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As Compliance passionates, we all enjoy getting up in the morning to create and nurture a culture of ethics. To foster such a culture, diversity is key. By incorporating individuals from various backgrounds, experiences, and expertise, organizations can tap into a wealth of perspectives and insights, enabling them to navigate complex ethical challenges more effectively. In today’s mood post, we dive into the advantages of building and sustaining a diverse team in our organizations and how this helps us create and reinforce a culture of ethics. We also provide a few ideas on how to walk the talk as an Ethics & Compliance leader.
According to the Institute of Business Ethics, diversity in the workplace can be defined as “the inclusion of different types of people, including age, disability, gender, race, religion and sexual orientation as well as differences in individuals’ values, viewpoints, socio-economic background, experience and knowledge” (Institute of Business Ethics).
Still today, diversity is not always seen as a priority. As Rocío Lorenzo, who researched diversity thoroughly, puts it in her inspiring Ted Talk:
“many leaders I met saw diversity as something to comply with out of political correctness, or, best case, the right thing to do, but not as a business priority. They just did not have a reason to believe that diversity would help them achieve their most immediate, pressing goals: hitting the numbers, delivering the new product, the real goals they are measured by” (Rocío Lorenzo TED Talk - How diversity makes teams more innovative).
No matter how many boards you may still see today composed of only white men all coming from the same backgrounds, an homogeneous team is a death sentence for creativity and innovation.
“The lack of diversity on boards runs the risk of generating ‘groupthink’ and increases the likelihood of placing the organization in a position where it has an inferior understanding of risks and opportunities” (Institute of Business Ethics).
Clearly, if everyone in our team has the same framework of reference and thinks in the same way, it’s very likely we are going to agree, and also keep hiring people who look like us and think like us. It feels quite good, non confrontative and swift, but is it the best for our businesses? Do we have all our risks covered? Are there things we do not see? Well, we will find out about our blindspots on the day the disaster happens.
Going beyond, diverse teams actually drive more innovation.
Rocío Lorenzo established a thorough research protocol, measuring actual output in terms of products reaching the market and innovation, and the level of diversity in the company. And the result from her research was astonishingly clear:
“the data in our sample showed that more diverse companies are simply more innovative, period.” (Rocío Lorenzo TED Talk - How diversity makes teams more innovative).
And, if you need more data to be convinced, she’s not the only one having conducted research in this field. In fact, there seems to be a “diversity bonus” showing that diverse groups almost always outperform homogeneous groups. (The Business Ethics Institute, The Ethics of Diversity, Citing: S.E. Page (2017) The Diversity Bonus: How Great Teams Pay Off in the Knowledge Economy).
One may ask: does innovation bring diversity or is it diversity that brings innovation and better results? Chicken 🐥 or egg 🥚 - I would argue that it doesn't really matter at the end of the day: “it works both ways, diversity driving innovation and innovation driving diversity” (Rocío Lorenzo TED Talk - How diversity makes teams more innovative).
For diversity to be meaningful though, there is a minimum threshold of 20%, for example of women in leadership positions for gender diversity to have an impact on innovation (Rocío Lorenzo TED Talk - How diversity makes teams more innovative).
Want to know where your organization stands in terms of diversity - and hence - potential for innovation? Look around, but most importantly, look up. How’s your leadership team?
As you do so, you may want to remember that Gen Z, who represents the largest generation on earth, deeply believes in diversity, encompassing notably gender, origin, identity and orientation: 76% of them consider that companies should address diversity and inclusion, as compared to 46% of boomers (Quantilope, Customers Brand Expectations around Race and Representation). Addressing diversity is critical for our survival as businesses in the world of tomorrow, not only to recruit the best talents but also to keep selling what we do.
And by addressing diversity, we mean really addressing. Showing a diverse advertising or website won’t do the trick. As this McKinsey study underlines: “Gen Z consumers are mostly well educated about brands and the realities behind them. When they are not, they know how to access information and develop a point of view quickly. If a brand advertises diversity but lacks diversity within its own ranks, for example, that contradiction will be noticed. In fact, members of the other generations we surveyed share this mind-set. Seventy percent of our respondents say they try to purchase products from companies they consider ethical.”
