Why do some companies value "diversity" so much?

Question

I see a lot of companies advertise the fact that they value diversity and emphasize hiring a diverse workforce. I find diversity can be a bit of a vague word without context: are they referring to diversity of age, gender, ethnicity, languages spoken?

Why do some organizations value this so much? Are these all indirect ways with the intent of getting diversity of thought and perspectives? Why would these things be valued? In my experience it works better of people working together are on the same page as opposed to having a different opinion or interpretation of everything.

Answer 1

Let me start with what corporate diversity doesn't do:

Diversity doesn't improve performance:

You may have seen articles promulgating the idea that diverse workforce performs better and makes companies more profitable -- several commentators here have mentioned it as well. Many of these studies are conducted by financial institutions and consulting firms. However, rigorous academic research and meta analysis gives a different picture:

Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion.

Board gender diversity either has a very weak relationship with board performance or no relationship at all... There is no evidence available to suggest that the addition, or presence, of women on the board actually causes a change in company performance... The research results suggest that there is no business case for — or against — appointing women to corporate boards.

Even if the meta-analyses revealed a stronger relationship between board gender diversity and firm performance, we couldn’t conclude that board gender diversity causes firm performance. To establish causal effects, you need to conduct a randomized control trial. But, that’s impossible here; we can’t randomly assign board members to companies.

If different viewpoints were essential to making good decisions and promoting innovation, then it's very curious that companies are not looking for diversity in ideology, religion, or culture -- which are literally, different mindsets/viewpoints. I have not seen corporations promulgating the number of Muslims, Zoroastrians, Taoists, and utilitarians they hired. Instead, when people talk about corporate diversity, they're talking about gender, race, and sexuality. Likewise, if they wanted people with different background and "personal experience," then they should be hiring people who grew up in poverty, don't have a college degree, etc.

Furthermore, during the tech recession, DEI jobs were hit the hardest. If diversity equated to more innovation and profit, apparently the most innovative and profitable companies, tech companies, certainly don't think so, given their actions:

One employee on the diversity and inclusion team said most of her department had been cut, including her. Similarly, Twitter, now owned by Elon Musk, saw its DEI team evaporate almost overnight.

Even with pledges and recognition that the people experience matters, HR and D&I are often seen as pure overhead and perhaps a little bit distant from the profit-making engine.

Another argument I hear is that a diverse workforce will build better products. While a particular background may provide some intuition and and insight, it doesn't necessarily mean an employee (even an expert) will correctly understand the needs of the consumer. That's why continuous market research, user feedback, and data analysis are key components to understanding customer needs.

So then, why do corporations promote "diversity"?

1. Diversity is used as a cover for union busting and subverting collective bargaining:

Union-busting firms have re-branded themselves, coopting DEI and "diversity" to make their industry more palpable:

Major corporations are at once under pressure to appear sensitive to employees from marginalized groups and eager to blunt unionization efforts that would hurt their bottom line. Thanks to consultants like Greer and others, these companies can sometimes kill two birds with one stone by wrapping anti-union talking points in a patina of racial sensitivity and commitment to diversity.

“There’s kind of a jiujitsu, to get employees thinking about racial justice issues, at least superficially, as a way to deflect labor and collective bargaining,” said Michael C. Duff, a law professor at the University of Wyoming.

Starbucks is particularly notorious for this behavior:

One could take a quick glimpse at the Starbucks Stories and News website and their Equity Inclusion and Diversity Timeline to determine just how invested the company is in social justice causes... Starbucks seems to check all the progressive boxes. Yet, where do they stand on unions, unionization, and the plight of the proletariat... Starbucks CEO Howard Schultz has essentially been on a crusade across the country to stem the unionization effort... The company is now the subject of National Labor Relations Board investigations (NLRB) by virtue of their union-busting efforts across the country.

One wonders as to whether the support for aforementioned woke causes by corporate America is based in a shared vision for progressive ideology or is also just an effort in shoring up sales and the bottom line.

2. Diversity as woke-washing:

Many companies engage in woke-washing, disingenuously claim to support liberal causes in order to gain favor with those who champion them, and promulgating their commitment to diversity is one such action.

The DEI spending of 2020 and 2021 was a signal sent from executives to workers that the bosses are good people who value DEI, a signal executives sent because many workers valued it. Put another way, the outlays were symbolic.

Even the CIA, well-known for their history of overthrowing democratically elected governments and replacing them with brutal tyrants, running covert ops to oppress minorities, and generally causing misery for brown people around the world, released a recruitment ad where manage to utter every single "woke" buzzword and to re-brand themselves as "diverse." Woke-washing and diversity-washing serve a duel purpose: deflect from wrong doings, and use it as a marketing strategy.

