Why Two-Dimensional Diversity is Critical for Innovation

April 25, 2018 | Tom Bernot


Diversity in hiring practices is considered a requirement from an ethical standpoint to ensure organizations are operating with a culture of inclusion, and more often, to protect a company from discrimination lawsuits. However, what many hiring managers and business leaders may not realize is that a diverse workforce has proved time and again to provide organizations with a significant competitive advantage.

 A recent study from NC State University's Poole College of Management found that companies that actively take steps to foster diversity create and develop more innovative products and services. 

“There is a business case for diversity,” says Richard Warr, coauthor of a paper on the study and head of the Department of Business Management at NC State. “It’s not just about trying to be nice. It’s good for business. It not only helps in terms of perception. It actually produces better outcomes.”

In a world hallmarked by disruption, innovation is not only smart, it's paramount to survival. Since 2000, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired or cease to exist as a result of digital disruption. Companies that wish to outlast this increased age of disruption will need to tap into a range of ideas, opinions and experiences. Organizations with increased diversity, especially at the managerial and C-Suite level, are more likely to provide stronger business outcomes due to an enhanced innovative environment— an inevitable byproduct of a diverse workforce.   

The Truth About Like-Mindedness

Whether consciously or subconsciously, many employers continue to hire individuals that share similar backgrounds and characteristics to themselves. This “spark of commonality” can make sense during the interview process, as people are innately drawn to others who are like them. But when these individuals all get in a room together, they tend to agree with one another and squash any chance of divergent thinking—undercutting the overall strength of the organization and its differing employee viewpoints.

Without diverse leadership in place, companies lose out on crucial innovative opportunities. A study from Harvard Business Review reports that when there is a lack of diversity at the executive level, women are 20% less likely than straight white men to win endorsement for their ideas; people of color are 24% less likely; and LGBTQs are 21% less likely. An article from Crain’s Cleveland Business found that 86.6% of legal occupations are held by white individuals nationally; the number jumps higher in the Cleveland area with fewer than 4% non-white local partners. Exposure to implicit bias can lead to a detrimental impact on performance, mental and physical health and overall organizational behavior. However, when a corporate culture exists that respects and encourages unique perspectives and divergent thinking, value-driven insights and productive habits are given room to flourish.

The Plurality of Diversity

There are two widely examined types of diversity: inherent and acquired. Inherent diversity relates to the traits an individual is born with, such as ethnicity, gender, age and sexual orientation. Acquired diversity, on the other hand, is less tangible as it involves characteristics gained from life experience. 

Inherent diversity is often touted as an immediate human relations priority for organizations that may employ a "too homogeneous" workforce. Hiring more women, more people of color or more of any protected class requires changes to recruitment practices and a more inclusive way of working that both attracts and retains individuals with diverse characteristics and requisites.

Acquired diversity, conversely, is easier for organizations to quickly integrate into their employee pool. Employers don’t set out to hire an individual that is inherently similar to their current workforce; instead they search for a candidate with a “depth experience and wide range of perspectives.” Acquired diversity becomes more and more valuable in increasingly globally integrated organizations, where varied life experiences and proficiencies result in increased opportunities to better relate to and understand the expectations of new, and current, customer segments.

Despite the benefits associated with each identified form of diversity, both are necessary to produce a truly innovative environment. Research shows that companies whose leaders exhibit both inherent and acquired diversity traits, or two-dimensional diversity, report higher performance and innovation results. In fact, companies with two-dimensional diverse leadership are 45% likelier to report a growth in market share. This innate level of diversity at the top encourages employees, whose voices may have been prior muted, to let their ideas be heard in a work environment that values differences.

How Diversity Fosters Innovation

Hiring a team of individuals with diverse backgrounds is not only an ethical business move, it’s strategic. Creating a more diverse workplace helps keep your team members’ biases in check and makes them question their preconceived assumptions. Diverse teams are more likely to reexamine facts and remain objective over homogeneous parties, who are more often prone to making factual errors in favor of group agreement. By establishing workplace dichotomy, employees can become aware of their entrenched ways of thinking, which in turn opens the door to creative decision-making processes.

Conformity is a barrier to innovative thinking, despite the comfort level it brings. A study published in Economic Geography found that companies with homogenous management were less likely to introduce new product innovations into the marketplace than their diverse counterparts. The diverse organizations also reached international markets faster, increasing the bottom line. These results support the economic benefits that diversity in leadership provides.

Building Your Own Diverse Team

Developing your own diverse workforce can seem insurmountable, especially if your business is entrenched with homogeneous bureaucracy. As with any hiring initiative, it requires conscious prioritization, difficult conversations and a holistic strategy. To begin evolving, and retaining, your own diverse labor force, consider the following recommendations:

1. Commitment from leadership

 LinkedIn Talent Solutions advises that businesses get commitment from the right people straight away before beginning a diverse recruitment initiative. Ensure that your HR department has set fair policies, your business leaders fully support a culture of inclusion, and potential hiring managers are onboard. Additional education may be necessary to create a compelling business case for diversity that everyone within your organization can endorse.

2. Identify how diversity will help your customers

Consider how a diverse workforce will not only benefit your company, but also your customers. Your staff demographics should widely correlate with the individuals you conduct business with. Studies show that a team with a member who shares a client’s ethnicity is 152% more likely to understand that client’s wants and needs versus another team that lacks this connection.

3. Locate candidates beyond the usual job boards

By unintentionally placing job descriptions in the same places, or by using the same recruiters, companies often find themselves with an identical workforce. To truly create a diverse workforce, go beyond the typical postings on Monster or Indeed. For example, if your organization hopes to increase diversity by hiring military veterans, consider posting on Shift—a company dedicated to bringing technology opportunities to returning vets. Many job boards exist that specifically appeal to non-traditional candidates.

Companies that wish to thrive in the age of disruption must enrich their talent with representatives from different genders, ethnicities and walks of life. An inclusive culture not only challenges unconscious biases, it also enhances business performance through increased innovation. In a world challenged by accelerated change, a diverse workforce can provide the competitive edge nearly any business can wield to help overtake a stagnant market.

Topics: Future of Work Digital Disruption Corporate Character

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