Diversity is Part of the Business
By Marjorie Thomas
Effective leaders must take into account the impact of their decisions for the entire organization, shareholders and employees alike. The CEO, who holds all the power, is responsible for the shareholders, by cutting costs to diversity efforts without fully understanding the potential downside, productivity and profits can be impacted. “In the business of diversity, when the board supports elimination of diversity and inclusion efforts as a cost reduction measure because the CEO says so, the die has been cast. These actions explicitly say diversity means nothing to the business and the business can continue without it” (Metzler, 2014).
By understanding the types of diversity and how they can be a source of positive performance and a competitive advantage for the organization leaders can increase productivity and profits, making employees and shareholders happy. Phillips & Gully (2014) stated, “Realizing the potential positive effects of diversity depends on employees’ attitudes towards diversity. Recent research has found that firm performance increases when employees have more positive attitudes towards diversity…it’s…important for companies to define how diversity links to their business results. Otherwise, there will be no compelling reason for leaders to focus on Diversity” (p. 42).
If board members allow the CEO to undermine the importance of diversity, and Chief Diversity Officers cannot demonstrate how their efforts have had a positive effect on the organization then the CEO can find justification for cutting costs towards diversity. “In dysfunctional boards, directors often become beholden not to shareholders but to the CEO. This is especially true of directors who work inside the company… If we want to ensure accountability for diversity in organizations, it is time that we shift our mindsets and actions to match the oft-repeated rhetoric that diversity is a business imperative” (Metzler, 2014). Leaders must see the entire picture and not be blinded by power.
Metzler, C., (2014, June 4). When the Board Isn’t on Board. Diversity Executive. Retrieved from:
Phillips, J., & Gully, S., (2014). Organizational Behavior: tools for success. (2 ed). Mason, OH: South-Western Cengage Learning.