3. DEI consultants make a career out of it, so they promote it:

As diversity has became a profession in the US, DEI consultants are incentivized to extol the virtues of diversity to preserve their own jobs:

The pages of the diversity officers’ journal reveal much more fascination with increasing demand for their own employment—via compulsory programs in “cultural competence” for example—than in the hard work of mentoring and tutoring.

4. Perhaps most importantly, diversity has become part of America's moral identity:

In the US, both consumers and employees demand diversity from companies:

Companies today are under a lot of pressure to take a stand on social justice, and to act accordingly

64% of consumers are “belief-driven buyers”—that is, they may choose to purchase, switch from or to, or boycott a brand based on its stance on social issues.

Ultimately, "diversity" is seen as virtuous and good, and a large portion of the population want organizations and institutions to promote their moral values. This drives corporations to promote (or at least pretend) that they too are moral and value the same things, including valuing diversity.

Answer 2

Many companies have pages on the web explaining why they value diversity. In its most direct form, it comes down to getting input from a much wider range of people than, for example, able-bodied white cis-gender male American college graduates. There have been some fairly spectacular blunders when people didn't understand that there was more than one subculture, and indeed more than one macroculture, in their potential market. Or when AI's were trained on faces in the above mentioned groups and then performed horribly on other populations. Or... it's a long list, actually.

Could they have been aware of these issues and addressed them without a more diverse employee base? Theoretically, yes. In practice, there is more than sufficient evidence that they didn't, or did so poorly. The fact is, we don't always understand the other person's viewpoint as well as we would like to think we do, and that can make a serious difference in success of a campaign or a product.

More viewpoints also tends to yield better creativity and fewer stupid errors.

There is also the simple fact that there are institutionalized biases in many companies, just as there are in society, which need to be fixed entirely as a matter of social justice. You can quibble about the exact mechanisms that would be best for this purpose, but if your staff doesn't statistically resemble the candidate base odds are high that you are doing something you would really rather not be called out for doing.

(In fact, I just had a good example of this. I was one of a bunch of early readers for a short story. Pretty consistently, women understood the author's intent -- that the entire story was an internal monologue by one of the characters, explaining her recent history to herself -- and men did not, interpreting it as third person. Like it or not, culture and experience do affect perceptions, even when we're actively trying to see through another's eyes.)

Answer 3

There are cold hard performance reasons to promote diversity. By diversity I mean at least gender diversity and the presence of minority ethnic groups.

Quoting from the book Accelerate:

Diversity matters. Research shows that teams with more diversity with regard to gender or underrepresented minorities are smarter (Rock and Grant 2016), achieve better team performance (Deloitte 2013), and achieve better business outcomes (Hunt et al. 2015).

In addition, I would suspect an organization that opposes diversity on the grounds of valuing "sameness" will not be a good place for innovation and new ideas. This is bad because having a "generative culture" (in the Westrum model) is associated with success.

People have already mentioned the branding advantages. I would venture that there are moral reasons as well, but I don't feel I need to enumerate them.

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Sources:

• Accelerate. Book by Gene Kim, Jez Humble, and Nicole Forsgren

• Deloitte 2013: Inclusion in My Soup?: A New Recipe to Improve Business Performance

• Rock, David, and Heidi Grant. “Why Diverse Teams Are Smarter.” Harvard Business Review. November 4, 2016. https://hbr.org/2016/11/why-diverse-teams-are-smarter.

• Hunt et al. 2015: Hunt, Vivian, Dennis Layton, and Sara Prince. “Why Diversity Matters.” McKinsey.com. January 2015. https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters.

Answer 4

There's a lot of different takes on what diversity means out there and why it should be pursued. This is just my take. In short companies should focus on true meritocracy and will likely end up more diverse as a result.

By nature people have a tendency to hire others that are similar. This can be gender or race but equally about which sports team people support or also personalities. This tendency usually gets in the way of meritocracy and also in the way of building an effective team where people who think differently add up to more than the sum of the parts.

Most companies are not 100% meritocratic so there's always room for improvement. For instance the classic mistake (shortcut) is to not hire from first principles. You'll see things like "we only want to hire people with experience in our industry" or "we only want people who have been to a prestigious university". This brings in selection criteria of other institutions and therefore also any biases they may have. I've seen many places that hire for people from "good backgrounds" and never actually question whether this actually results in better hires.

So my take is focus on meritocracy. Hopefully most people can agree on this. I believe this will result in more diversity and others may disagree but if we can agree on the actions to take them out predictions of the end result are sort of irrelevant.

Answer 5

I have a lot of opinions why companies (seem to) value diversity so much nowadays. However you primarily seem interested in what extra insights/knowledge they might gain with it. So I limit my answer to that.

I think that in some specific situations there are some good commercial reasons to have a diverse workforce. For example for a company that makes beauty-products it would make sense to not employ only Asian men but also Black women so they have a wide range of inputs about what kind of stuff people of different genders/races like put in their hair/on their face.

