There are many arguments for diversity in business, including the availability of talent, the enhancing of interpersonal innovation, risk avoidance, and appealing to a global customer base. The business case for diversity is driven by the view that diversity brings substantial potential benefits, such as better decision making, improved problem solving, and greater creativity and innovation, which lead to enhanced product development and more successful marketing to different types of customers.
Globalizing and non-globalizing countries' GDP growth
As noted in the chart above, globalizing organizations capture significantly better revenues in modern markets. "Nonglobalizing" countries averaged around 1.5% GDP growth in the 1990s, while globalizing countries averaged around 5% GDP growth.
Arguments for Diversity
Innovation
It is widely noted that diverse teams lead to more innovative and effective ideas and implementation. The logic behind this is relatively simple. Innovative thinking inherently requires individuals to go outside of the normal paradigms of operation, utilizing diverse perspectives to craft new and unique conclusions. A group of similar individuals with similar skills are much less likely to stumble across a series of new ideas that may lead to innovative progress. Indeed, similarity breeds groupthink, which diminishes creativity.
Localization
Some theorize that, in a global marketplace, a company that employs a diverse workforce is better able to understand the demographics of the global consumer-marketplace it serves, and is therefore better equipped to thrive in that marketplace than a company that has a more limited range of employee demographics. With the emerging markets across the globe demonstrating substantial GDP and market growth, organizations need local talent to enter the marketplace and communicate effectively. Individuals from a certain region will have a deep awareness of the needs in that region, as well as a similar culture, enabling them to add considerable value to the organizational development of strategy.
Adaptability
Finally, organizations must be technologically and culturally adaptable in the modern economy. This is crucial to reacting to competitive dynamics quickly and staying ahead of industry trends. Diversity enables unique thinking and improved decision making through a deeper and more comprehensive worldview. Diversity also enables hiring of various individuals with diverse skill sets, creating a larger talent pool. The value of this, particularly at the managerial level, is enormous. Staying quick on one's feet (as an organization, that is) by leveraging the strength of diversity is critical to capturing opportunities and dodging external threats.
Mismanaging Diversity
While diversity has clear benefits from an organizational perspective, the threat in diversity comes from mismanagement. Due to the legal framework surrounding diversity in the workplace, the underlying threat to mismanaging diversity arises through neglect of relevant rules and regulations. Equity of pay for all employees, as well as ethical hiring practices that do not give preference one candidate over another for discriminatory reasons, are absolutely essential for managers and human resource professionals to understand. The legal ramifications of missteps in this particular arena can have high fiscal and branding costs.