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Zabeen Hirji, Chief Human Resources Officer for the Royal Bank of Canada. (Matthew Sherwood for The Globe and Mail)
Zabeen Hirji, Chief Human Resources Officer for the Royal Bank of Canada. (Matthew Sherwood for The Globe and Mail)

Strategy

Workplace diversity: ‘To win in your market, you need to hire the market’ Add to ...

When Zabeen Hirji came to Canada in 1974, she never dreamed she would have the career she does today. Although the civil rights movement had pushed equality issues to the forefront, a Tanzanian immigrant like her had little chance of reaching her full potential in the business world.

When she started working at Royal Bank of Canada in 1977, the bank had no female or visible minority executives. With some encouragement from one senior manager, though, she persevered, and gradually climbed the ranks. Today, Ms. Hirji sits on RBC’s executive committee as the head of HR.

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“The culture at RBC has changed,” she says. “Today, diversity is seen as an asset.”

Once considered primarily an issue of social responsibility, a growing number of organizations have embraced workplace diversity as the range of benefits – both financial and non-financial – have become more clear.

“It definitely leads to a stronger bottom line,” says Robin Taub, chartered accountant and owner of Robin Taub Financial Consulting. “Return on equity, return on sales, return on capital, share performance, stock price growth.”

As markets continue to globalize, a diverse work force is helping businesses grasp the increasingly varied needs of customers, who come from a multitude of cultural and ethnic backgrounds.

Sonia Kang, assistant professor at the Rotman School of Management, says diverse organizations tend to have better employee relations. “You typically find less absenteeism, less turnover, higher productivity, people are more committed,” she says. “There’s a higher sense of belonging, which tends to make them better workers.”

They also tend to be more innovative, less prone to groupthink, and are better at attracting and retaining talent.

Despite so many benefits, though, many workplace biases, particularly non-conscious ones, persist. According to the Canadian Board Diversity Council, women currently hold 14.4 per cent of board seats, whereas visible minorities, persons with disabilities, and aboriginal people respectively hold 4.6 per cent, 2.7 per cent, and 1.1 per cent.

A study by University of Toronto professor Philip Oreopoulos found that online job applicants with English names and Canadian or British education and experience were more than three times more likely to receive an interview request than equally qualified applicants from China, India or Pakistan.

Still, there are signs of improvement. Many leading organizations have responded with comprehensive strategies to diversify their work forces. Banks such as CIBC and Bank of Nova Scotia, as well as the big four accounting firms – KPMG, Ernst & Young, PricewaterhouseCoopers, and Deloitte & Touche – all have policies in place to bring more balance to their work force. Many, for example, have signed on to the Catalyst Accord, which challenges businesses to have at least 25-per-cent female board membership by 2017.

Governments are increasingly on board, too. Last May, Ontario’s provincial government proposed a “comply or explain” policy, whereby publicly listed companies are required to either implement diversity policies for women, or explain why they choose not to.

Although work-force diversity has been a hot topic in the business world for years, the definition has changed as nations such as Canada absorb people of increasingly varied backgrounds.

While the bulk of research and policy initiatives still focus on women and visible minorities in the workplace, strategy experts in this field have moved beyond traditional definitions of diversity to consider a whole host of visible and non-visible factors, from sexual orientation, to cultural and generational differences, and even personality traits such as introversion.

“Diversity of thought is really what you're driving for,” says Ms. Hirji, who has spent years driving and formulating diversity policy at RBC. “There are differences that you want to bring to the table so that you end up with more options and more of a reflection of your clients. To win in your market, you need to hire the market.”

At RBC, 36 per cent of executives are women, and 15 per cent are visible minorities, well above the average among other large Canadian businesses. RBC’s diversity program is overseen by a council that includes several top executives, such as president and CEO Gord Nixon, and meets quarterly to track goals, set targets and formulate policy.

Engaging directly with employees is critical to the program. Management conducts a comprehensive survey every year to gauge opinion, and regularly speaks directly to workers to get a sense of what needs improvement.

The council also meets with other self-governing diversity groups within RBC to discuss prevalent issues. “You have a CEO and other senior people sitting in a room,” says Ms. Hirji, “and these employees have an opportunity to speak to them directly. They are very candid. It’s not just about telling us what we’re doing well, it’s what are the two or three things we need to do better?”

While Ms. Hirji believes explicit policy is important, she says that organizations that hire well shouldn’t obsess over filling quotas. “When you have good recruitment policies and practices… you get diversity,” she says. “All of that just happens naturally.”

Bottom-line benefits

Work-force diversity is about more than just social responsibility. When implemented properly, a good strategy can directly affect the bottom line. Here, according to diversity experts, are three benefits of a diverse work force:

Better problem solving

Different people bring different attitudes and experiences to the table, which helps companies avoid groupthink, provides deeper insight on issues, and challenges people to think outside the box.

Better client insight

As markets continue to globalize, customers are becoming more diverse. A diversified work force is likely to have people that identify with the unique needs of clients, and are therefore able to serve them better.

Better employee relations

Employees need to feel valued if they want to reach their full potential. Companies that embrace diversity tend to have lower absenteeism and turnover, and higher productivity.

Editor's note: A previous version of this article said the bank had no female or visible minorities on its board, rather than as executives. As well, it said Ms. Hirji sits on the bank's executive board, rather than its executive committee. This version has been corrected.

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