When the topic of diversity in the workplace arises, gender is often a hot topic in the discussion.
However, a new report has urged companies to start considering the benefits of cultural diversity in the workforce, finding that there is still significant underrepresentation in key areas.
Research from Diversity Council Australia (DCA), produced with PwC, IBM and the Australian Government, examined the cultural origins of ASX 200 Business Leaders. The personal names, family names, occupation, and gender of board members and senior executives were analysed.
Nareen Young, CEO of DCA, said the research is an important first step in capturing the cultural mosaic of ASX business leaders.
“For many years we have known the degree of gender diversity on ASX 200 boards but we haven’t had any knowledge of the cultural background of directors,” Young said.
“Yet a culturally diverse and capable leadership team can provide enormous benefits for organisations, such as the potential to boost local market share, enter international markets, create strategic alliances, maximise innovation and meet critical talent shortages,” she added.
Defining ‘diverse’ as non-Anglo-Celtic, the research found that 32 per cent of ASX 200 companies employ culturally diverse Australians. This figure shrinks to 21.9 per cent of CEOs, and 13.5 per cent of chairs.
The research also revealed that New South Wales, Western Australia, and Victoria have the highest proportion of cultural diverse directors. Queensland was found to have the greatest alignment between diversity in business and the community, and NSW the least.
The commercial and professional services industry has the highest level of diversity, while banking ranks low.
According to Luke Sayers, CEO of PwC Australia, cultural diversity is an important aspect of a company’s culture and is a critical source of differentiation in today’s market.
“A culturally diverse workforce is essential for organisations that want to attract and retain the best talent, foster an ecosystem of innovation, remain relevant to their clients, and capitalise on the many opportunities that exist for Australian businesses in the Asia Pacific,” Sayers said.
The research also found a relationship between greater cultural diversity in the workforce and financial performance, with a one-unit increase in cultural diversity increasing sales revenue by 9 per cent.
Furthermore, publicly traded companies in the top quartile of executive-board diversity have ROE 53 per cent higher on average than those of companies in the bottom quartile.
Actively cultivating an inclusive and culturally diverse workforce can help with brand differentiation and talent acquisition, positioning a company as a leader in its field.