So, diversity helps us create and nurture a culture of innovation, generate great results for businesses and is key for the consumers and talents of tomorrow. Awesome!
We also see that a strong culture of ethics creates a strong business performance:
Ethisphere, which elects every year the world’s most ethical companies, has been tracking the connection between good ethical practices and financial performance for 17 years: “the World’s Most Ethical Companies historically outperforms their peers and competitors financially, demonstrating a tangible ROI for doing the right thing.”
“The World’s Most Ethical Companies assessment process includes more than 200 data points on culture; environmental and social practices; ethics and compliance activities; governance; diversity, equity, and inclusion; and initiatives that support a strong value chain”.(Ethisphere).
So it seems that these most ethical companies who outperform other companies are also more diverse. Here again: chicken 🐥 or egg 🥚, who cares. It seems that diversity is one of the key values that can help us create and nurture a culture of ethics, while a culture of ethics probably helps us create more diversity.
The Institute of Business Ethics summarizes it nicely as follows:
“By creating an open and respectful atmosphere where everyone can thrive, diversity at all levels of an organization can contribute to embedding a strong ethical culture”(Institute of Business Ethics).
We’ve seen that diversity is key to drive innovation, results, and a deeply engraved culture of ethics. Want to be part of the solution? Let’s work together to make diversity a reality in our organizations!
Below a few ideas on where to start, which are by no means exhaustive, of course:
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Lastly, walk the talk with your own team:
Diversity in your E&C team fosters a broad range of perspectives, enabling the team to approach ethical challenges from different angles. This rich tapestry of viewpoints helps in identifying potential blind spots and considering alternative solutions that may not have been apparent to a homogeneous team. Moreover, a diverse team is better equipped to address the complexities of an increasingly globalized business environment. Different cultural perspectives and experiences allow for a deeper understanding of international compliance standards and local customs, thereby mitigating risks associated with cross-border operations.
When individuals with diverse backgrounds collaborate, they bring a range of perspectives and knowledge to the table, promoting thorough analysis and critical evaluation of ethical dilemmas. This collective intelligence ensures well-informed decisions that consider a wide array of factors and potential consequences.
Each member's unique expertise and experiences enable them to identify and assess risks from various angles, leading to comprehensive risk management strategies. By avoiding groupthink and encouraging healthy debate, the team can make better-informed risk assessments and develop more robust frameworks.
Organizations with a diverse Ethics & Compliance team are better positioned to build trust and foster positive relationships with stakeholders. Stakeholders, including employees, customers, suppliers, and shareholders, come from diverse backgrounds themselves. When an Ethics & Compliance team reflects this diversity, it signals an inclusive approach and an understanding of the unique needs and perspectives of these stakeholders.
A diverse team is also more likely to have a deep understanding of different communities and cultures. This cultural competence allows for more effective communication, engagement, and collaboration with stakeholders worldwide. By establishing relationships built on trust and respect, organizations can enhance their reputation and strengthen their commitment to ethical practices.
We’ve seen it above. When team members with different backgrounds and experiences collaborate, they bring a broader range of ideas, insights, and approaches to problem-solving. This diversity of thoughts enables the team to think outside the box and generate novel solutions to ethical challenges. Your diverse team can also help challenge conventional wisdom and identify systemic issues that may have been overlooked. By examining ethical practices through different lenses, organizations can uncover hidden biases, rectify shortcomings, and develop more inclusive policies and procedures.
Building and maintaining diverse teams is crucial for organizations aiming to foster a culture of ethics. The advantages are manifold, ranging from enhanced problem-solving and decision-making capabilities to improved results. Embracing diversity in Ethics & Compliance teams enables organizations to navigate complex ethical challenges effectively, adapt to global business environments, and remain agile in an ever-evolving landscape. By investing in diversity, organizations not only demonstrate their commitment to ethical conduct but also gain a competitive edge in attracting and retaining top talents and clients while building trust and maintaining a positive brand image.
I hope the above article has inspired you to walk the talk on diversity!
Follow Upright Solutions Aps on Linkedin for more Ethics & Compliance content!
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