06 October 2020

Diversity makes companies smarter

Working with different people is challenging for our brain because we have to overcome common ways of thinking in order to come up with better solutions.

Diversity and inclusion, due to their many advantages, are an integral part of leading global corporation’s management that have for this purpose developed special organizational functions and hired people who are responsible for the implementation of the set goals. Reasons for such commitment are based on the wish to develop better business because companies with ethnically diverse leadership, according to McKinsey analysis, are 35% more successful above the industry average, while gender-diverse companies are 15% more successful. It is important to note that the reverse situation is also proven true; heterogeneity yields worse business results than the industry average. With their diversity, employees contribute to business with greater creativity and innovation, more efficient problem solving and decision-making, increasing tolerance and flexibility. Deloitte research shows that team collaboration of diverse teams is 1.4 times better, and employee engagement is twice as high.

The definition of diversity itself is often understood differently, depending on the organization and also the age group. Older employees believe that diversity is equal to the representation and inclusion of people from different demographic groups, while millennials consider this to be an appreciation of the open expression of opinions of employees who have different perspectives and personalities. We would say that diversity is a combination of both definitions because the first, more traditional, should be provided by organizations in the process of hiring and developing employees, while the second, let’s call modern, needs to be created by an organisational culture that is key to achieving real employee engagement.

The path to achieving a culture of acceptance of diversity is theoretically very simple, but practically difficult to implement due to a series of invisible obstacles, mainly because of the stereotypes that are unconsciously exposed. We tend to put people into certain categories based on age, gender, race, nationality, origin, profession, and automatically associate them with thoughts and feelings related to stereotypes we have seen in the media or that have been transmitted to us in childhood and while growing up. It is extremely difficult to change something we are not even aware of, but according to behavioural economists, it is possible to adapt the decision-making process to make diversity truly alive.

Unbias employment

It is necessary to create a fresh environment that enables a structured way of transmitting information and options for making rational decisions. In practice, this means creating procedures that reduce the impact of subjective and the expected that is following our beliefs.

The real commitment to the company’s diversity starts with first interviews and contacts with potential employees. Job advertisements must reflect a culture of equal opportunities regardless of diversity, while interviews should be structured with equal questions for all candidates. Harvard professor Iris Bohnet says it is desirable for the commission that interviews the candidate to be gender-balanced to avoid gender stereotypes. He introduces that soon the application of artificial intelligence recruitment processes is likely to be more objective because for most jobs it is not possible to conduct the following auditions, as conducted by orchestras that until the 1970s had only 10% women, and today is counting 30-40 %. It is also a great example of good organizational design that allows for objective decision making.

Objective performance management

Performance appraisal is an area that brings the next large possibility for ​​subjective judgment. The system needs to be made objectively measurable using measurable quantitative targets. Assessors need to be educated about the assessment process and how to give feedback that should focus on the behaviour rather than the characteristics of the person being assessed.

To develop competencies and careers, it is necessary to provide employee education that should be available to everyone, regardless of age, gender, parenthood or long-term illness. The same goes for the possibility of advancement – opportunities should be given to candidates with potential and developed competencies. Under the influence of stereotypes, it can be assumed that a mother with a small child cannot take on a job that requires more travel, which is a wrong assumption because everyone  has to decide for themselves what is possible in his case

Starting from management

For diversity to really come to life, it is crucial to involve senior management to enable the necessary changes in the environment and decision-making process. That part of the job should not be difficult when management is shown the benefits of business diversity that is part of the organizational culture and nurtured by senior management. The greatest benefits of diversity are realized by companies that respect different opinions, perspectives and ideas of a wide group of employees, not just management. It is therefore important to develop a culture in which different opinions are heard from all parts of the company. Companies in which management nurtures diversity, experts say, have a 45% higher chance of increasing market share and a 70% higher chance of conquering a new market.

Women are an important part of diversity

Gender diversity occupies a special place in the wider area of ​​diversity due to the size of the total population which, regardless of education, competencies, experience and knowledge and number of stereotypes and unconscious biases still does not achieve equal employment and promotion opportunities. As a result, companies achieve poorer business results because they choose talents from a predominantly male population, which limits them to 50% of the possibilities.


Success is achieved by using all available resources. Numerous indicators show better business performance for companies with a higher share of women in management positions, among some are 45% higher profitability, 53% higher return on capital and 66% higher return on invested capital.


Finally, the importance of greater inclusion of gender diversity is evidenced by the possible impact on the gross domestic product, which could grow by an additional 9.6% in the European Union with better gender equality policies, amounting to 3.15 trillion euros. In Croatia, one of the countries with the most room for improvement, GDP could grow by 12 per cent.


Dianna K. Desković


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