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Why Diversity Counts: The Business Case

By Sondra Thiederman

There was a time when corporations in the US could get away with ignoring diversity issues and hire employees who all looked and thought alike, catering only to one type of consumer. Those days are gone. Also gone is the myth that diversity has little to do with business.

Providing opportunities for people of all backgrounds is the right thing to do from an ethical standpoint. But it is also great for business.

Why? Because companies can benefit from a multicultural workforce's expertise. For instance, if your company does business in Asia, having Asian Americans on your negotiating team will greatly improve your chances of success.

A Competitive Advantage

Allied Signal discovered this when it successfully negotiated to sell wheels to China Eastern Airlines. Much of its success was due to the presence of Chinese Americans on the sales team. Allied Signal and dozens of organizations like it have learned that diversity is a wonderful asset when competing in a world marketplace. In fact, with as much as 25 percent of US sales originating overseas, few companies can afford not to take advantage of America's diversity in creating workforces filled with cultures that reflect this international marketplace.

Turning to the domestic consumer, if your goal is to get a share of the $560 billion that Latino buyers have to spend, then hiring employees of Hispanic background can be a competitive advantage. This also applies to African American and Asian American consumers who are in the position to spend $825 billion combined. Businesses could learn from companies like Avon Products and Sears Roebuck & Co., which have found that qualified people of all backgrounds are an asset to businesses reaching out to nontraditional markets.

All this may seem obvious -- diverse consumers require diverse staff -- but it gets more interesting.

Even if your organization has no interest in conducting international business and couldn't care less about consumer marketing, you still need diversity on your staff. Diversity matters to both clients and consumers. A commercial real estate company I worked with learned this in the most painful way possible.

Diversity Makes Dollars and Sense

This organization was bidding on a contract that would have meant millions in badly needed revenues. After weeks of expensive and time-consuming competition against another firm, the company lost the business. When asked why, the client said the decision was not based on dollars, service or reputation -- both competitors were largely equal in those dimensions. The difference, the client said, was that the firm had no diversity on its sales team, every member was a middle-aged white male. The winning firm, by contrast, had white males, women and minorities at every negotiating session.

At this point, you may be thinking the lost customer must have been a minority or female-owned firm or maybe one owned by an overseas company. But it was a US company run primarily by white males. Those white males, however, valued equal opportunity.

Realizing the real estate company had made little effort to create or sustain diversity on its staff, the client became suspicious the organization did not share its values and decided not to do business with the company. And that's what it all boils down to -- business. Diversity may be the right thing to do, but it's also a key component of business success.

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