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Is diversity in the workplace a phantom player?

As more and more companies struggle to compete globally, it is increasingly clear that innovative thinking about how we can do business differently is urgently needed.

In a business world that moves from the bottom line up, diversity in the work force and diversity training for managers is often considered fluff.

It is a chore shoved off to human resources departments to consider between handling payroll and benefits, ensuring that there is a body in place to fill each job, and providing basic skills training.

According to a fascinating study by McKinsey and Company, selling the power of diversity short could have significant impact on your company’s profits and future prosperity.

The report, called Diversity Matters, shows that gender-diverse companies are likely to exceed the profits of non-diverse companies by 15%.

Ethnically diverse businesses will likely out-perform less diverse companies by 35%.

McKinsey has had its eye on diversity for many years. For their 2015 report they examined 366 public companies from a variety of different industries in Canada, United States, Latin America, and the United Kingdom. The researchers looked specifically at financial results and the composition of top management and boards.

In the United States, they discovered a linear relationship between racial and ethnic diversity and increased profits for companies. Specifically, for every 10% increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rose 0.8 %.

The report also underlines the challenge of achieving greater diversity. For example, women account for an average of just 16 % of executive team members in the United States, 12% in the United Kingdom and 6% in Brazil.

Looking at racial diversity compared to overall population, a total of 78% of companies in the United Kingdom have top management teams that do not reflect the demographic composition of the country’s labor force and overall population, compared with 91% in Brazil and 97% in the United States.

In an article about the report, Vivian Hunt, director of McKinsey’s London office, Dennis Layton, a principal there, and Sara Prince, a principal in their Atlanta office, noted that the numbers of the research report send a clear message that work needs to be done.

From the perspective of the team of The Bridging PrinciplesTM, a Canadian-based cross-cultural program designed to help businesses and organizations build bridges across cultural gaps, it is clear that there is a compelling case for greater diversity and a better handling of the diversity that exists.

As more and more companies struggle to compete globally, it is increasingly clear that innovative thinking about how we can do business differently is urgently needed.

The importance of ensuring all employees understand the principles of cultural respect and the ways to negotiate and do business amicably with people from vastly different cultures is of paramount importance.

It is no longer enough to tell the HR department to deliver a bit of diversity training and call it a day. It is unacceptable to issue statements saying that your business is taking steps to address the lack of diversity in its workplace and then forget about it.

Real change happens when real respect happens. If there is not commitment to crossing cultural bridges, it will not happen.

The old rules as corporations created them just aren’t working anymore. Businesses are becoming bigger, but they are not becoming more successful. There is a reason for this.

We need to find a new way to do business that changes “show me the money” to “show me the respect.”

The Bridging Principles is a blog about doing business and life differently to create better results for all. Click here to subscribe for free. To pre-order a copy of the book “The Bridging Principles: Building Bridges for Business,” coming out soon, click here. To arrange for training in The Bridging Principles for your company, email info@thebridgingprinciples.com.

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