The business case for diversity management

An ACCA-ESRC report examines the role of the finance function in developing diversity within organisations

This report presents research commissioned by ACCA and ESRC into the limitations of current diversity management and looks at what could be done to help organisations benefit from greater diversity and inclusive cultures. In particular, it considers the role of the finance function in helping gather relevant financial and non-financial data, and developing and implementing diversity strategies, policies and procedures.

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Building a robust business case is the first step in organisational commitment to diversity management, with evidence showing that effective management of diversity is a success factor for organisations.

There exists a well-developed literature on the effects of diversity on the organisational performance.

Earlier studies explored the link between different diversity dimensions (eg race/ethnicity, gender, age, nationality, tenure, functional background, education) and organisational outcomes (eg innovation, team performance and effectiveness, decision making quality, internationalisation, corporate reputation, and financial performance).Yet the results are inconclusive, with research demonstrating conflicting diversity outcomes.

Drawing on 22 case studies in globally significant organisations, this report outlines the state-of-the-art practices in creating the business case for diversity management. 

The report answers five critical questions. Two of these relate to broadening the business case:

  • What is the existing evidence base on workplace diversity and its impact on business performance and innovation? 
  • What motivates business diversity policy? 

A third relates to building the evidence base:

  • Through what means does the evidence suggest that increased diversity can result in improved business performance? How is this manifested? 

The fourth is concerned with mastering the business case:

  • How do organisations understand the business case, plan diversity into their strategies, and implement and monitor diversity policy in line with their business case? 

Lastly, there is the question of moving from best practice to customised practice:

  • What does ‘customised practice’ in policy and implementation look like? 

Through the case studies, the report presents the complexity of the business case for diversity management around the world. In the selected organisations, interviewees were either a senior diversity practitioner or a senior finance leader.