The need for diversity in the chemical industry


Journal of Business Chemistry | December 12, 2018

The Journal of Business Chemistry article, “The need for diversity in the chemical industry,” was written by Russell Reynolds Associates Consultants Thorsten Bauer and Joachim Bohner. In the article, they discuss why diversity management is important, the current scope of diversity management in the chemical industry, and research that supports the necessity of diversity and inclusion. The article is excerpted below.

The signs are clear, the focus on Diversity & Inclusion (D&I) in business is by no stretch of the imagination just a fad. It will therefore also remain an important issue for chemical industry companies in years to come.

An extensive survey of Russell Reynolds Associates has discovered that D&I is the most determining factor of corporate culture in management. Management boards are dragging behind but achieving clear progress in the field of diversity management. What is needed now is a clear view on what kind of behavior leadership needs to exhibit to bridge the gap between observed and desired levels of diversity and inclusion. It is key to identify those managers that enable the cultural transformation in a sustainable way.

1 The importance of diversity management

     The term diversity management can look back on an impressive career. It started out as a US civil and political grassroots movement in the 1960s, an amalgamation of the women's rights and civil liberties movements. In the past decade, however, diversity management increasingly became a business management concept, seeking to recognize diversity and utilize it for the benefit of all concerned.

Specifically, diversity aims to recognize people's varied achievements and experiences and to grasp and utilize their potential. Eliminating discrimination and promoting equal opportunities are the core objectives. Fundamental aspects representing human diversity are mostly held to be age, gender, ethnicity, social background, sexual orientation, and physical and psychological condition.

As a consequence, the turnabout in recent years regarding attempts to increase the number of female executives in businesses happened not only as a result of moral scruples: many companies realized the need for greater diversity among their leadership and workforce to guarantee their place at the top. This push for greater diversity is not only of benefit to management, by way of increased profits and employer branding, but also to employees. For example, current research supports the assertion that growth in the number of female leaders has a distinct impact on company culture and talent decisions. Talented individuals that may otherwise be overlooked have a higher chance of being developed and promoted, leadership assessments are conducted in a more objective manner, and knowledge is built across the organization through mentoring programs (Byham, 2018).

The higher the corporate level, the greater the impact of diversity is. Continuing the example of gender diversity, this year's McKinsey Report restates that companies with greater gender diversity can hope to achieve greater profits. According to Hunt et al. (2018) companies on the lower rungs of the diversity ladder can expect subpar results.

Moreover, companies employing a greater number of women in leadership positions are mentioned in the same breath with supreme financial performance or greater across-the-board success. When it comes to the prevailing view in the public opinion, diversity affords individuals, teams and organizations an advantage. The following advantages are often mentioned in the public debate: 

  • better initiation of business contacts, resulting in advantages on international markets;

  • improved employer branding, following from possibilities of hiring top international talents;

  • generating a better image towards clients and enhancing responsiveness to a variety of customer demands;

  • better prerequisites for innovation, lower organizational blindness;

  • performance enhancement through more effective teamwork, lowered chance of groupthink in teams;

  • higher motivation because of higher identification of employees with their companies. 

2 Diversity management in the chemical industry in the USA, Europe, and Asia

    What then is the current situation in the chemical industry? In its September 2017 issue, Chemical & Engineering News (C&EN), published by the
American Chemical Society, printed survey results showing that women then occupied 16.7% of 430 board director seats at 43 US chemical companies (Tullo, 2017). That was an increase of some 16% compared to the previous year.
    In Europe, the female top leadership share is even higher with the trend continuing upward. C&EN's 2017 survey found that in 13 chemical companies examined, more than every fourth board seat, namely 28.6 % of 154 such seats, was filled by a woman (Tullo, 2017).
C&EN said that Europe's trailblazers, as depicted in table 1, included Air Liquide, whose supervisory board had 5 female and 7 male members. Akzo Nobel had 3 women and 5 men on their supervisory board, as did Syngenta and Yara. DSM's supervisory board was on its way to achieving a similar setting with 3 women currently facing 4 men.
    C&EN discerned an upward trend at Bayer, BASF, Evonik, LANXESS, and Solvay, but women still are a distinct minority on the supervisory boards of these companies. Efforts to achieve greater diversity on management boards have not been as pronounced, says C&EN. The gender ratio on management boards at Europe's chemical giants is 7:1, i.e. seven males to one female in management - a significant difference when compared to supervisory boards, where the average ratio is 2:1 in favor of men.

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The need for diversity in the chemical industry