Diversity Management: How Can It Help Grow Your Business?

Diversity management matters a great deal in modern workplaces. That’s because equality and diversity in the workplace can lead to better functioning teams, happier employees, and, on top of that, more revenue. Even though it sounds like an HR manager’s dream, diversity management can turn it all into a reality.

In order to achieve this extra revenue, though, and without generating additional conflict, it’s important to really understand diversity. Through this article, we break down exactly the importance of diversity management and you can implement it successfully.

Before we begin, we would love for you to download our change management guidelines for your organization today.


What is Diversity Management in Business?

Diversity management falls under the area of HR management (click here to read more about HR’s role in organizational development). Its task is to promote equality and diversity in the workplace through the social, cultural, and ethnic diversity of employees.

This is all done for the good of the company, with the theory being that employees coming together from different backgrounds instills a more creative and efficient problem-solving process. This is thanks to an increased amount of varying perspectives.

What exactly does a “diverse” team look like, though? Well, you certainly need to do more than just think about gender diversity every now and then in order to check the “diversity” box.

Rather, diversity becomes apparent in very different ways, for example through:

  • Internal factors: age, gender, education, ethnic origin, religion or belief, sexual orientation, and disability
  • External factors: income, education, work experience, marital status, parenthood, habits, leisure behavior, and geographical location

According to PageGroup, which interviewed employees from 139 companies in 2018, 63.3% of companies now use diversity management – almost 20% more than three years earlier. 

The topic itself has long since become part of public discourse. For example, in Germany, it has been mandatory since January 2019 that transgender people be included in job advertisements. Anyone looking for a new employee today includes (m/f/o) in the advertisement, which stands for male, female, or other.

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Why Does Diversity Management Matter?

Here are the facts: Ethnically diverse and inclusive companies are 33% more successful, 1.7 times more likely to become innovation leaders in their field, and have better odds of attracting top talent. That’s because, according to a study by Glassdoor, 67% of job seekers care about diversity and inclusion in the workplace.

In short: Diversity management is not only a concise business English buzzword but a key strategic human resources tool.

Originally, diversity management was primarily about avoiding discrimination in recruitment and promoting tolerance within the company. In the meantime, companies have recognized that diversity also offers a strong competitive advantage (click here to read more about how Personio facilitates better recruitment).

More than that, it has become a necessity because phenomena such as demographic change, the globalization of markets, and digitization mean that the customer base of many companies is becoming more and more diverse.

In order to show an in-depth understanding of a range of customers, a hiring policy geared toward diversity and inclusion pays dividends. That’s why companies such as Airbus, Porsche, Zeiss, and Volkswagen have long since put their faith in workplace diversity. In its Wolfsburg location alone, Volkswagen employs people from over 100 countries.

How Can Diversity Benefit Your Company?

As a rule, diversity management is integrated into the HR department. However, some global corporations have whole teams or departments dedicated to it. And this is hardly surprising because diversity is crucial to their success, especially with regard to their diverse customer base.

How Diversity Management Can Help Companies…

  • Promoting an understanding of target groups from other cultures.
  • Ensuring improvements in customer service.
  • Driving innovative thinking in the company.
  • Boosting research and development.
  • Optimizing decision-making processes thanks to different perspectives.
  • Establishing new business relationships and partnerships.
  • Opening up new markets.

But, diversity management and managing diversity, more broadly, does not only have a positive effect on the economic potential of a company. Businesses also benefit from genuine diversity in terms of their employees.

The Benefits of Diversity Management For HR…

  • Greater employee satisfaction, because the team feels understood and valued.
  • An interesting and inspiring working environment for employees.
  • A positive company image that attracts top talent and high potential associates.
  • The enrichment of corporate culture.
  • Stronger employee loyalty to the company.

So, how can you take the importance of diversity management and make it real? Here’s how diversity management is implemented in a way to drive business…

How To Implement Diversity In The Workplace

For all intents and purposes, diversity management is the responsibility of HR. However, that does not mean that they can implement the process single-handedly. Just as the topic itself is characterized by integration and team spirit, HR managers need the help of influential partners to successfully establish a diversity-conscious approach.

1. Ensure Operational Readiness

Management, in particular, has a significant influence on whether diversity and inclusion are truly put into practice. First, make sure that the management team is ready to re-evaluate its corporate culture.

Only if the process is supported at the highest level and management principles take cultural diversity into account can your company successfully implement diversity management in the workplace.

In order to implement your HR diversity management practices, try and anchor your new values in concrete principles to ensure they are both present and measurable. Volkswagen, for example, has maintained its commitment to greater equality of opportunity and diversity within the company with its ‘TOGETHER Strategy 2025.’

