OPINION: Diversity is the key to reaching wider audience

Back in July, struggling retailer Mothercare announced that it had recruited Karren Brady, managing director of Birmingham City football club, as a non-executive director.

According to the company, the fact that Brady is the mother of two children and a Mothercare shopper means she could bring valuable insights into the board room.

This is a rare example of what should be pretty obvious. Too few companies have yet to grasp that a diverse board can strengthen customer understanding.

A report from the dean of London Business School, Laura Tyson, shows that women account for just 11% of non-executive directors at the biggest FTSE 100 firms, 8% at FTSE 250 firms, and 4% at small, quoted companies.

This lack of diversity goes well beyond gender. According to a recent article in The Observer, while women make up 9% of management grades and only 2% of senior management, it's much worse for ethnic minorities. They make up 1.5% of all managers and are just about non-existent at senior levels, although they comprise 7.6% of the UK population.

By themselves, of course, statistics like these don't get you very far.

Instead, you have to consider potential implications. As Allan Leighton argues in the annual report from Race for Opportunity(RFO), diversity is not just about equal opportunities or compliance, but about being more competitive, especially in a downturn.

He chairs the RFO, a national business network of more than 180 UK private and public organisation that helps members put diversity onto their business agendas, in the realisation that it can make a competitive difference.

As Leighton says, communities equal profitable customers and potential employees. If you rely on traditional perceptions of who these groups are, you limit your pool of talent and your target market.

The RFO emphasises the importance of making the business case for embedding diversity into the organisational strategy. It has found that 93% of the organisations surveyed are committed to understanding and engaging ethnic minority customers, service users and other stakeholders, up from 84% last year and 66% in 2001.

And it pays off. Lloyds TSB reported a 30% increase in sales in some branches where staffing has been changed to reflect the ethnicity of customers.

This will come as no surprise to Professor Amin Rajan, co-author of another report, out last week, called 'Harnessing Workforce Diversity to Raise the Bottom Line'. He believes companies are slowly beginning to realise that diversity pays for two key reasons.

Customers want to be served by a company and a workforce they can identify with. So being mainly white and male is obviously limiting, at a time when the buying power of women and ethnic minorities is rising. Almost 40% of the 500 companies surveyed said diversity initiatives had led to improved customer satisfaction and retention, while a similar amount said productivity had increased. And there is a positive impact on creativity when there are differing views and cultures in the mix.

As Leighton says, if companies don't face up to the need for a business strategy on race (and gender, for that matter) they will suffer both commercially and in branding terms. Promoting diversity isn't just the right thing to do. It's the smart thing to do.


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