.
 
Inclusive workplaces and new opportunities
The first step to make change in the immediate sense is for everyone in our business community to embrace a more open, inclusive workplace. Take Ernst & Young and Atlassian, for example: These two companies are being proactive about fostering an inclusive workplace by trying to identify weaknesses in their culture. They're not lowering standards or passing over qualified candidates, as some people might imagine. They're simply making changes that will attract and retain a wider range of candidates.
 
However, if we're going to make real, lasting change, we need to start early. We need to encourage more young girls and people of color to take an interest in business education, especially in tech fields.
 
Just as important as the education, though, are the connections that will help young business leaders succeed. Good connections can be hard to develop for those outside traditional business circles, which is where mentorship and professional support comes in.
 
Firms like Maya Venture Partners focus on early-stage investment for startups founded and led by women of color. That's incredibly important because, as mentioned earlier, women of color have extremely limited access to venture capital. Other services, like StudentMentor.org, help connect young students, especially those from underrepresented populations, with experienced voices that can help them get the best start toward a successful career.
 
I can't overstate the importance of projects like these. It's the only way we'll really bolster the ranks of candidates and ensure that diversity remains America's strength -- not its blind spot.
 
Monica Eaton-Cardone is an entrepreneur and business leader with expertise in technology, e-Commerce, risk relativity and payment-processing solutions. She is COO of Chargebacks911 and CIO of its parent company, Global Risk Technologies.