However in most cases I don't think ethnic and/or gender diversity automatically brings a wider range of insights. Don't see why a female civil engineer would approach the building of a bridge differently than a male engineer, on the basis of her gender.

Answer 6

I can speak to ' In my experience it works better of people working together are on the same page as opposed to having a different opinion or interpretation of everything,' and why that can work against the company rather than help.

In the 1970's, all American car companies took pride in hiring the 'right people with the right education', basically only taking new hires from a small set of American Engineering programs, mostly in the corny midwest.

The executives assumed that American tastes in cars was set, and focused on creating big cars, while ignoring the gas milage and efficiency.

To paraphrase what happened next, there were some world events and suddenly Americans cared a lot about gas milage.

American car companies had never anticipated this, and took a huge hit in market share and in some ways never recovered.

Many people who study business efficiency point to the hiring practices as part of the problem. They only hired 'the right people', and ended up with groupthink.

The theory is that if they had, at the very least, hired outside of the big ten universities, someone might have pointed out that the Japanese car companies were kicking American butt in this one key area.

If this is about butting heads with teammates, you might want to focus in on what it is specifically that's the problem, rather than their identities. Their perspective may have nothing to do with their personal background.

Answer 7

You've already received many answers that cover various aspects, but I see curiously little attention to job seekers even though you seem to be describing their communications to them. I think if we focus purely on this lens we can see some additional motivations:

• Emphasizing the diverse workforce could encourage some people from minority backgrounds to apply who might otherwise not. Some of these candidates could be great hires other employers miss out on for projecting an image that they would not be welcome (and, sure, if we want to be cynical, they might accept lower pay if other companies are passing them over unfairly).

• Job candidates, even more than customers, often care a lot to feel that a company they are working for reflects their values to some extent. If you are someone who cares about social justice issues (which is disproportionately the case among the people likely to accept some jobs), this could make you consider a company -- maybe even one you hadn't heard of before or did not previously have a favorable impression of.

Recent events would suggest this commitment to diversity is not very deep on the part of many, but the same could be said to the devotion to a "fun" workplace with free lunch or other oft-touted perks.

Answer 8

Billionaire investors demand it.

Diversity, equity, and inclusion (DEI) is one part of a company's environmental, social, and governance (ESG) scores. Many billionaire (often institutional) investors require companies they invest in to have a good ESG score to receive their money.

As a result, companies invest time and money into things like DEI or greenwashing in order to meet the expectations of ESG investors.

This is part of why some right-wing governments are making noises about making ESG investment illegal within their jurisdictions.

Answer 9

There are two different things: “Diversity” means employing people from different groups. And “non-discriminatory” means employing people that are often discriminated against. Similar but not quite the same.

Being non-discriminatory is just basic fairness towards everyone. AND it gives companies the advantage that they have a larger talent pool to choose from. If a company doesn’t hire or doesn’t even interview the best candidate because they are a woman, or black, or gay, or all three, they are just shooting themselves in the foot. And in some jurisdictions there may be tax or other advantages when you hire from certain groups. And customers may not like it if you are obviously discriminating.

Being diverse is probably fashionable in most circles, and customers will also like it. But here the fact alone that you have diverse employees will give you advantages from having different points of view, different ideas, and so on. And it’s good to have someone who knows how female, black, gay or other customers think. It may help driving toxic employees out.

Answer 10

They value it for the reason of not being sued, they could hire diversity without writing that on the job offer, but they don't, because the sole target is to SEEM diverse.

This was evident when the (for lack of a better word)Woke mob started labeling every business, system and activity as racist, suddenly people of color(or women/different ethnicity) started getting jobs they weren't qualified for, and a lot of companies lost a lot of money by trying to be diverse, while the result was the opposite, they forced "diversity" and ended up with a more racist then ever environment, because we as humans, If you impose X Y Z we will do the opposite.

By "Diverse" they mean, to seem different, because I've never seem a company hiring autistic(functional) people, neurodivergents or atypical behaviored ones.

It's just a badge that gives them immunity to being sued.

https://www.investopedia.com/terms/a/affirmative-action.asp https://hbr.org/2016/07/why-diversity-programs-fail

Answer 11

The main agenda is to seek out underpriced labour, and continue to pay them as little as possible.

In effect, to profit by arbitraging against the discriminatory policies of other employers.

To give a concrete example, you set up a new corporation and you make a big deal of the fact that you welcome women.

You pay them say 50% less than what it would cost to hire a man. You are, of course, also willing to hire men at 50% less than the norm, although you don't get many takers.

Eventually, you end up with a woman-heavy workforce paying 50% less than a corporation with a man-heavy workforce, and you pat yourself on the back as an employer who proudly hires a very large proportion of women.

But because the women are concentrated in a different corporation than the men, there can be no equal pay claim that would boost women's pay to the level of men in the same occupation and sector.

Rinse and repeat for basically any other "diverse" group.