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by Karen Abrams, MBA, AA
Companies that hire from culturally diverse talent pools, benefit by recruiting employees with a broad range of skills that are often not accessible when hiring from a homogenous talent pool. Companies that are truly focused on gaining every bit of competitive advantage can add to their service range and product offerings by leveraging the skills and experience their diverse employees bring to the table.
The Harvard Business Review publication reports that “a broader skills base and a more potentially diverse offering of products and services can help businesses acquire the competitive advantage of adaptability. In today’s volatile and uncertain global business environment, nimble and adaptable organisations are the ones that thrive.”
Adaptability means faster and more effective planning, development, and execution. A company with cultural and cognitive diversity can be quicker to spot a gap in the market. It will also have the global (or market-specific) insight and experience to help a new or adapted product to meet changing consumer behaviour—and succeed.
According to the July 2018, edition of the Harvard Business Review, researcher Paul Gompers analysed the decisions of thousands of venture capitalists and tens of thousands of investments, and the evidence is clear: Diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns. And even though the desire to associate with similar people—a tendency academics call homophily—can bring social benefits to those who exhibit it, including a sense of shared culture and belonging, it can also lead investors and firms to leave a lot of money on the table.
According to Gompers, when comparing financial outcomes of homogeneous partnerships with those of diverse collaborations, the difference is dramatic. Along all dimensions measured, the more similar the investment partners, the lower their investments’ performance. For example, the success rate of (company)acquisitions and IPOs was 11.5% lower, on average, for investments by partners with shared school backgrounds than for those by partners from different schools. The effect of shared ethnicity was even stronger, reducing an investment’s comparative success rate by 26.4% to 32.2%.
When projects selected by both homogeneous and diverse sets of investment partners were analysed, it was determined that both were equally promising at the time the decision to invest was made. Differences in decision quality and performance came later, when the investors helped shape strategy, recruitment, and other efforts critical to a young company’s survival and growth. Thriving in a highly uncertain competitive environment requires creative thinking in those areas, and the diverse collaborators were better equipped to deliver it.
What does this mean for Guyana? a diverse country where organisations have historically paid token homage to diversity? It means that as a nation, our governments and private sector entities; to the extent that they lack diversity, have simply underperformed because they chose to take the socially comfortable path of choosing those of their political party, generation, gender or ethnicity to become major influencers in their organisations.
Today, It has become increasingly important for Guyana’s leaders; both public and private, to engage talent, wherever they find it, if their goals are to maximise profits and to optimally develop Guyana. Companies operating in Guyana will increasingly compete against progressive and diverse companies, both foreign and local and it will require every bit of talent, creativity, and diverse perspectives to maintain market leadership in this increasingly competitive environment. Those who believe ‘local content’ will save them, risk becoming liabilities to foreign partners if they do not take steps to create the right environments for a highly talented and diverse workforce to flourish.