Businesses Know More Diversity Means More Customers

Businesses realize diversity means profits.

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When the U.S. Supreme Court hears arguments concerning the constitutionality of the Defense of Marriage Act (DOMA) Tuesday and Wednesday, it will be reviewing a law that is remarkable for how quickly it became out of step with mainstream America. This transformation happened due to many factors. But one little noted and yet extremely powerful force may be a seldom praised entity: the American corporation. Therein lies an important lesson for today's policy makers—especially Republicans who say they want government to behave more like business.

As a Washington Post- ABC News poll last week showed there has been an almost complete reversal in public opinion on gay and lesbian marriage during the past 10 years, with about 58 percent saying they support the idea. During roughly this same period, a subtle paradigm shift was underway in many of our institutions and businesses—and a lot of politicians either missed it or dismissed it as old fashioned political correctness.

This was the shift in the concept of fairness from purely "affirmative action" to "diversity."  And just as significantly, adding the concept of "inclusion" to the value of "diversity."

[See a collection of political cartoons on gay marriage.]

While engaged in a recent assignment for a large international corporation, I was struck by the company's pervasive Diversity and Inclusion (D&I) program and how dramatically it differed from old Affirmative Action programs of the last century. Mid- and senior-level managers were required to go through day-long D&I training programs in which small teams discussed issues candidly and worked through real-life scenarios. Throughout the company, functional groups within offices had designated D&I "champions" who were responsible for maintaining a high level of awareness for D&I team meetings.

Nearly absent from the conversations among employees was a focus on counting faces of specific minority groups. It had been replaced by a focus on respecting, accepting and including your coworkers for who they are.

As one of my colleagues put it, "Diversity and Inclusion means I get to be who I am when I come to work." This is a very powerful shift in part because it is non-threatening to people who are not part of minority groups and because it appeals to the universal value of fairness to all. It means the 50-year-old white man is valued for the diversity he brings to the organization as much as the 30-year-old Asian woman. And it means the group is being taught to accept and value the presence and insights of each individual, including the team-member who is gay, lesbian, bisexual or transgendered.

[Read the U.S. News Debate: Should the Supreme Court Overturn the Defense of Marriage Act?]

This is not something unique to one particular company, and it is why political leaders and policy makers need to pay attention. Let's do a little speculative math to illustrate. According to the federal Bureau of Labor Statistics, there are about 135 million Americans working today. About two-thirds of those, or 89 million, work for companies with more than 100 employees. If you are a company with more than 100 employees, you probably have a reasonably sophisticated human resources office. 

According to the Society for Human Resource Management, about 86 percent of companies say they have moderate to very strong D&I cultures. That would mean about 76 million people are being encouraged or required by their employers to embrace these values of diversity and inclusion. These lessons are not only being communicated throughout the organization, they ripple through the employees' families and social groups outside of work.  And this has been going on for some time.

In 2003, when the Bush Administration filed its legal brief opposing the University of Michigan's race-influenced admissions policy, the Christian Science Monitor noted that "more than 40 Fortune 500 companies… filed legal briefs siding with the university." A group nearly double that size has signed onto a brief urging the Court to strike down Section 3 of DOMA.

[Read the U.S. News Debate: Should Same Sex Marriage Be Left to the States?]

Why have so many leading edge companies been embracing diversity and inclusion?  It makes good business sense. A Gallup Workplace study in 2003 found that businesses with inclusive cultures were 27 percent more profitable and had higher customer satisfaction, greater productivity, and lower turnover.

Besides complying with anti-discrimination laws, business back then were aware that their employees like working in cultures that support fairness. Businesses want to ensure they have access to the best people in the talent pool. And businesses have found that having a diverse workforce helps them reach similarly diverse groups of customers.

These are important insights for any business and they are important for political and policy making organizations to understand too.  Any group that fails to grasp this will be alienating itself rather than the other way around.

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