There are many reasons why workplace diversity is important, but in this article I’m just going to focus on the business case.  Numerous studies, including those by McKinsey, Credit Suisse, and others have found that diversity is correlated with improved results for companies.  But, if you study the academic literature on the topic there is more to the story, including theories describing how company performance can be hurt by diversity.

At the core of what we are doing at Telescoped, we are promoting geographical diversity.  But, we are doing so by promoting global hiring, not outsourcing. If done right, global hiring improves your geographical diversity and your business outcomes.  If done wrong, outsourcing could hurt your company.

Why and how?

Arguably the two biggest theories on diversity as it relates to business outcomes can be referred to as: cognitive diversity, and similarity-attraction.  There is a lot of research that shows cognitive diversity (in other words, having people with a bunch of different backgrounds and perspectives) will improve decision making and creativity because you have a broader base of knowledge and perspective to draw from.  So far so good.  

But, similarity-attraction studies sometimes find that diversity can be correlated with worse business outcomes.  The reason why is because people really like themselves and therefore they are attracted to people that are like them.  So, when you introduce diversity into that paradigm, you can end up with people and teams that perform more poorly because friction is introduced into that similarity-attraction system (to drastically over simplify). 

So, diversity can lead to better outcomes, but it can also lead to worse outcomes, and we have lots of correlation studies that positively correlate diversity with company performance. What’s going on?

A lot of thought has gone into how companies mitigate pitfalls with similarity-attraction theory and much of it doesn’t sound too dissimilar from just best practice in business.  Some examples of techniques to mitigate the downsides of similarity-attraction include: promoting inclusion simultaneously with diversity, creating goals, getting people to identify with their team and organization, and getting individuals to know each other.  In other words, create a goal and get your entire team or company oriented around it and working together. Again, that just kind of sounds like business best practices.

So, if we can get our diverse workforce working together to solve a common goal, we’re going to outperform other companies. Perfect.

So how does outsourcing fit into this equation?  Usually, it means that you bring somebody into your organization…well, actually, no you don’t.  You interact with them, but you sort of fence them off and keep them out of the organization. They are just being brought on to get some work done.  I can’t really remember their names anyway, but as long as they deliver I don’t care. Is it any wonder that there are countless stories about outsourcing going wrong?  With outsourcing you’re introducing diversity into your organization, but giving everyone in the parent organization a license to disregard the input from the diverse team members. You are doing exactly what psychologists say will lead to decreased team performance.

At Telescoped we’re proposing global hiring as an alternative.  Many companies are working feverishly to improve the diversity of their organizations, but many are missing one of the best ways to do it: by investing in geographical diversity. We already know from similarity-attraction theory that people like to hang out with other people that are like themselves.  So as a result, people cluster geographically around various different attributes; race, ethnicity, religion, socioeconomic status, etc. Simply by re-drawing the geographical boundaries from which you hire (typically a reasonable commute into your office), you have the opportunity to significantly diversify your organization across many different factors. 

It isn’t just about opening an office in another city or country to service that local market. That does nothing to bring together geographically diverse teams of people who are all working on the same goal together. Instead, hire globally and integrate remote team members into your core company and your culture. 

The companies that invest in global hiring will be the winning companies of the future.

Categories: Remote Work


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