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2. Identify Priorities and Goals

Before you decide, together with management, which diversity management initiatives make sense for your company, you should take a look at your corporate goals. Which skills are important to you? What helps you grow? And where are your problem areas?

  • Is the company’s rate of staff turnover above average? Then you should consider how you can improve the working atmosphere and hire and retain the right talent.
  • Do you find it hard to warm to international customers? If so, your priority should be to understand them better.
  • Is your product range hopelessly dull? In this case, multicultural workshops could help to boost your capacity for innovation.

3. Determine Initiatives

Now it is time to pull out all the stops. After determining how you expect your company to benefit from cultural diversity, you should create a plan of action. The initiatives themselves can take effect at a strategic level or be designed to be put into practice by the employees themselves.

Fifteen Diversity Initiatives to Ensure the Success of Your Company

  • Mentoring programs for employees
  • Management coaching on culture-specific topics
  • A culturally adapted advertising or communications strategy
  • Regular cross-departmental projects
  • Deploying an equal opportunity representative in the company
  • Offering language courses and language learning partnerships to break down language barriers
  • Actively combating stereotypes (for example, through awareness training)
  • Facilitating intercultural competence and conflict management
  • Restructuring existing recruitment processes to increase opportunities for equality
  • Offering a range of meal types in the company cafeteria (vegan, kosher, vegetarian, etc.)
  • Providing prayer rooms
  • Flexible working hour schedules
  • Child care services for employees with children
  • International cooking evenings
  • Senior- and disability-friendly workplaces

m w d in job advertisements

4. Allocate Roles

Make sure that areas of responsibility are clearly defined, both within and outside the HR department. For example, HR recruiters should be checking recruitment processes to ensure that job advertisements are formulated in a non-discriminatory way.

Language courses or the implementation of initiatives to encourage more management diversity are more in the competence area of HR development. In contrast, the creation of an equal opportunity representative position or the adaption of the company communications strategy are managerial tasks.

5. Monitor the Results

Have your initiatives been productive? To find out, there are various indicators you can consider. For example, surveying satisfaction levels among employees and customers. Check the staff turnover rates. And take the temperature of the office:

  • What is the prevailing atmosphere?
  • Are ideas like shared cooking evenings attracting attention?
  • Do employees feel valued and understood?

In order to discreetly find out how satisfied employees are, tools like Leapsome are ideal. With their help, managers and HR can obtain anonymous responses from their teams and see immediately if the atmosphere within the company is strained.

Three Potential Conflicts In Implementing Diversity Management

Although companies benefit from a diverse corporate culture, a very diverse range of employees working together also holds the potential for conflict. They are as follows:

  1. Team-internal conflicts: When completely different perspectives and life experiences come together, a lot of tolerance, acceptance, and empathy is required. So, keep your eyes peeled: Is there any friction in the team? Power games? Maybe even signs of bullying? Make sure that employees have a contact person at all times in case of problems. Leaders should ensure transparency and openness within their teams and hold regular feedback meetings.
  2. Cooperation conflicts: In India, work processes may well be very different than in Norway. And a 55-year-old will approach their duties differently than a 25-year-old. This can lead to communication problems in everyday interactions. HR managers should therefore ensure that employees share some common ground. This is something intercultural workshops and information events can help with.
  3. The tokenism problem: Candidates recruited as part of diversity programs are sometimes perceived as underperforming or over-advantaged “token minorities.” This can lead to a focus on their gender, skin color, or age rather than their abilities.

To avoid this, you should promote an open, transparent, and enlightened corporate culture and communicate clearly which specific abilities the person in question brings to the team. Make sure that subconscious prejudices are exposed and diversity candidates are not seen as representatives of a minority, but rather as capable employees who enrich the company and its workforce.

Five Facts You Should Know About Diversity In The Workplace

Fifty-nine point seven percent of companies that use diversity management report improved teamwork, while 69.4% are finding themselves becoming more attractive to applicants (PageGroup: Diversity Management Study, 2018).

Australia leads the way in gender diversity, with 17.1% of CEOs, 25.8% of area managers, and 30.5% of key managers being female (WGEA: Data Explorer, 2019).

Companies with particularly gender-diverse management teams have a 21% higher chance of achieving above-average profitability than companies that are in the lower quartile of the industry standard in terms of gender diversity (McKinsey & Company: Delivering Through Diversity, 2018).

More than half of the companies in Germany (53.1%) have restructured recruitment processes in order to make them more inclusive and fair. This includes changes such as using gender-neutral wording or critically reviewing the questions asked during the selection process (PageGroup: Diversity Management Study, 2018).

For 43% of HR decision-makers in DACH, the priority is retaining employees (Statista, 2018). Diversity management can make an important contribution to this.

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