With the recent EU legislation on equal treatment in employment, many companies are looking into the long-term business realities of implementing diversity programmes. Carrie Shearer investigates.

The European Commission claims, "Companies that implement diversity policies identify important benefits that strengthen long-term competitiveness." The USA-headquartered Society for Human Resources (SHRM) agrees: "Appropriate management of a diverse workforce is critical for organizations that seek to improve and maintain their competitive advantage."

Focusing on diversity is more than a politically correct idea. It is good business sense that yields greater productivity and competitive advantage through:

Improved ROI on human resources

The ROI on human resources (often the largest item in a company’s operating budget) is reduced "when productivity and commitment are lost because employees feel disregarded and time is wasted with conflicts," according to SHRM.

The European HR Manager for a consumer products company echoes this sentiment, "An environment where all employees feel included and valued leads to greater employee commitment and motivation."

To ensure that they accomplish this lofty goal, the company has formed an international working group that meets fortnightly to discuss initiatives and issues.

Capitalise on new markets

Sue O’Neill, Diversity Manager for B&Q in the UK, says, "We address diversity from a business perspective and see it as an opportunity to provide improved customer service. Having a diverse workforce is an opportunity to increase our market share and open up our labour market."

Over 21.5 percent of B&Q's workforce is over 50. They began actively recruiting older workers when low unemployment could have proven a death knell to their expansion programme. Their customer feedback programme made them aware that many customers believed older people had better product knowledge.

As a pilot programme, B&Q staffed one store with older workers. At the end of a year, they discovered that the store had higher profits, less staff turnover, less absenteeism, and improved customer perception of service when compared to four of their other stores.

BMW UK has launched a programme to attract more female technicians by actively trying to encourage more women to enrol in their training course. "The traditional image of the greasy car mechanic needs updating," says Roger Waters, Career Planning Manager.

"When we search for candidates for our training programme, it's crazy to ignore half the school leavers," continues Waters. "It's not rocket science to see the connection between more female technicians and improved communication between female customers."

Recruiting the best and the brightest

Companies' futures depend upon the quality of their employees. Recruitment can be made easier by managing diversity since such programmes send a message to prospective employees about what career situations and opportunities they might expect.

Qualified candidates are attracted to employers who can show they are committed to developing and promoting diversity. Each year Fortune runs an article on the 100 best companies to work for in the USA. Companies appearing on this list tout their inclusion and use it as a marketing tool when recruiting.

Preparing a business case for diversity

Companies that are at the cutting edge of implementing model diversity programmes have done so because they understand the business realities that make diversity in the company’s best interest. SHRM recommends that companies consider the following questions when preparing a business case for diversity:

• What are the demographics of your customer/ client base? (Information such as age, income, gender, education, ethnicity.)
• How many languages do your customers/ clients speak?
• How much does employee turnover cost your company?
• How much does your company spend annually on recruitment?
• How much have discrimination/ harassment suits cost your organization in the past year (in both legal fees and settlements)?
• How frequently does inter-group conflict arise?
• Is there a high level of turnover among certain employee groups?
• Are your policies and benefits attractive to potential diverse recruits?

Sue O'Neill recommends that companies consult with their staff when developing programmes. "Don’t assume that you know what your employees want or need. Ask them."

An HR representative of a Dutch petrochemical company believes that companies should not dictate policies. "It is better for HR to provide guidelines that enable managers to respect the differences within their work unit in their geography. Action could vary dependent upon the product, demographics, economic cycle, and location.

"For example, if a large part of the local population is from the Indian subcontinent, race/ faith might be a larger issue than in another area of the same country."

We can conclude that economics often drives diversity programmes. The companies listed in the Fortune's Diversity Career Guide, which ranks the 50 best companies for minorities, have shown improved diversity statistics as well as profits during the six years the analysis had been done.

In May 2003, the European Commission listed the 100-Best Workplaces in the EU. Since what is measured is what gets replicated, we can anticipate an increase in workplace diversity in the EU from companies that see the financial imperative of making the grade.

February 2004

Carrie Shearer spent 20 years in international HR, living and working in seven countries, as well as working at headquarters. Currently she runs a small international HR consulting practice and is a novelist who writes about expat living.