How Diversity Improves Business Performance

Guest contributor Terry Lipovski is the president of Ubiquity, a preeminent provider of leadership development services around the world. HR professionals interested in contributing to Reinventing HR can email

Most of us have taken part in diversity training, and we’ve seen the quota systems that are put into place to break previous trends. These initiatives are aimed at positive change and they are important pieces of the puzzle, particularly at the board, executive and management levels of organizations where these perspectives are needed most.

Unfortunately, diversity training and quota systems are not moving the needle of progress to a sufficient degree.  The gender diversity trends table below reinforces this point, showing that women make up less than 19 percent of directors on boards, while 45 percent of the companies polled have 20 percent or more women directors, 55 percent of companies have shown a decrease in the percent of their women directors. Although things are improving, we still have a long way to go.

gender diversity trends

Why is Diversity Important?

Organizations that actively accept and support diversity, particularly (but not exclusively) within leadership ranks, outperform homogenous teams by a wide margin. This has been well documented by Korn Ferry:


As organizations mature from being fresh startups (“Forming”) through the difficult adaptations and changes inherent in their growth phase (“Storming”), homogeneous teams tend to outperform diverse teams on measures of productivity. However, once an organization begins to work through the “Storming” stage of their evolution, diversity begins to contribute more and more to a more productive and efficient workflow and results. By the time an organization progresses to the phase of creating systems and workflows (“Norming”), too much of the same-old, same-old limits the lateral thinking and unique perspectives that are vital to continued growth.

[bctt tweet=”Being intentional about diverse leadership is not just right, it is smart business.” username=”reflektive”]

In fact, this becomes a critical time within an organization’s lifecycle where productivity either hits a ceiling or takes off in a clear pattern of exponential growth. This trend continues as organizations evolve further into the production phase of their lifecycle (“Performing”). Diversity remains critical to continually feed fresh perspectives and innovative thought into teams and projects. This fact is becoming crystal clear as we see traditional business models challenged by diverse, disruptive tour-de-forces such as Apple, Airbnb and Alibaba.

Diversity is achieved when executive and leadership teams recognize past succession patterns and practices and find more intentional ways of identifying new high potentials and the further upwardly mobile people in their existing mid-management teams.

Being intentional about building diverse leadership circles is not just the right thing to do, it is also smart business.

The Lack of Progress

So why are we not making the kinds of progress that we all seem to agree is needed? There is a piece of this perplexing puzzle that is still eluding us. It is one thing to be told by a trainer that diversity is good, but if corporate leaders still don’t see sufficient examples of culturally or gender diversity around them, those lessons remain nothing more than positive theory rather than effective outcomes. To make matters worse, quota systems may be placing people in positions that they are not ready to succeed in, at least not in the long term. Let’s not forget that these people face additional mountains that many others do not have to climb.

We need a complimentary “Pull Strategy,” aimed at encouraging individuals to pursue opportunities.  

Research suggests that most women will not apply for leadership promotions unless they feel that they have most or all of the required job competencies while men will apply with a little more than half of the required competencies. Other studies have found similar effects for young leaders, colleagues from different cultures and those with physical disabilities. In other words, promoting awareness through diversity training and quota systems is only treating part of the root causes. In essence, diversity training and quota systems are “Push Strategies,” designed to convince people and force change. We need a complimentary “Pull Strategy,” aimed at encouraging individuals to pursue opportunities. When we stoke those individual internal fires through support and development, lasting change will follow.

To learn more about how diversity coaching can take diverse teams to the next level, check out our follow-up post here.

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