Does diversity pay dividend?

Is there a diversity dividend? That was the question that we posed in a special Talking Business programme from the World Economic Forum, in Davos.

There is evidence, for instance, that boards of directors with greater diversity generate more dividends. That means greater returns to shareholders and fewer bonuses paid to managers.

So, it matters who's at the top. Yet, only 4% of bosses in the UK financial services industry and 4.6% of chief executives of S&P 500 companies are women, and there are just six black CEOs of Fortune 500 companies.

With respect to gender, there are numerous studies that show that adding women to the labour force increases national output, or gross domestic product, which I have written about before.

The panel referred to evidence that makes the business case that a more diverse workplace boosted the bottom line. For instance, a Massachusetts Institute of Technology study has found that changing from all-male or all-female workforces to equal numbers of both sexes could raise revenues by around 40%.

Unconscious bias
For women, as well as racial and ethnic minorities, these are not new debates. For LGBT - lesbian, gay, bisexual, transgender - executives, the issue has increasingly come to the forefront, with Apple's Tim Cook, Beth Brooke-Marciniak, of EY, and Antonio Simoes, of HSBC, generating headlines.

This year was the first time that LGBT diversity was discussed on the main WEF stage, the world's biggest gathering of business and policy leaders.

Everyone would agree that it's good to promote and attract talented people from all backgrounds who are qualified for the job. The challenge is how to do that with an eye on diversity and why such disparities still exist.

When we asked our audience if discrimination was why top executive jobs are still not reflective of society, the show of hands indicated that nearly half thought that was still the case.

The panel emphasised that a lack of diversity was due more to unconscious bias than overt discrimination. Unconscious bias leads to people hiring people like themselves. As former US State Department official Anne-Marie Slaughter pointed out: "We all hire ourselves."

She also stressed that women CAN have it all - if there are changes in the workplace. An article she wrote in 2012, Why Women Still Can't Have It All, generates debate to this day.

So, it seems that systemic policies and workplace practises that ensure that merit is rewarded are still needed.

These aren't straightforward to fashion. Mentorship and role models, childcare assistance, and being conscious of female labour force interruptions to start a family, were all mentioned by the panel.

Tokenism
And, the panel debated whether affirmative action or positive discrimination was needed, or if that would lead to tokenism.

Bernard Tyson, chief executive of Kaiser Permanente, one of America's largest healthcare companies and one of the few black bosses, and Beth Brooke-Marciniak, global vice-chair of public policy at EY (formerly Ernst & Young) who is the most senior openly gay female executive of a large global company, both said that an appointment that added to diversity was a worthwhile criterion.

Inga Beale, the first female chief executive of Lloyds of London in its 327 year history, said that she doesn't worry about tokenism, but the "rule of three" mattered - you need three people of diverse backgrounds and not just one. Once teams are diversified, there won't be tokens.

Measuring outcomes is another issue. How is success measured? Guy Ryder, the head of the International Labour Organisation, and Anne-Marie Slaughter, now the CEO of New America, would like to see organisations reflect the societies in which they operate.

For others on the panel, having a diverse work environment where people can be themselves was what they wanted to see.

In terms of a diversity dividend, no one wants to see talent wasted. There are also other forms of diversity, such as being physically challenged, to be considered.

But, how to achieve a diverse workplace that generates dividends will require a lot more discussion not just in legislatures, but in boardrooms, schools, and in communities.