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After the death of George Floyd, protests against police violence and against racism and discrimination have been taking place all over the world. Companies are also called upon to take action here – for both moral and economic reasons. After all, diversity and inclusion pay off.
Minneapolis, Washington, Paris, London, Munich, São Paolo, Accra. People around the world are currently taking their outrage at the extent of discrimination and their solidarity with George Floyd to the streets. The protesters are calling for an end to racism and discrimination against disadvantaged groups and a reform of social and legal structures.
Companies have been confronted with similar expectations for years. What counts here, however, are not political positions, especially in a heated, polarized mood, but rather economic considerations. And they speak a clear language.
Diversity pays off
The consulting firm McKinsey conducts regular studies on how diversity influences companies’ profitability. The studies look into how the profitability of companies with the highest diversity in management positions differs from those with the lowest diversity in management positions.
The latest study (published in May 2020) found that companies that lead the field in terms of ethnicity and cultural diversity in management positions outperform the stragglers at the end of the ranking in terms of EBIT margin with a probability of 36%. This means a diverse company does not necessarily have to be better off than a non-diverse competitor in every single case. A clear success factor is evident on average across more than 1,000 companies in 15 countries, however. (By the way, similar results can be seen with regard to the diversity of women in management positions).
Why is this the case? Three approaches play an important role here: innovative strength, customer proximity and attractiveness as an employer.
Diversity leads to power of innovation, customer proximity and attractiveness as an employer
Diversity and innovations: In the corporate context, innovations often do not arise from a single moment of genius, but rather from the teamwork between a group of employees. If these teams consist of people with the same professional and social backgrounds, however, thinking “outside the box” becomes more difficult. Conversely, diversity can promote the exchange of creative, new ideas.
Diversity and customer proximity: These innovations must be brought to market in order to be successful. As early as the development phase, diverse teams can help ensure that all customer segments are taken into account. In globally active companies like NORMA Group, diverse sales teams are also indispensable for responding to the cultural conditions in the various markets.
Diversity and attractiveness as an employer: Last but not least, diversity helps companies position themselves as the employer of choice and attract talent. It gives talented people from disadvantaged groups the chance to develop and make their maximum contribution to the company. Conversely, the company can draw from a larger pool of talent.
Companies must also take action
The benefits of diversity for companies do not come automatically, however. To stick with the three examples just cited: In order for diverse teams to truly realize their innovative potential, they must learn to work together and appreciate each other’s ideas. Sales teams need intercultural skills to recognize and respond to differences in markets. The structures for hiring and promoting skilled workers and talented employees must offer equal opportunities for all applicants and employees.
A clear commitment to diversity, appreciation and equal opportunities and a clear rejection of any form of discrimination marks the starting point for these forms of inclusion in companies. This must come from two sides: from management and from the employees themselves.
Diversity at NORMA Group
Over the last few weeks and months, NORMA Group has demonstrated its solidarity with the victims of discrimination and racism through various activities (see photo). In the Charter of Diversity and the Diversity Mission Statement, company management commits itself to diversity and opposes discrimination in any form. On annual Diversity Day, the sites set an example of diversity in the workforce and bubble assignments give employees the chance to get to know other cultures. A Stakeholder Roundtable on Diversity Management was also held last year.
Commemoration ceremony for the victims of the racially motivated attack in Hanau,Germany
From its own point of view, NORMA Group has not yet reached its goal by participating in these activities. Nevertheless, this is at least a starting point and the foundation for strategically developing diversity and inclusion within the company, and thus for combining equal opportunities, appreciation and anti-discrimination with profitability, has been laid.