We all know diversity matters. But it’s becoming increasingly evident that it also makes a lot of business sense.
The competitive advantage
An international report launched by McKinsey & Company in early 2015, Diversity Matters, found companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. It revealed gender-diverse companies are more likely to out-perform their counterparts by 15 per cent. Ethnically diverse companies are more likely to out-perform by 35 per cent.
Diverse companies are also better at winning top talent and improving customer orientation, employee satisfaction and decision-making, the report showed. All of this in turn leads to a virtuous cycle of increasing returns and an over-arching culture of inclusion, corporate social responsibility and a forward-thinking, global mindset.
Australia lags on diversity
In Australia, most organisations are far from reaching the potential of a truly diverse pool. Many can do fundamentally more when it comes to their talent pipelines and attracting, developing, mentoring, sponsoring and retaining the next generation of global leaders in their organisation.
The recent Inaugral NAB Australian Business Diversity Index revealed only 30 per cent of Australian businesses scored themselves ‘high’ in terms of overall diversity. A fifth rated themselves ‘low’. The report found that industries that lagged behind in diverse recruitment the most were manufacturing and wholesale. Diversity was also lowest in Australian SMEs employing 35 to 49 people and lowest across all diversity groups.
Benefits of diversity at executive level
Research shows that companies with a more diverse leadership structure also have significant economic advantage, yet many Australian organisations are still to embrace change. The report confirmed that companies with more diverse top teams may also be superior financial performers. However, when asked to identify the proportion of women on executive management teams, Australian businesses on average reported women make up only 23.8 per cent of the total. In the case of ASX 300 companies, the share was even smaller at just 15 per cent.
Diversity and financial professionals
As trusted financial advisers, accounting professionals can educate their clients on how embracing diversity can have many cultural and social benefits for a corporate structure, and ultimately have a positive impact on their client’s bottom line. It is imperative that clients know that diversity and inclusion have become key corporate imperatives to not only drive recruitment, advancement and talent retention, but also to increase overall customer service and satisfaction. A more diverse culture can also have a significant impact on corporate reputation and brand, while optimising overall performance and compliance across the board.
Diversity, like changing technology or a global economy, is a business reality that requires companies to be agile and open to adapt in order to remain competitive. Forward-looking accounting professionals will recognise and understand the implications of both domestic and international demographic shifts in the working culture on their client’s organisational structure. They will effectively work with their clients to enhance their client’s focus and best business practices to better engage their employees and exceed their expectations.
Moving forward, as national and international clients become steadily more diverse, the accounting profession’s own growth can effectively arise from effectively tapping into these diverse markets.
Forming lasting business relationships with clients means understanding the long-term social, cultural and economic implications of diversity as one of the key decision-making processes of all businesses whether they are large, medium or small.
By fully embracing diversity and encouraging everyone in the profession to espouse its benefits, accounting professionals can ensure their counsel and advice remains both competitive and relevant.
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