Accessing the diversity dividend

AS SOUTH AFRICANS, our complex history has ensured that we inherently understand the deep need to nurture diversity and inclusion at every level of government, society and business.

There are essentially two kinds of diversity and considering both is useful when it comes to understanding how they impact an organisation for the better.

Identity diversity refers to diversity of race, gender, ethnicity and age, whereas cognitive diversity is the diversity in people’s perspectives, culture, socioeconomic circumstances and education.

In South Africa, achieving identity diversity in its employee profile is an obvious goal for any business in order to correct the inequality of the past and appropriately reflect the demographics of our country. But beyond the benefits of identity diversity in the workplace, more global companies are realising the value created by tapping into cognitive diversity.

LOOK BEYOND VISIBLE DIVERSITY

South African businesses, in particular, are very familiar with the identity diversity part of it, to a large degree driven by broad-based black economic empowerment (BBBEE) legislation that impacts companies operating within the South African context. And, depending on who you are, the mere mention of BBBEE incites very different feelings and responses. But I want to address and unpack the big casualty to the heavy focus on headline stats – the concept of cognitive diversity and inclusion, i.e. creating an environment where people can be who they are, that values their unique talents and perspectives, and makes them feel like they belong. I believe the ‘inclusion’ component captures the zeitgeist of this complex topic and is key to unlocking the diversity dividend.  

For those of us operating in the asset management industry, embracing true diversity and inclusion seems obvious. Our environment is characterised by competitiveness and uncertainty, and thriving in that context requires creative thinking. This is exactly what makes diverse collaborators better equipped to face these challenges.

Cognitive diversity means recognising what isn’t always visible in people, embracing this difference, and actively including people who think differently, and have differing viewpoints and skill sets. This is the really difficult part. Our South African experience has shown that looking beyond the many superficial assumptions based on identity has been one of the biggest challenges. This, in turn, creates a barrier to digging deeper and identifying the cognitive. Something that we have had to work hard at changing.

Improved cognitive diversity goes a long way to boost collective intelligence among teams.

Harvard Business Review (i) has reported that teams solve problems more effectively when they are cognitively diverse. Researchers looked closely at how individuals with different perspectives or information processing styles add value in a team that is tackling new challenges. The results showed a significant correlation between high cognitive diversity and high performance, which makes intuitive sense. When we take on a new challenge, we need to balance what we know with discovering what we don’t know that might also be important. So, it’s valuable for everyone involved to be able to apply their unique expertise to the task at hand.  

THE BARRIERS

Visibility

The problem is that cognitive diversity does not come with a well-printed label and is hard to detect at face value. A person’s race, gender, culture or generation may not necessarily tell us how that person thinks and processes information. It takes effort to draw out those internal differences and harness the benefits, the how of which I discuss further on.    

Organisation’s Culture

Cognitive diversity can be restrained unintentionally by an organisation’s cultural barriers. It is normal and natural for people to gravitate toward others who think and express themselves in a similar way (aka “group think”), and so organisations often end up with like-minded teams. This is called functional bias and research globally continues to show that people have a more positive skew towards individuals who have the same qualifications and went to the same schools or universities as themselves. The result is low cognitive diversity. It’s a problem because teams with little cognitive diversity have limited ability to see things differently and engage creatively and innovatively. This can become a material decision-making handicap in fast-changing and complex environments. 

Organisational beliefs and setup

In addition, an organisation’s beliefs about diversity creates a self-fulfilling cycle. Industries and companies that view diversity as important and actively implement it in their recruitment, capture the benefits from it. Those that don’t, don’t. Diversity creates positive benefits when people believe in its intrinsic value. They don’t see it as an obligation or a social tax. Because when you value diversity, you encourage diverse idea exchange. Research has shown that truly diverse teams can develop more innovative ideas. When people from different contexts work together, their unique perspectives often lead to greater creativity.

Tied to this is the fact that diversity does not work without psychological safety. People only contribute unique ideas to the group when they feel comfortable enough to speak up and present a contrarian view. It is difficult and stressful for those who do not fit into an entrenched culture or identity group. Many choose to hide important parts of themselves and importantly, their ideas.

Experimental studies further support this, showing that psychological safety is key to idea generation. Increasing a team’s collective intelligence is not just about having cognitive diversity but also about having an equality in the distribution of conversational turn-taking to unlock it. This is essential because it is easy for differences in views to be lost within a team setting that is dominated by a few individuals who think similarly.

