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How To Start Treating Human Resources As The Engine Of Profit

I think it’s time to see the human resources department as an investment and an engine of company profit—instead of an overhead cost.

Put another way, it’s an untapped competitive edge. Because a conscious effort to recruit differently than the competitors can set you apart, and it could set you on the road to increased profitability.

How can recruiting accomplish all that?

By harnessing the proven power of diversity and inclusion in the executive suite. Research study after research study, from DeloitteMcKinsey & CompanyBoston Consulting GroupHarvard Business Review and more, all show the same thing: Businesses with more diverse executive teams outperform their more homogenous peers—by 36% according to McKinsey.

It’s really quite simple. Diverse teams are more creative, innovative teams. And innovation drives profitability in any industry by delivering breakthrough ideas, patents, new ways to connect with customers, building completely new customer bases—any kind of innovative problem-solving that keeps you a step ahead.

When approaching a problem, we bring our own individual experiences to the table. And when everyone around the table comes from the same life experience pool, it can be easy to assume that they will more likely than not agree with each other. It’s easy to sell your idea, easy to come to a consensus—and easy to miss the truly innovative ideas.

Being with others who are similar to us can lead us to think we all hold the same information and share the same perspective. As Katherine W. Phillips notes, “When we hear dissent from someone who is different from us, it provokes more thought than when it comes from someone who looks like us.” Just having diversity in a group can make people believe that differences of perspective exist, and I’ve noticed that belief alone can make people change how they think.

When members of a group come with different backgrounds, even look and talk differently, expectations may change. There will likely be differences of opinion and perspective. You’ll have to work harder to sell your idea. And when all those different perspectives and viewpoints start ricocheting off of each other, sparks fly.

And sparks ignite new ideas.

This isn’t just a theory; it’s been proven to work in the real world. What some call “peripheral knowledge”—input from the fringes of the mainstream thinking—is often the source of the most innovative breakthroughs.

For example, Reebok borrowed the idea for cushioning in a best-selling basketball shoe from intravenous fluid bags. Qualcomm’s revolutionary color display technology originated in the study of microstructures of a butterfly’s wings. Design firm IDEO crafted a leak-proof water bottle by looking at the technology from a shampoo bottle top. And a University of Texas banking study found that increases in racial diversity were related to better financial performance.

This is how diversity works—by encouraging the consideration of alternatives that are outside of our own limited worldview and turning them into profitable innovation.

So, how do you achieve this holy grail of diversity? How can you implement change in your organization?

It’s more than just a press release. Words are wonderful, but they are just words.

It’s more than appointing a chief diversity officer—which can be an important step and a visible message throughout the company of how seriously you take this. But without the support and authority that go with the title, you’re just setting the chief diversity officer up for failure.

It’s more than setting a quota for people of color. (That’s illegal, anyway, and misses the point. Diversity includes straight white males—the benefit gains come from having all points of view.)

It’s changing how you recruit up and down the process. From how you write the job description to where you search for candidates, and from how you talk about your own company to how you conduct interviews.

What can you start doing in your organization to realize these benefits?

This may sound counterintuitive, but don’t start by just recruiting people of color and women. If you don’t truly make your process inclusive (and that means including white males), you are setting yourself up for failure. Yes, it’s important to make a conscious effort to include people of color and women; also consider age, gender identity, age, neurodiversity.

That probably means you will have to look outside your current network—alumni associations, industry connections and the like. Because the net result of recruiting from the connections you already have is to continue hiring more of what you already have.

Change the way you develop the requirements for the job description. Asking for “10 years of CPG management” immediately limits your candidate slate; instead, define skill sets, not experience. Look for career progression and specific success stories, and consider parallel skill sets.

Lastly, take steps to eliminate unconscious bias by creating a blind slate of top candidates—remove names, schools, specific companies. This eliminates the opportunity for reviewers to make an initial judgement before they get to know the candidate.

This kind of wholesale change will take buy-in from the very top, or it just becomes window dressing, the flavor-of-the-month hot button issue until something new comes along. It’s incumbent on HR professionals to take the time to explore the research that proves executive diversity can generate 36% more profit. Then present that to your company’s board, along with the recommended process changes.

After that, it probably won’t take long for human resources to be seen as an investment and an engine of company profit.

Steve Forbes said, “The real source of wealth and capital in this new era is not material things—it is the human mind, the human spirit, the human imagination and our faith in the future.”

What better way to sum up the value of building a more diverse workplace?

via Desmund Adams, photo credit: GETTY

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