In the US there are many strong laws that require that companies not discriminate against people due to their background or status. They are called policies for encouraging diversity. Most people see this as being a way to be more tolerant of people who are different from most other people. They see it as being a way of being fair to others.

However this really misses the point of diversity. Really its advantage is that it encourages people to be receptive to new ideas, perspectives and cultures that can, if this policy is followed correctly, encourage creativity, innovation and ways of thinking that can make companies far more competitive.

Founders and managers of new and young companies need to follow diversity not mainly because it will make them more tolerant and fairer to others, but because it will help them to be more successful as business people.

In other words, diversity can be one of the key ways that young companies become more competitive and stay that way. So diversity should not be regarded as being an act of charity. Rather it is a matter of business self-interest that will help make the company more successful by making it more inclusive.

There are seven major areas of diversity in today’s world. Later we are also going to look at new emerging areas that I think will also be important in the future. The seven areas are:

•	Racial
•	Gender
•	Sexual
•	Cultural
•	Religion
•	Physical
•	Age
 
So let’s look at how providing equal opportunity to various groups can actually make a company more successful.

Racial discrimination: In the US, the laws against racial discrimination have resulted in millions of people of different races becoming valued employees, CEOs and contributors. This applies to African-Americans who have opened up new industries such as music, sports and fashion to many companies and allowed them to create new products for these new groups, which have then spread to the main groups in society.

A great example is sneakers. Generally sneaker fashions have originated with African-Americans and then have been adopted by larger groups of white people, thus resulting in new, vibrant and rapidly expanding markets which have enriched the companies that decided to enter them. In these markets, racial groups such as African-Americans and Latinos are the driving consumer force, driving new fashions and creating new streams of revenues.

Of course sneakers are only of many categories that ending racial discrimination has opened up. Another area is education.

Traditionally in education Asians were discriminated against but now in the US they comprise a very successful group; Enabling Asians to become valued employees and part of US society has opened up new areas, particularly in education where Asians are now widely recognized as being more successful than American whites.

Now the education industry is the US relies disproportionately on Asians for growth in education revenues. Again this is not the only area; Asian food, travel and leisure activities such as yoga, martial arts are some of the areas that Asians have brought to the US that now generate billions of dollars in revenues for American businesses, most of which are run by whites who have profited from these new areas.

Gender Discrimination: There’s still discrimination against women almost everywhere. Even in the US there are far less women in senior positions than men. But that’s counterproductive because if you have more women, they are better equipped to figure out how to market better to women and sometimes, even to men (e.g. what fragrance should a man wear?).

And new research shows that men and women have different risk profiles (e.g. in buying and selling stock) and it’s better to have them work together to balance risk. Particularly at higher level positions that can prevent men making riskier decisions than are justified in the circumstances.

Sexual Discrimination: There is widespread discrimination against people with sexual preferences and identities that are different to most people. Yet research in the US shows that cities with a higher proportion of gays are more creative. And having gay people on staff means that a company will better be able to market and sell to this large group of people, maybe even getting higher prices since many companies won’t market to them.

The same things goes with transgender discrimination; no matter what your personal views about transgender, it does happen, more often than people realize and these groups of people also represent a niche market that could be highly profitable.
 

Cultural Discrimination: Most people don’t know that a hugely disproportionate number of CEOs in the US were not born in the US but in other places, mainly India, China and Latin American countries.

Its well-know that immigrants tend to have higher levels of motivation, initiative and drive because that’s how you have to be if you are prepared to give up the safety of your own country and culture to go to a strange land with no friends and even maybe no language.

Immigrants, mostly from another country, but even from within China, such as the western provinces, can also bring many of these benefits. Every company should try to hire some immigrants or foreigners, even if they don’t speak Chinese. They will provide another perspective that you would get otherwise and will probably help you to invent new products that you wouldn’t otherwise have invented.

Religious Discrimination: If you discriminate against people who believe in a religion or in a religion that isn’t the same as yours, you are going to miss out having some of the smartest people. Also you are going to miss out on being able to market to people who have a religion that want to buy particular products and services.

The markets for products and services for religious people in the US are absolutely huge and usually these people tend to buy from people who have the same religion as them. Plus, if people have a strong religion you can be sure that they have good ethical values (as long as they are not extremists, and you get these in every religion). Plus religious businesses in the US have been important contributors to expanding the US economy (e.g. religious schools, universities, companies). What’s not to like?

Physical Discrimination: In the US it is illegal to discriminate against people with physical handicaps unless you can show that their handicap prevents them from doing a particular job. But that means you cannot reject a physically handicapped person who could still sit at a computer if the job is administrative in nature.

The benefit to society is that many more people with handicaps have jobs and that means society has to spend less to look after them as well as the fact that these people will be happier and more productive than otherwise.

But the market for products and services for physically handicapped people is huge; not just for younger people but also for aged people for example who have trouble walking. When you hire such people especially at more senior levels they can help you figure out how your company also can profit from this huge market.

Age Discrimination: In the US it’s illegal to force someone to retire unless there is another reason for this, e.g. they don’t have the strength to do the job. So you cannot have a mandatory retirement age; there is only one major exception, namely senior executives who have a high pension.

