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This article was first published in the May 2019 Ireland edition of Accounting and Business magazine.

Diversity in the workplace has been debated for many years. A lot has been said and written about it, but from experience everyone realises by now that diversity is not something that will just happen because different people have been put together into one office. Companies can only benefit from having a diverse workforce if there are opportunities for everyone to express and challenge different views, and in doing so find new and better ways of working.

In a study carried out with the Technical University of Munich, the Boston Consulting Group (BCG) found that openness to cognitive diversity – when employees can share opposing ideas and provide constructive criticism – is one of the most powerful factors in helping the business harness the benefits of a diverse workforce.

BCG looked at five work environment conditions that are necessary to encourage diversity and, as a result, innovation. The most important was participative leadership behaviour, with 68% of companies seeking this as a prerequisite. However, the next most common prerequisite was openness to cognitive diversity, cited by 62% of companies. BCG suggests the importance of these two conditions means companies will have to look beyond formal initiatives and embrace ‘softer’ tactics if they want to reap diversity’s innovation benefit.

Weighing it up

An important aspect of cognitive diversity is making sure that business decisions are preceded by an extensive process of weighing up all available information. Businesses spend a lot on ERP systems capable of handling ever growing amount of data. The problem remains, however, with obtaining and handling information such as employees’ expertise and their ‘know-how’ that is not easily captured or stored by any IT systems. In order to harvest that information, employees need to feel safe to share their opinion and the management needs to engage in dialogue with its workforce.

Unfortunately, no amount of time spent on leadership courses can challenge the biases that individuals have been holding for years. Appreciating cognitive diversity requires a change of mindset at a personal level, and results from understanding that everyone has something to contribute and nobody has all the facts. If diversity is to be more than just a slogan, then each employee needs to take responsibility for efficient flow of information in the business. Ultimately, however, it is up to the management to set the tone and show that employees’ opinion matters.  

Patty McCord, former chief talent officer at Netflix, is known for stressing the importance of communication flowing freely between employees and the management. At Netflix, employees are encouraged to challenge the status quo and the management is advised to listen carefully. Ensuring cognitive diversity made a huge difference to the company’s bottom line and confirmed that businesses grow best when people are free to think together about how to serve their customers better.

Encouraging cognitive diversity is important for accountants, too. In the past, the accounts department was often seen as a separate function from the rest of operations. Nowadays, accountants are increasingly expected to act as business partners who support their colleagues in making the right commercial decisions. A diverse workforce increases the expertise available at management’s disposal. Accountants able to engage with employees at all levels can ensure that no information has been overlooked or intentionally withheld. In the cognitively diverse environment, accountants should have confidence that decision-making is based on facts and not mere opinions.

Increased transparency

Accountants rely heavily on the integrity of various teams across the business. Freedom to speak up increases transparency and reduces the risk of having whistle-blowers silenced. It is much more difficult to collude and coerce in an environment where employees are expected to question how the business is managed. Fraud will always be a risk; however, increased transparency reduces that risk.

Promoting cognitive diversity is not without its price, though. Managers who have never relied on their subordinates to provide valuable information will find it difficult to change their attitudes. Teams relying on more informal arrangements, where those who are better connected get ahead of the rest, are unlikely to appreciate more transparent ways of doing business.

In the cognitively diverse workplace, each team needs to bear certain ‘adjustments costs’. When everyone’s starting position is open to debate, then ultimately no team can push its own agenda unchallenged. Management interested in promoting cognitive diversity needs to be realistic about potential conflicts that might cause.

From a finance perspective, it remains impossible to quantify the value of lost business that results from lack of cognitive diversity. The organisation might be doing well, but how much better could it be if employees felt that they were truly free to speak up? How much more value would be added if information flowing from the bottom up carried as much weight as that coming from the other direction? Creativity might not be what accountants are known for, but when it comes to promoting cognitive diversity we might want to take the road less travelled; it can make all the difference.

Urszula Pajdzik ACCA is a financial accountant in the media sector