By Adrian Towsey, Area Vice President, Small & Medium Business, Salesforce APAC
For the average Australian SMB owner, the calls to innovate and diversify their workforce in the vein of their large competitors, coming from commentators and politicians, can often ring hollow when their main priority is ensuring that suppliers and employees are paid on time.
However, Australia’s record period of uninterrupted economic growth, that has helped many small businesses to grow and thrive, could be faltering, with the March Quarter 2019 Sensis Business Index reporting small business confidence fell significantly across the country during the first quarter of the year.
Amidst economic volatility and uncertainty, increased demands from customers and greater complexity in running a business, now is the time for SMB owners to pause and consider the strong business case for diversity and innovation that they simply can no longer afford to ignore.
So how can today’s small business leaders foster a culture of equality and innovation? Here are some key benefits to a diverse workforce.
Diversity helps you make better decisions
A recent Salesforce SMB Trends report explored the challenges faced by small business owners globally, to understand what makes owners take the decisions they do.
The report highlighted notable differences between men and women in what they view as the top characteristics for success.
Men surveyed said self-discipline, personal passion, drive and market knowledge are characteristics needed for success, while women stated people and communication skills, self-discipline and money management are key.
A diverse workforce is proven to be a more engaged workforce. Research from Deloitte Australia found that teams that are focused on diversity and inclusion tend to deliver the highest levels of engagement and according to a CEB Corporate Leadership Council findings (now Gartner), engaged teams grow profits three times faster than disengaged ones.
Engaged teams have individuals who make positive statements, who are focused on the group rather than themselves. They ask questions and defend their own views. In other words, they trust one another to do the right thing.
Bunnik Tours, one of Australia’s leading travel companies is a prime example. They have a 60/40 split between its female and male leaders. The company has found that gender diversity has enabled it to run a truly agile business, with a successful mix of skills and points of view, which has helped it to grow by 20 per cent every year in the last five years.
Diversity fuels creativity
Workplace diversity fosters an environment where all ideas can come to the table. As the modern consumer requires a personal touch, SMBs must get creative when building a customer journey. This can only be done through different trains of thought.
The SMB report found that women were 42 per cent more likely than men to cite an innovative mindset (25 per cent vs. 18 per cent) as the key to running a successful SMB. The McKinsey Global Institute 2018 analysis found that companies in the top quartile for gender diversity on executive teams were 27 per cent more likely to have superior value creation.
When leaders value differences, all employees can feel comfortable sharing ideas and honest views. Bringing in people who have different opinions on the same issue means a greater chance of fresh ideas, hence improving the creativity of your team and boosting its capacity for innovation.
Diversity helps service and profitability
The report also found SMB leaders citing market knowledge as one of the top five characteristics for running a successful business.
Diverse team members with different worldviews and experiences have a greater chance of generating market knowledge, creating products and services that reflect the communities they serve. This can generate a competitive advantage and increase income profits for their organisation. McKinsey’s “Delivering Through Diversity,” research in 2018 showed that gender diversity in management positions are 21 per cent more likely to outperform on profitability.
Businesses with greater diversity tend to have lower turnover rates, meaning reduced recruitment and training costs. Reducing these costs will be vital for the 60 per cent of SMB owners in the report who are seeking to grow their business and not to consolidate or shrink their brand.
Now is the time to plan
When consumer confidence falls, it is tempting to respond by focusing on the here and now. However, this only acts as a stop gap. Customer expectation of a personalised experience will not go away, and will only increase as time moves on.
This is why SMBs must instead focus on future planning, and consider the genuine business case for diversifying their workforce. To meet the needs of every individual, businesses must make well informed decisions, driven by creativity and an in-depth knowledge of the market.