Some of the most productive workers are older because they have a huge amount of experience, more wisdom and are less likely to make serious errors. So if you hire older people,
 
you gain experience and often their gratitude which will show up in other ways such as higher job loyalty.

Like almost every other country in the world, China is ageing rapidly so many more companies are going to have to figure out how to address the rapidly growing market for products and services for aged people. What better way to do this than to hire older people?

The above 7 areas are the most important areas of diversity for companies. However the definition of diversity is constantly expanding as governments everywhere try to prevent discrimination and promote equality.

And there are new areas of discrimination that are now being uncovered, even though laws haven’t yet been passed to cover them. There are two areas in particular where I think some countries will pass laws against discrimination, although it might still take some time. These are educational discrimination and personality discrimination.

New Areas for Diversity

Educational Discrimination: Laws to promote educational diversity would be used to ensure that one’s education background is not used unfairly to not hire someone who could do a job well, even though he doesn’t have high educational qualifications.

You might think that this doesn’t make sense. After all, if someone has a higher educational qualification than someone else, doesn’t that mean they are better suited to do a particular job than another person who doesn’t have such a high qualification?

Of course not! It all depends on the person. It depends on their personality and natural competences. You can have a high education but no common sense for example, or be terrible at dealing with people.

In the US one of the richest people is called Peter Thiel. Every year he gives scholarships for
$100,000 to new entrepreneurs who want to start a new business. However his condition is that they must not be at university, and if they are, they must drop it immediately.

Peter Thiel is one of a new generation of successful people who have realized that too much or higher education can sometimes be a barrier to personal and professional success. Their perspective is that we have to look at issues such as the relevance of the education to a particular job, and the presence or otherwise of natural competencies that might be more important than just education.

Does a degree in Chinese literature make you better suited to do a sales job than a person who has no degree but is great at dealing with people?

I predict that education discrimination will be made illegal in the US within 10 years.

Personality Discrimination: What this means that people with certain personalities are discriminated against systematically in such a way that it leaves them in a worse position than
 
other people in professional or social terms without that personality just because they have that personality.

Let’s take an example that I have seen often. It mainly has to do with introverts and extroverts. It’s not uncommon to see companies that have strong technical or engineering cultures that in their own way discriminate against salespeople, who are, of course, mainly extroverts.

In such companies salespeople are looked down on and often won’t get into management because the reigning culture stereotypes them as being frat boys, loud, obnoxious and crude. That they might possess elements of all of these characteristics doesn’t mean any the less that they are being discriminated against on the basis of their extroverted personality.

I have also seen the reverse, discrimination against introverts. They are often discriminated against within companies that have a strong sales culture where signs of strong introversion and introspection are looked down upon, shunned or even viewed as being cowardly. In such companies the introverts usually leave, leading to a monoculture of extroverts. The same happens in the companies where extroverts are discriminated against, leading in this case to a monoculture of introverts.

Of course, I’m not saying that this discrimination happens just with introverts or extroverts. It happens with many different personalities. There are some companies that discriminate against analytical types (usually they are ruled by intuitives who reject what they see as being obsessive, detail-oriented or academically-tinged behavior). And of course you get the opposite, the companies ruled by analyticals who discriminate against the people with great gut feel which
the analyticals often despise as being crass, uninformed or even ignorant.

The signs of discrimination with personality are often subtle and hard to pick up, just as they are with more traditional forms of discrimination such as racial or gender. People may have a pretty good idea that they are not behaving in a fair manner so often the discrimination gets baked into a culture in subtle ways which are hard to pick up for an outsider. But they still exist anyway.

The results of personality discrimination are not dissimilar to other forms. It’s harder for people to become promoted in companies where this is practiced. Their salaries will generally be lower. They will receive less job opportunities within the company and less access to non-prescribed benefits. In essence they will be treated as not part of the club that unofficially exists in the company; yes, I hate to say it, even as a kind of inferior race.

Just as was the case with other, earlier forms of discrimination, people might dismiss the idea that there is personality discrimination or that, if there is, it’s just innocent and the way people naturally are. But there are people out there who have suffered such discrimination all of their lives and who would strongly disagree. The fact that there is no formal or legal recognition of the issue increases their frustration just as it did with other forms.

Accept versus Promote?

It’s common for people and companies to accept diversity once they are obliged to by law. But often they don’t do anything unless there is no choice.
 

I believe that the companies that actively promote diversity even before any laws are passed will gain a competitive advantage. That is for the reasons I have set out above. In other words,
companies should see diversity as not just being a social and ethical issue, but also a competitive and business issue that they can turn to the advantage of their own company and to the business advantage of the social groups that are being discriminated against.

If you innovate socially you will innovate inn business terms. And that will bring you more profits and value to your investors, stockholders and employees.


Dr. E. Ted Prince, the Founder and CEO of the Perth Leadership Institute, located in Florida in the US has also been CEO of several other companies, both public and private. He is the author of two books: “The Three Financial Styles of Very Successful Leaders” (McGraw-Hill, 2005) and “Business Personality and Leadership Success”, Amazon Kindle 2011 as well as numerous other publications in this area. He is a frequent speaker at industry conferences. He works with large corporations globally on leadership development programs and coaches senior executives and teams in the area of financial leadership. He has held the position of Visiting Professor at the
University of Florida in the US in its Graduate Business School and also at the Shanghai University of Finance and Economics in China.