When there is a failure to harness the true diverse thinking of different people, everyone loses.

HOW TO ACHIEVE COGNITIVE DIVERSITY AND INCLUSIVITY

Cognitive diversity is all around us, but you have to look out for it. When you are faced with a complex business challenge, and everyone agrees with you on what to do, find someone who disagrees and actively make an effort to understand their viewpoint. I know firsthand that this is really hard – we all prefer the comfort of being surrounded by our own echo chambers. But, the evolution and robustness of your thinking improves significantly when considering different views, and the end result is far better than your initial thoughts.

At Coronation, we encourage robust debate. We know how important it is to give everyone a voice and to enable them to be themselves. And we know that this alone is not enough. We actively promote communications or interactions where those views are truly heard and the individuals expressing minority views are celebrated for thinking differently.  It makes for richer and deeper analysis, and, ultimately, better outcomes for our clients.

But to achieve this, one must take deliberate action. Start with the right tone at the top and ensure that progress is being made at every level of the organisation. Make it clear that not only diversity but also inclusion is a business necessity and not just a human resources target. It needs a long-term plan and commitment in order to become entrenched in the culture.

Mentoring talent

A good way to encourage cognitive diversity and an inclusive environment is to establish mentoring programmes within the business. Giving advice as someone with experience and expertise can help others along their own path. My mentoring programme for high school learners who receive a Coronation bursary and Coronation’s Lean In initiative for employees are just two examples of how we provide a safe and supportive space for participants to learn and grow.  We become stronger by leveraging our mix of capabilities, skills, and personalities, and we intentionally seek to maximise our collective intelligence through cognitive diversity. In an industry where you are only as good as the people you employ, it gives you a competitive edge when you enable that group of people to collaborate seamlessly and to bring out everyone’s best.

I am personally proud of our distinctive and inclusive culture, which has evolved (and continues to evolve) since our launch over 25 years ago, and it would be encouraging to see inclusivity and diversity accelerated across the industry. Anyone with the appropriate skills and qualifications should feel that they belong in asset management.  No-one should avoid pursuing a career in the industry because of their background or upbringing.  The outdated thinking epitomised by the age-old question “Where did you go to school?” is out of step with our industry which, like the rest of the world, is changing fast. Companies can only survive if they inherently understand their clients, deliver on what they promise, and act to stay relevant.

Celebrating the contribution of a minority view

As mentioned earlier, an important aspect of achieving cognitive diversity is the psychological safety produced by an inclusive culture. How to get this right varies by organisation, but most often it includes two important elements:

1. Creating a discussion framework where people, motivated by the genuine fear of missing important perspectives, look at differing views as an opportunity for all to learn more about a situation. 
2. Ensuring that the organisation’s culture celebrates the person giving rise to the minority view rather than punishing or alienating them. Let’s face it, human beings are social characters and we all have a profound need to be accepted. Celebrating differing views elevates the perception around this and should encourage a greater confidence amongst others to do the same.

Building a strategy for the future

Management consulting firm McKinsey’s latest study on diversity in the workplace “Delivering through diversity” reiterates the positive relationship between a company’s level of diversity and financial outperformance, and recommends how to develop more effective Diversity and Inclusion (D&I) Strategies (whether these are stand-alone policies or part of the companies cultural vision) as a source of competitive advantage. One needs to be mindful that groups of people in companies responsible for implementing D&I policies are themselves representative of a broader grouping - otherwise you are running the risk of merely institutionalising their individual biases.

The research shows that the success factors of top-performing companies include having a strong, sustained and inclusive leadership who are committed for the long-term and who ensure that the strategy reflects their own unique company ethos and business-growth drivers.

CONCLUSION

Companies can empower themselves beyond creating a demographically diverse workforce by creating a cognitively diverse and inclusive environment. A willingness to openly recognise and tackle bias is at the heart of all recommendations. When people choose to ignore bias or deny that it exists, they keep seeking out colleagues and business partners, team members and employees who share their traits, and they miss out on the quantifiable benefits of diversity. Implementing a well-planned and long-term D&I Strategy is the key.

From personal experience, I know that you do not need to conform to a stereotype to fit in. Own and celebrate your differences and the value they bring to your area of work. Both you and your organisation will reap the rewards.