Ignoring diversity could undermine business performance

Organisations that fail to get to grips with managing diversity are putting themselves at risk, with legislation placing no limit on how much an employment tribunal may rule an organisation to pay if they are found guilty of discriminating against someone. But the damage caused through a failure to reap the business benefits of effective diversity management could cost organisations even more dearly than tribunal payouts, according to the Chartered Institute of Personnel and Development (CIPD).

Diversity plays an essential role in tackling skills shortages, helping organisations retain knowledge and experience, widening the recruitment base, and attracting more customers and enhancing profits. However, diversity can also cause tensions between people and have a negative impact on the business by triggering poor performance and lack of motivation, unless diversity is carefully managed. CIPD’s new guide, Managing Diversity: People make the difference at work-but everyone is different, available free of charge on the CIPD website, has been designed to help organisations understand the challenges and opportunities diversity can bring.

Dianah Worman, CIPD Diversity Adviser, says, Diversity is about valuing everyone as an individual. Managing diversity is central to good people management and it is relevant to the way organisations do business in all sorts of ways. The challenge is to create a culture in which everyone feels valued so they give their best in their jobs.

Recent CIPD research found over half of UK organisations are facing recruitment difficulties. More and more organisations are beginning to address diversity in order to be more successful at recruiting and retaining the skills they need. Organisations that don’t will risk losing out in the continuing war for talent.

In today’s competitive markets organisations cannot afford to ignore possible sources of competitive advantage. Fairness and ethical behaviour in relationships with employees, customers and clients are important to maintain corporate standing and reputation. It also helps to maintain and increase market share. Employers must seek to understand diversity fully and how it relates to business performance in order to raise their game and compete successfully. Sticking to basic legal requirements won’t be enough.

The guide explains what managing diversity is and why it is important. It uses case studies to illustrate the business case for action and suggests practical ways of making progress.

Employer quote
- We have a history - as do most financial organisations - that when we were downsizing or restructuring, our early retirement packages were so attractive it made sense for people over 50 to leave. And we really felt the loss of corporate knowledge and experience. The extended retirement age has resulted in over 220 people staying with Barclays to date. We have kept some extremely good people.
Charlotte Sweeney, Diversity Manager, Barclays plc

- Fairness and equality are central objectives at Middlesex University. We have made this decision, formally, because it is right and because it is essential for organisational success and well-being.
Professor Michael Driscoll, Vice-Chancellor, Middlesex University

- We believe the world is a rich and diverse place in which cultures and peoples should be treated with respect and from which there is a great deal to learn. Hilary Wiseman, Head of Diversity for UK and Europe, HSBC

- With an industry that is suffering from severe skills gaps, an ageing workforce and a reduced number of young people applying for positions, recruiting a diverse workforce has never been so important. One of the main barriers to achieving diversity is the lack of employers’ understanding therefore it is important to ensure all managers are aware of the benefits diversity can bring to the business.
Gail Campbell, NTP Limited

The CIPD’s Annual Employment Law Conference takes place 28-29 June 2005. An update on avoiding discrimination at work will take place on 29 June - this will examine the scope of the new and forthcoming legislation, recent case law and the types of issues that arise from discrimination at work.