Often the debate about diversity is coupled with the debate about equal opportunities; it is seen as being synonymous with demographics, about gender, race or age. While demographics are certainly part of diversity, increasingly the debate has expanded to recognise that actually when we talk about the value of having diverse workforces it is not the input — the “who” — that matters, it is the output — the “what” they bring — that makes the difference.
Key to this new way of thinking about diversity is the idea that the value of diversity is through having a range of perspectives and experiences in a team.
It is diversity of cultures, diversity of skills and experiences, diversity of ideas and business perspectives that help to create and drive great organisations and deliver great business performance.
Recruiting in our own likeness is something that is not uncommon for managers at all levels; on a conscious or unconscious level we often end up creating teams that think in a similar way to ourselves. It is easy to see why: teams like this can often be seen as efficient, reaching a consensus easily, harmonious with little dissent or debate and ultimately they can be much easier to manage.
However, this lack of diversity, at its extreme, can lead to some disastrous consequences as the proponents of “groupthink” theory advocate. This psychological phenomenon was pioneered by Irving Janis in the 1970s and has subsequently been used to explain many faulty decisions in history. It argues that the desire for harmony or conformity in a group results in an irrational or dysfunctional decision-making outcome and the lack of alternative viewpoints is key to this.
Having a diverse team and people that feel confident to challenge in a constructive way based on varying perspectives and experiences can add huge value to organisations and also help to mitigate risks.
A report by the Association of Chartered Certified Accountants (ACCA) on building a better business through finance diversity argued that greater diversity brings greater capability, and with changing roles the more diverse experience people have the more effective they can be as they gain new responsibilities. Specifically the report argued that in the global finance function, chief financial officers and their teams must embrace the diversity that comes from operating across geographies and cultures and leverage this for positive outcomes.
Companies may have teams that look different, which is good for the CSR reports, but the more important factor is to have a team which is also going to think and work differently. When expanding overseas, new markets bring their own customs, culture, regulatory environment and governance standards, which need to be considered and integrated into existing corporate models. Finance leaders need to strike the right balance between a company drive for international standardisation and diversity of local market experience and knowledge.
A diverse team is also better able to represent the increasingly diverse customer base that organisations need to tap into to be successful. Our customers don’t all think alike and we can’t afford to either.
The ACCA’s report suggested some practical steps to help build better diversity in finance functions, but which is equally applicable to any area of a business.
Firstly you need to understand the cultural differences Having a diverse team is not always simple, so you need to actively consider how to integrate different styles, practices and approaches in an effective way. In understanding the differences it will enable you to be sensitive to them and ensure that you get value from diversity rather than conflict.
It may seem simple, but diversity starts with recruitment; you need to make an active choice to recruit from different backgrounds, sectors, experiences and careers. You also need to nurture diversity where it does not exist. As the report states it is no longer the “career ladder” but the “career lattice”. Experience across functions, offices and markets all helps individuals to broaden their own awareness and perspective, ultimately enabling them to bring more diverse opinions to business decisions.
For diversity to work you have to encourage open ways of thinking, teams have to be encouraged to express different views. There is no point having a diverse team if you are not willing to listen to each and every opinion. Allowing time for a constructive debate means it might take longer to reach decisions, but decisions are likely to be better for it. It may not be easy but those organisations that truly embrace diversity will be better able to identify risks and opportunities, and ultimately will perform better.
Lindsay Degouve De Nuncques is the head of UAE for the Association of Chartered Certified Accountants.
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