What is "diversity" all about and what are its implications for business? Is it just another variation on the theme of good Corporate Governance? No way, argues Evelyne Sevin, who is responsible for diversity issues at Egon Zehnder International. Her responses reveal the correlation between diversity and boosting a business by outlining a talent management approach that is really sustainable and future-oriented.

Isn’t diversity just an empty buzzword that many companies use to improve their image?

Evelyne Sevin: I cannot exclude the possibility that it may be understood by many in this way – perhaps even by some senior executives. We definitely have a problem with the term “diversity,” that much is clear. If you mention “Talent Management” or the “War for Talent” everyone in the business world listens up when you have something valuable or new to say. But whenever you talk about “diversity” the term is immediately associated with justice, equality and ethics. Important things, but not vital to business. That is the common misperception at any rate. Diversity is much more than just a question of corporate governance…

What does diversity mean for companies?

Evelyne Sevin: Diversity is about creating value in the long run. Analysis of recent statistics by Catalyst, a non-profit corporate membership research organization, has even revealed a link between value growth and the representation of women on boards and Executive Committees. This is significant because it reflects the fact that women and different ethnic groups bring a different perspective to any issue, which is often enriching. Statistically one thing is for sure: demand for top talent will rise in the future. Companies that offer flexible working hours - giving men and women the option of combining a family and a career - will enjoy a clear competitive edge. These firms are not acting on ethical grounds, but because of the real economic benefits they stand to gain. Diversity in this context means a practical and ethical approach leading to an economic advantage.

What leads you to believe that firms share this view?

Evelyne Sevin: To give you just one example: my colleagues surveyed top German businesses on their diversity management and the vast majority cited economic reasons as the primary motive for launching diversity programs, which are relatively new in Germany. And we are receiving a growing number of enquiries about how to attract and retain diverse talent, a skill that is becoming a key requisite when selecting a business partner.

What is the situation in other countries?

Evelyne Sevin: Diversity programmes are almost universal in U.S. companies and estimates suggest that about half of the U.S. population will consist of minority groups by 2050. Awareness has risen in Europe as well. In Norway, for instance, 40% of board members must be women by law. Introducing such legal measures to encourage diversity nevertheless requires careful consideration, as they do not always produce the desired result. Competencies are ultimately what counts when recruiting senior leaders. Unfortunately, there are still too few highly qualified women available to fill senior positions in many countries. Too often female managers lack the operational experience of running a P/L, as well as the global perspective gained by their male counterparts by spending several years abroad in a leadership role. EU diversity programmes vary between member states, but a trend is definitely there. Europe’s demographic and legal changes mean that it has passed the point of no return in terms of implementing measures to promote diversity. I also would like to highlight the situation in Asia, where I just took part in the Women’s forum for Economy and Society in Shanghai. The event was attended by 700 participants, mostly from mixed Asian and European backgrounds, with fantastic Chinese and Indian female entrepreneurs and senior executives discussing ways of pushing the diversity agenda forward.

What is the ideal initiative for companies seeking to encourage diversity?

Evelyne Sevin: While there is no such thing as a one-size-fits-all initiative, there are definitely some best practices we need to be aware of and share with our clients. Firstly, companies need to make diversity a business issue, not a female thing! It has to be on the CEO’s agenda and at the forefront of everybody else’s mind. Secondly, it is essential to define the business case for diversity. Companies wishing to promote diversity should examine their future market positions and analyse their resulting talent requirements. The aim is to achieve a consensus about why such an initiative makes sense and win agreement on how to address it. Firms should then take a closer look at why the diverse top talent that they seek is currently vanishing from their workforce. It is important to give such initiatives a budget, instead of just relying on volunteers to execute the ideas, and to recognise that there could be resistance to such plans. At the same time it is important not to let people mix messages. Gender diversity, for example, is not the same topic as work life balance. “Even the issue of childcare it is not a female issue, but a family issue “ (Women as Leaders Barbara Cassini in Why Women mean Business) Other components of such programmes include the appointment of an independent monitor or ombudsman, the revision and formalisation of employment processes, the setting up of diversity councils and workshops cascading down the organisation! Some firms have even gone so far as to link compensation to diversity goals, but I personally would not encourage companies to follow that route. Becoming “multilingual” is ultimately what counts in my view.