Recent research from the Alberta School of Business explores how diversity and inclusion (D&I) practices affect companies, especially in tough times. D&I, which aims to support people of different backgrounds, is usually seen as good for business. It brings fresh ideas and perspectives.
But this study found something interesting. While D&I practices are good in the long run, they might cause some short-term problems. When companies embrace D&I, they might struggle to adapt quickly to changes.
Becoming diverse
The researchers looked at how companies with high D&I ratings handled the COVID-19 crisis in 2020. They used an AI tool to analyze millions of employee reviews from Glassdoor.com. They found that companies with high D&I ratings had bigger drops in efficiency after the pandemic hit.
In simple terms, while diversity and inclusion are important, they might slow companies down at first. It’s like taking a short-term hit for long-term gains.
“When you allow for diverse opinions, it takes longer for people to reach consensus” and collect the necessary supporting information,” the researchers explain. “Diverse teams may encounter communication issues, and the process of integrating differences among employees may require time and resources that hinder swift decisions.”
Doing things right
As companies embrace diversity and inclusion (D&I) measures, tasks like hiring and firing can become lengthier processes. To ensure fair hiring, companies need to cast a wider net for candidates with diverse backgrounds, which naturally takes more time.
It’s not just about looking at standard qualifications; companies must dig deeper to find the best fit. Firing also becomes more complex, with employers needing stronger justifications and thorough documentation. Additionally, implementing harassment training and other D&I initiatives eats into daily work time.
While these adjustments may slow down decision-making and flexibility in the short term, it’s crucial for companies to be prepared for these constraints. However, these challenges shouldn’t deter companies from prioritizing D&I practices. They hold significant social and ethical value and can enhance a company’s long-term performance in the stock market.
“There could be many potential benefits of D&I that future studies can examine, such as higher innovation and higher efficiency during normal times,” the authors conclude.
“Understanding these trade-offs is important for business leaders as they navigate the evolving landscape of diversity and inclusion in the corporate world.”
