As business professionals, we recognize “knowing your customer” as a best practice in entrepreneurship for target marketing. According to Entrepreneur Magazine’s Small Business Encyclopedia, “the consumer marketplace has become so differentiated; it’s a misconception to talk about the marketplace in any kind of general way anymore.”
With this recognition then, there is a naturally following need to ensure connectivity to this continually differentiating field of people. The Workforce Diversity Network indicates that “Diversity is good for business” through two main forces: recruiting and retaining top talent, and maintaining a competitive advantage in the marketplace.
It’s also the case that such desirable diversity, once recognized only in an intrinsic sense following the demographic differentiation of the market, has now been proven by empirical research. A study of 1,550 employees from Deloitte, in 2012, identified an 80 percent improvement in business performance when levels of diversity and inclusion were high. Another study, this one from the American Sociological Association, found that sales revenue increased by up to 9 percent for every 1 percent increase in ethnic diversity. A Columbia University study even found that Wall Street traders who worked in ethnically diverse groups, set prices that were 21 percent more accurate over time than ethnically similar groups which actually experienced a 33 percent decline in accuracy over time — that’s a 54 percent gap, and a huge bubble waiting to pop.
And these are only a small fraction of the relevant studies positing the benefits of diversity in the workplace that are available to be found.
Business and entrepreneurial technical-assistance providers stress the importance of business planning as a key indicator of success. Including metrics related to diversity in your operations plan allows you to actually measure and validate, as the studies above demonstrate, the benefit of your diversity initiative in your own business. With measurements in place that are specific, measurable, and timed, it then becomes a simple matter to compare actual data to outcomes, and analyze if diversity programs you have implemented — such as hiring practices — have led to outcomes you desire such as improved job satisfaction, increased rankings as a best place to work, decreases in pay disparities, and productivity improvements.
Your next step may include implementing a diversity assessment as part of your professional and organizational development activities, and then using the information from the assessment to implement the business-diversity components of your business plan. If your organization does not have the expertise to conduct such an assessment, you may consider contacting a Small Business Administration (SBA) technical-assistance provider that can provide you with free and confidential advisement for taking your business to the next level.
A business advisor or consultant can help you come to a customized solution for your diversity planning efforts through personalized advisement, education, and research to address this evolving need of businesses, and answer questions such as:
- Has your organization defined diversity?
- Is your company active in serving and building relationships in diverse communities?
- Has your organization agreed to and examined your reasons for seeking diversity?
- What metrics will you use to measure diversity and the effectiveness of your diversity initiatives?
- Is your leadership and ownership pro-active in their commitment to diversity?
Frank Cetera is a NYS SBDC-certified business advisor at the Small Business Development Center at Onondaga Community College.