(May 29): South-east Asia is a unique melting pot of people and cultures, so it comes as some surprise to discover that the region is failing to leverage the value of that diversity.
It is time that businesses across the region recognise the true value of difference, and embrace the business opportunity inherent in diverse cultures and backgrounds. These are the findings of Boston Consulting Group’s (BCG) study, The Diversity Dividend in South-east Asia, exploring insights from over 6,100 employees in Singapore, Thailand, Malaysia, Indonesia, Vietnam and the Philippines.
This study shines a spotlight on a potential annual cost of US$25 billion–US$30 billion ($35.5 billion–$42.6 billion) that companies across the region are exposed to as a result of failing to engage with diversity and inclusivity initiatives (D&I). BCG’s study found that companies across Southeast Asia are falling behind on their diversity programmes, yet those which have invested are reaping substantial benefits in terms of workforce morale and business opportunity. This sets out the significant moral and business imperative for organisations across the region to engage more deeply with diversity and inclusivity going forward.
South-east Asia’s diversity deficit
Diversity is undoubtedly complex. It incorporates the intertwined cultural roots at the heart of South-east Asia, while also recognising the importance of equal opportunity regardless of gender, sexual orientation, ethnicity, disability or age. This drive for equality not only reflects a business opportunity, but a moral imperative to support a more fair and cohesive society.
Progress on diversity initiatives has been made in the region, and that should certainly be celebrated, yet more work remains to be done. BCG’s study reveals that only 58% of companies in South-east Asia have some form of diversity initiative in place, a figure which compares poorly to a global average of 96%. Of the respondents from under-represented groups, 50% agreed that obstacles remain for women, ethnic minorities and LGBTQ employees, 13% higher than the global average. In a region which boasts such diversity, we should be pushing to outperform that global benchmark, rather than falling behind it.
The reality on the ground contrasts the
value placed on diversity initiatives by respondents across the region. More than two-thirds of respondents surveyed believe diversity and inclusivity programmes are important. That number is 20% higher for LGBTQ employees, perhaps reflecting significant historical hurdles this demographic faces in workplaces across the region.
It is important that companies pioneering D&I initiatives in the region should also be recognised for their successes. Employees from diverse groups in South-east Asia are 2.5 times more likely to have benefitted from these programmes compared with earlier BCG global surveys. That commitment offers an important route to real business value.
Unlocking dividends through diversity
There is a growing recognition of the value of diversity in both employers and employees across the region. That sentiment is particularly acute in workforce retention. Fifty-seven percent of all respondents, and 90% of underrepresented groups, said they would consider leaving a job for a more inclusive organisation. That represents a potential cost of US$25 billion-US$30 billion in replacing and retraining these workers in Southeast Asia. That is roughly equivalent to the total education budgets of Indonesia and Malaysia in 2019.
Absence of appropriate D&I results in further negative impact on productivity, morale and health. In a world of increasing competition for globally mobile talent, such business continuity challenges cannot be overlooked.
The truth is diversity is not simply an ethical decision, it is a foundation for real competitive advantage. BCG research indicates that companies with above-average diversity on leadership teams report 19% more innovation and 9% higher Ebit margins than less diverse peers.
Diversity is heavily linked to innovation, with diverse firms enjoying a 14% higher share of revenue from new products compared to less diverse competitors. The greater the level of diversity, the stronger the innovation dividends at companies in South-east Asia. There was consistent correlation between increased diversity, and a company’s positive outlook on upward growth, competitiveness and digital preparedness.
Leading towards diversity
Discussions around the value of diversity abound in our business landscape. What is sometimes less easy to access is the most effective path to truly inclusive operations. BCG has identified three simple types of underutilised initiatives which firms could capitalise on to unlock diversity dividends in the region.
Basic measures: This represents a set of foundational diversity and inclusivity initiatives that are widely supported across all
demographic groups. These include formal anti-discrimination policies which should be a pillar of any modern workplace. Such policies are widely utilised in business today, meaning promotion and enforcement are vital. Only one-third of South-east Asian respondents were aware of such policies at their own places of work.
These basic measures should also include support for key life events, such as the birth of a child, which often disproportionately impact women. A positive business response at these “moments of truth” can also provide a valuable boost to employee loyalty.
Hidden gems: This represents initiatives that specific diverse groups such as LGBTQ or ethnic minorities identify as important, but which business leaders may overlook. A simple example is the introduction of nursing rooms for new mothers or business signage in multiple languages. What might seem like small measures as a business can have a significant positive impact on employee motivation.
Leadership commitment is another critical part of this diversity arena. Leading from the front on diversity initiatives, particularly in support of groups such as LGBTQ where social attitudes have historically been fairly conservative across the region, can significantly amplify the value of these programmes.
Potential measures: Measures to consider include several initiatives which have not yet seen widespread adoption in Southeast Asia. One such suggested measure is the introduction of blind screening, where applicants are screened for job vacancies absent of any identifying names or demographic data. This can help remove conscious and unconscious bias from the hiring process, levelling the playing field for under-
The path to delivering effective D&I initiatives should be built on honest recognition of where a business has existing gaps. Addressing these gaps is by far the best way to recognise where deeper commitment is needed. The roadmap towards enhanced diversity and inclusivity initiatives should then be worked out in a specific strategy, which includes initiatives to boost inclusion supported by a road-map for implementation.
The moral case is clear, but so too is the business value for companies across Southeast Asia. Positively engaging with effective diversity and inclusivity initiatives could not only save regional businesses up to US$30 billion in talent acquisition and training, but provide a valuable boost to worker sentiment and innovation that offers a platform for future success. Ultimately, diversity and inclusivity is not just right for your business, it is also the right thing to do.
Colin Teo is a project leader at Boston Consulting Group; Mariam Jaafar is a managing director & partner at Boston Consulting Group and leads [email protected] in Southeast Asia; and Michael Meyer is a managing director & partner at Boston Consulting Group and leads the firm’s Singapore office.