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Monday 25 January 2021

How to Do Diversity Right This Year in Business

WebProNews
How to Do Diversity Right This Year in Business

2020 was the year of supply chain disruption. After decades of industries striving for leaner supply chains, lockdowns and travel restrictions due to coronavirus blew the system over like a house of cards. As early as February, 70% of US businesses needed to assess their inventory. When lockdowns hit the United States, the general public discovered the shortage of necessary items, like PPE, on the shelf.

No business has gone completely unaffected by the pandemic. 97% of companies around the globe experienced pandemic-related supply chain disruptions. 76% of companies saw a decline in revenue, the average drop being around 23% compared to pre-pandemic levels. For some businesses, that decrease in revenue is enough to put them out of business. The problem is most prominent for small business, who lack bargaining power and receive less attention compared to large retailers.

Over half the businesses that closed during the pandemic will never open again. Companies across the spectrum were not affected equally; in the first few weeks of the pandemic, 65% of businesses in high rent zip codes laid off staff while only 30% of those in lower rent areas did. Businesses catering to higher income people with unnecessary goods saw a drop in demand as the top quarter of earners cut spending by 17%. Meanwhile, the bottom quarter of earners’ spending went unchanged. Perhaps most troubling, minority business owners saw twice as much a decline in business ownership as their white counterparts in the first three months of the pandemic. Black business ownership dropped by 41%, Latinx by 32%, and Asian by 26%.

These figures represent more than just personal tragedies. Beyond the individual business owners and employees who suffer, these closures could be a setback for racial equality. According to Robert Fairlie, Professor of Economics at the University of California, Santa Cruz, “the negative early-stage impacts [of the pandemic] on minority- and immigrant owned-businesses, if prolonged, may be problematic for broader racial inequality because of the importance of minority businesses for local job creation, economic advancement, and longer-term wealth inequality.”

Just a few months later in 2020, public outrage over racial injustice exploded. The biggest impacts of the protests are on young adults: 70% of Millennials chose to shop with brands that demonstrate diversity and inclusion, 60% of all people said brands’ reaction to protests would influence their buying decisions in the future, and 53% of adults aged 18-34 said they have no desire to work for a firm that failed to speak up during the protests. Businesses ignoring the current social climate run the risk of losing both workers and customers in the long run.
Diversity compliance is out. Embracing diversity as a business strategy is in. Diversity in the workforce leads to more product innovations, new patent filings, and more citations on patents. When companies work with local suppliers, including the minority businesses that remain, communities flourish. Not relying on faraway suppliers also means fewer disruptions caused by faraway lockdowns. Diversity is a positive-sum game, not a zero-sum.