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Diversity Program Effectiveness, Part 1: If Diversity Helps, Why Does It Often Fail?

CoAdvantage- Diversity programs have the potential to produce enormous benefits for the organizations that embrace them, but all too often efforts fail to generate the desired results. Why?

It’s important to understand that, yes, inclusivity and representation are not only right in principle, they also legitimately produce business value when translated into smart programs designed to diversify the workforce. Failed training programs don’t mean diversity isn’t legitimately valuable.

First, diversity powers better business performance:

Sabrina Clark, a managing partner with SYPartners, which specializes in organizational transformation, told CIO Magazine, “Research shows that even just the presence of physical diversity results in better performance and for companies that are data-driven, that extra performance boost can be extremely motivating.”

Other research backs up that assertion. Analysis from consultancy firm McKinsey & Co. shows links between greater workforce diversity and greater profitability. Specifically, more diverse organizations are 15% to 35% more likely to see an above-average financial performance.

Then, diversity fuels improved innovation:

A survey by Boston Consulting Group (BCG) of 1700 companies found that organizations with above-average workforce diversity also generated a greater portion of revenue from innovation when compared to organizations with below-average diversity.

Plus, diversity protects against certain losses:

Let’s not forget that government regulation also penalizes behaviors that can reduce diversity, like discriminating against a protected class. Lawsuits and government action can result in massive payouts and legal costs. For example, The Harvard Business Review (HBR) reports that Bank of America Merrill Lynch settled a race discrimination suit in 2013 for $160 million. Combined with similar cases, Merrill ended up paying out nearly half a billion dollars over the course of 15 years.

Yet many diversity programs don’t seem to work.

Unfortunately, analysis by HBR found that the three most popular forms of intervention designed to increase diversity – mandatory diversity training, job tests, and grievance systems – actually reduced it by as much as 11.3%, depending on ethnicity and gender. What’s going on, and what can organizations do to ensure their programs actually deliver? We’ll answer those questions in the next post in this series.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about CoAdvantage’s ability to create a strategic HR function in your business that drives business growth potential, contact us today.

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