Diversity can be good for business, but the bottom line is elsewhere …

Many companies are strong and clear about their diversity ambitions. But the way they do it often does more harm than good.

Without a doubt, the traditional network made up exclusively of kids is definitely a thing of the past. Boards of Directors that include only grizzled men in blue suits they have become an anachronism. Bringing more diversity into organizations has simply become “the right thing to do”.

Frederik Anseel.
© Frank Toussaint

Proponents of diversity, however, claim otherwise and in so doing shoot themselves in the foot. “Diversity creates a lot of added value,” fund manager Maxime Carmignac said recently. The President of the European Commission, Ursula von der Leyen, believes they are there “irrefutable evidence” that companies that score well on diversity perform better. This is called “building a case” for diversity.

Diversity should not be sought because it has intrinsic value, but because it is good for business.

However, beware of this dangerous statement for three reasons.

First of all, the evidence is not irrefutable. To be fair, science hasn’t established any evidence yet. Diversity advocates choose studies that speak for them, but you can also find many studies showing that diversity isn’t beneficial at all. The quality of most studies is actually very poor. The danger of such an argument is thata skeptic might present a study that shows the exact opposite, i.e. diversity within a team leads to worse performance. And suddenly you find yourself in the middle of a “yes or no” discussion. far from what matters: fairness.

Lehman sisters

The second problem is the explanation people find to support this claim. “Ah,” they say, for example, “women simply have different leadership qualities than men.” If you follow this type of argument, women are more humane, more attentive, more considerate, or more reasonable. If the bank had called itself Lehman Sisters instead of Lehman Brothers, it would never have gone bankrupt. Problem: This argument is completely false. Male and female leaders are actually very similar.

LGBTQ + people feel less comfortable in organizations that promote diversity.

The danger is also that thethe reasoning can easily be reversed. If there are situations where female leaders seem more competent, then there must also be situations where male leaders are better suited. With this argument, the doors are opened to business councils which suddenly state that a man is absolutely necessary to resolve an urgent crisis. Nonsense of course, but the knife is double-edged.

The third problem is likely to deliver the coup de grace. How do people from different backgrounds feel about these claims that diversity leads to greater success? Oriane Georgeac (Yale University) and Aneetta Rattan (London Business School) discovered this. LGBTQ + people feel less comfortable in organizations that promote diversity. They found the same for women looking for work in science, technology, and engineering (STEM) and for African American students enrolled in US universities.

Single individual

Why? When the rhetoric of the so-called added value of diversity prevails, minority groups feel it as a threat to their own identity. They are treated as stereotypes based on their gender, orientation or origin. Yet everyone aspires to be treated as a unique individual.

By constantly emphasizing the financial added value of diversity for the organization, you get the opposite of what you are looking for.

A woman doesn’t just want to be seen as a model of female leadership. It is also worth highlighting the inherent qualities of her. This feeling of being treated in a stereotypical way can go up to affect performance. In fact, women who were told about the diversity business case before a job interview performed worse than those who were made to realize that diversity was inherently “the right thing to do.”

Ultimately, while it’s encouraging to see companies striving to increase diversity at all levels, they still need to do so for the right reasons. Constantly emphasizing the financial added value of diversity for the organization, you get the opposite of what you are looking for.

Frederik Anseel
Professor of Management at the University of New South Wales in Sydney

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