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KiwiSaver Performance Improved With Diversity in Companies

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You may be familiar with the term “diversity and inclusion”. Many companies have “diversity policies” available on their websites. These outline their approaches to how they’re going to achieve equality within their company.

The recent growth of diversity policies has come, largely, from the United Nations creation of their 17 Sustainable Development Goals. These universal goals are created to ensure no-one is left behind. Specific to diversity and inclusion is Goal 10 which focuses on “Reduced Inequalities”.

Inequality is not just about whether you’re on the poverty line or not. It’s about how businesses conduct themselves, internally and externally.

You may have experienced an environment where someone doesn't feel comfortable, they aren’t included or they don't have progression, even though they are skilled and able, then you’re going to have staff turnover issues. And high staff turnover cuts into company profits.

Decreased profits can cause the stock price to fall as investors feel less confident about the company's future. This generally results in the demand for the stock decreasing. As the stock price decreases, so too do the value of your KiwiSaver savings, if those companies are a part of your KiwiSaver investment.

Equality can address a multitude of aspects, but we’ll have a look at how inclusive treatment of differing ages, ethnicities and genders can benefit your KiwiSaver savings.

 

Age (or multi-generational) diversity

Companies today can have up to five generations working within them. These can include the:

  • Silent Generation (born between 1922-1945)
  • Baby Boomers (born between 1946-1964)
  • Generation X (born between 1965-1980)
  • Generation Y (or Millennials, born between 1981-2000), and
  • Generation Z (or the Digital generation, born between 1995-2015).

Each age group have their own set of traits and characteristics that result in differing employee styles and needs. These differences can sometimes cause conflict and misunderstandings. When not managed properly intergenerational conflict can arise. At worst it results in age discrimination.

More than 61% of workers over 45 years of age have witnessed or experienced age discrimination at work.1 This type of discrimination is often based on false assumptions about older workers who may be ‘harder to train’, ‘lack technological skills’ or ‘are too expensive to hire’.

Telecommunications infrastructure company, Chorus NZ, thinks differently. Chorus said that when multiple generations collaborate on projects, it provides Chorus with different approaches to problem-solving. Younger employees provide new skills and ideas (essential to companies evolving and surviving) while mature workers act as mentors and share their substantial technical and specialist expertise.

Mentorship provides on-the-job training and is one of the ways some companies are positively promoting an age-diverse work environment.

Mentorship can aid the development of “soft skills” and enable the sharing of career-related knowledge in addition to the actual skills that get a job done. Some of the most valued aspects of mentorship include job skills or training advice (90%), followed by advice on career paths (84%), and advice on difficult workplace situations (82%).2

On-the-job training can not only improve employee engagement and retention (thus saving companies from the expenses of lost knowledge and skills, recruitment and additional training) but companies offering this have seen higher profit margins (by up to 24%).3

Cultural diversity

Of the people counted in the 2018 New Zealand census:

  • there were over 160 different ethnic groups (with 100 or more people living here at the time), and
  • over 27% of people counted weren’t born in New Zealand.

So, you may be surprised to hear that according to the New Zealand Workplace Diversity Survey 2020, only 12% of companies surveyed said: “ethnicity is not an area of concern for our organisation because it is addressed”.4

The a2 Milk Company falls into this category. This is reflected in the composition of their people from:

  • New Zealand, Australia and the Pacific Islands: 17%
  • Americas: 23%
  • Asian: 45%
  • European: 13%, and
  • African and Middle Eastern: 2%.5

We can all appreciate that finding ‘diverse’ candidates with the right skills for the job can be challenging. Conversely, though, it also suggests that 88% of companies aren’t as motivated to consider the cultural diversity of their customers.

An understanding of differing cultural perspectives can help companies to innovate to develop products and services which can better resonate with the cultural diversity here. 

Research indicates higher levels of ethnic diversity can increase revenue by 15%.6 While The a2 Milk Company has recognised that their ethnic diversity has increased the richness of their debate and discussions, they may be further rewarded on their promise to continue to do more work in this area.

Gender diversity 

In the U.S. women only hold 24% of computing jobs, and over half of them have left by the mid- point of their career7. They’re paid less, denied advancement opportunities, and their family commitment is seen as a negative – why would they want to stay? 

New Zealand is not much better. Despite women now making up 48% of the total paid workforce8 they only have a 26% representation in our local tech sector9.

This industry will need to work harder to mitigate gender diversity. They will benefit from working hard though. Women generally have more empathy, which can help them to understand customers’ needs and effectively communicate with them. This understanding can help to develop apps and web-based products and services that customers will pay for, and love to use. 

New Zealand-born, online accounting software company Xero know this. The representation of women across all Xero employees as of 31 March 2020 was:

  • Xero board – 43%
  • Xero leadership team – 42%, and
  • Xero employees – 42%.10

In addition to increasing their subscriber-base by 23% (to over two million) in their last financial year, they’ve been recognised for their commitment to gender equality and fostering a more inclusive and equitable workplace by the 2020 Bloomberg Gender-Equality Index.

Xero’s diversity activities have been supported by a revealing report by Deloitte who estimated that if New Zealand companies achieved gender parity in leadership, the resulting participation benefits would lead to the economy being around $881 million larger.11

How is this good for your KiwiSaver savings?

Diverse teams are less likely to fall into ‘group think’ and more likely to see things in a variety of ways. This enables them to recognise new and different market opportunities, and they can better appreciate unmet market needs. Expanded market awareness produces results.

The majority of National Capital’s KiwiSaver providers are conscious of this, and many undertake to address this with the companies they include in your KiwiSaver fund.

If this is important to you, you can prioritise “ESG considerations” as part of your KiwiSaver HealthCheck.

Have you done your KiwiSaver HealthCheck lately?

KiwiSaver HealthCheck

 


1 Glassdoor.com, How CEOs can create age-diverse companies, October 2019
2 AARP.org, Mentorship and the value of a multigenerational workforce, January 2019
3 HRExchangeNetwork.com, 7 stats that prove training value, August 2019
4 DiversityWorksNZ.org, New Zealand Workplace Diversity Survey 2020, April 2020
5 Thea2MilkCompany.com, FY18 annual report, June 2019
6 GobalWomen.org.nz, How ethnic diversity leads to business success, November 2019
7 CapitalOne.com, Women tech leaders cite top X factors for career success, October 2019
8 Stats.govt.nz, Women in paid work, March 2019
9 TechWomen.nz, NZ closing the gender gap but tech sector lagging behind, March 2019
10 Xero.com, Gender diversity at Xero, March 2020
11 https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12311897

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