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Diversity Equals Productivity

• volume 2 • number 2

Two comprehensive new studies offer convincing evidence of a link between diversity and profit. The American Society for Training and Development (ASTD) recently reported that companies with diverse work teams show increased sales and profit growth, and increased performance in a sluggish or even "downturning" economy.

Meanwhile, Towers Perrin analyzed team performance in major companies such as AT&T and Vought Aircraft. In every case, the firm found that "diverse teams outperformed the homogeneous teams," with increases in productivity ranging from 13 to 21 percent. The study concluded that diverse groups are better at solving problems and making judgments because of their broader perspectives.

But comparisons between diverse and homogeneous teams are not quite so simple; in fact, the performances of the two groups have a distinct tortoise-and-hare quality. Homogeneous groups start out strong ­ largely because team members have similar backgrounds and ideas ­ but they also burn out quickly. In heterogeneous groups, on the other hand, members need time to learn to work together and may be slow out of the starting block. Once things click, however, diverse teams continue to get better.

Finally, research has shown that a varied workforce gives companies an edge in an increasingly diverse and politicized marketplace, where women, older Americans, and to an ever greater degree, people of color control the dollar. African-Americans, Hispanics, and Asian-Americans, for example, will soon have an annual spending power of $600 billion. All these groups expect to do business with people who have values and interests similar to their own.

In short, studies prove what we have always maintained: a diverse workforce benefits business on all fronts. It not only boosts the productivity, creativity, and viability of companies but it also enhances their reputation and appeal among consumers.