Hiring women and minorities seen boosting business profits

Wanjiru stares at her CV in frustration at the lack of response to her numerous job inquiries. Among her group of friends that graduated from USIU last year with MBAs, she remains the only one unable to improve her career options.

Tom, George, John, and Michael all secured significantly good employment within six months of graduation. Meanwhile, despite her stellar academic performance, Wanjiru continues to struggle to make ends meet in a seemingly dead-end customer service job for a telecommunications firm.

“What can I do? What am I doing wrong?” She ponders.

The reality she faces along with millions of other Kenyans in the labour market — workplace bias and discrimination.

Some progress

But let us not mistake our reality for a lack of progress. If we ask our mothers and grandmothers about the difficulty of women employment in generations past, we will discover we have come a long way. However, Kenya has not yet reached gender or minority equality in the workplace.

Of the companies listed at the Nairobi Securities Exchange (NSE), almost 40 per cent do not see the value in retaining a single female director.

Further, according to research conducted by BrainTrust Strategies in 2012, another 26 per cent of NSE companies only use one woman on their boards of directors.

The figures paint a picture of a dramatic lack of female business empowerment among two-thirds of our largest Kenyan companies.

A global study by Deloitte last year found that the West, despite its equality rhetoric, did not perform much better in female board representation.

Now suppose you run a major firm listed at the NSE. As the CEO, you have difficult choices in hiring and promotions. In a country, such as Kenya that disproportionately hires men over women, would you find advantages in exploiting the underrepresented pool of female candidates? Would your organisation help or hurt profits by hiring more women over men?

You may fear upsetting the delicate work balance by hiring a woman to lead a department composed predominately of men. Now expand your geographic scope. Suppose your Nairobi-based entity desired to grow into Saudi Arabia. Saudi society famously suppresses the rights of women. Would you hire women in such a context to grow your business?

Now realise that the problem extends beyond gender. Minority groups also face intense discrimination and difficulty accessing jobs and promotions. Pastoralist communities repeatedly report bigotry in the job application process.

Tanzanians, have a disproportionate bias against people living with albinism. In Uganda, hysterical misconceptions about homosexuality pushes gay men and women out of the job market.

America’s widespread anti-Islamic sentiment yields Americans of Arab descent struggling to prove their worth in the country’s labour market. Europe faces its own chronic discrimination of gypsies.

Gender and minority issues present CEOs with a real challenge. While you may personally desire to extend diversity and equality to your own workplace as a matter of principle, you might fear the repercussions on your bottom-line — will your staff riot if you brought in more female managers or an exceptional capable minority? Will staff cohesion disappear? Will your firm performance decrease and hurt your profits as a result?

Research provides fascinating insights. As a CEO, hiring or promoting women and minorities in underrepresented environments such as Kenya gives you a win-win.

Sometimes ethical decisions come with real negative implications on profits, but hiring women and minorities is not one of those instances. It actually boosts your profits.

Research by Dr Siegel and his team at Harvard University in 2010 quantified the boost a company gains from doing the right thing.

In South Korea, a nation that systematically excludes qualified women from the workplace, companies that increased the proportion of female managers by 10 per cent recognised a surprising surge in return on assets by one per cent. The trend continues proportionally above 10 per cent such that a 40 per cent increase in female managers yields a four per cent higher return on assets.

Such shocking improvements in a firm’s core performance should get every CEO, CFO and COO’s attention — hiring women and minorities even in nations that actively discriminate against them actually helps your profits.

Raising standards

The research started in South Korea later extended to Japan and other countries. The principles hold true. Sure, firms that integrated marginalised workers reported initial disruptions to workforce cohesion. Existing men and majorities reacted apprehensively at first. However, the disruption proved short-lived and a new, harder working paradigm settled in.

As an example, Wanjiru states, “If a company would give me a chance to show my worth, I would be so grateful and work extra hard to prove my value and exceed expectations.”

Grateful for the opportunity, women and minorities work longer hours, work harder, pay attention to detail and show greater organisational commitment. This raises the standards and expectations among the entire workforce.

Durham University research, among numerous others, links higher employee organisational commitment directly to higher company profits.

Further, due to different backgrounds and experiences of discrimination or life circumstances, women and minorities bring different perspectives that previously lacked in your office and these improve your options and depth of office skills to tackle new horizons.

So, in the case of hiring women and minorities, as a CEO you really can have your cake and eat it too. Commit to workplace diversity and equality. Do the right thing and boost your profits at the same time.

Prof Bellows serves as the director of the New Economy Venture Accelerator (NEVA) at USIU’s Chandaria School of Business and Colorado State University, www.usiu.ac.ke/gsse, and may be reached on: [email protected] or follow on Twitter: @ScottProfessor

USIU and the Business Daily announce an upcoming business plan competition for socially conscious and sustainable business ideas for East Africans under the age of 27. Winners to receive features in the Business Daily and USAid scholarships for graduate-level entrepreneur studies at USIU and Colorado State University. More to be released weekly.