This article was originally published in Los Angeles Business Journal
The role of a business advisor has been evolving, and now COVID-19 has been a disrupter that shows the need for better and broader solutions to client challenges. A way to get there is diversity of thought, which comes from intentionally bringing varied skill sets, experiences, talents and backgrounds together.
As a result, business advisors have the opportunity to bring a diverse set of perspectives to the table to meet client needs and continue to grow. Different perspectives lead to better problem solving, which can advance product/service development, which in turn leads to better business results in areas like revenue, profits and talent metrics. As an example, a Boston Consulting Group study found that companies with more diverse management teams have 19-percent higher revenue.
A Deloitte Insights article titled “Diversity's New Frontier” notes three clear benefits to organizations that consider diversity of thought in their businesses. It helps:
- Guard against groupthink and expert overconfidence because it triggers more careful and creative information processing
- Increase the scale of new insights because generating a great idea often requires connecting multiple tasks and ideas together in a new way
- Organizations identify and purposely align individuals to certain teams and jobs because of the way they think
The Role of Trust
Diversity of thought plays an important role in being perceived as a trusted business advisor, which is a major determinant of success. A previous Accounting Today Accounting Insights Survey showed that being a trusted advisor is the top trait desired by small business owners in their accountants.
For firms that provide advisory or consulting services, a diverse team has a wider base of knowledge to bring to client issues. This is not restricted to leaders – the expectation should be that every client-facing professional is a trusted advisor, no matter what level they are in the firm.
Referring to the COVID-19 situation, for example, advising clients takes skills and experience that come from different generations and different perspectives to consider a new range of client options. In turn, clients will seek out firms that have good answers.
For the services sector, every professional that works with clients should be operating as a trusted business advisor, so building in the diversity starts with the hiring process and can be encouraged throughout their careers.
Building an advisory team starts with hiring, and diversity is good for business. A McKinsey study found that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. The study also found that in the United States there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
Being inclusive is an asset, not a “nice to do.” It has actual ROI that is measurable. Diverse companies have 2.3-times higher cash flow per employee over a three-year period, gender diverse companies are 15 percent more likely to have above-average financial returns, and organizations with diverse boards have 95-percent higher returns on equity than their less-diverse competitors.
For firms, diversity can also be built by making strategic non-accounting or non-advisory hires that meet evolving client needs. They could be data analysts, IT experts, engineers, human resources professionals, healthcare consultants and much more. Since technology has changed how people work, firms can use this talent to provide new services like growth planning, investment banking, IT consulting, human resources planning, pandemic response or marketing planning.
When considering building diversity of thought within any organization, it makes sense to first think about what clients want and what is lacking, and build from there. It also makes sense to consider what employees want. According to research by Glassdoor, 67 percent of job seekers said that a diverse workforce is an important factor when considering companies and job offers.