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The business case for diversity in higher education

Updated: December 17, 2013 2:23PM

There is a strong moral case for embracing diversity in American higher education. But there is also a compelling business case.

Research shows that workforce diversity benefits both firms and educational institutions. In the corporate setting, racial and gender diversity offers a direct return on investment. It is linked to increased sales revenue, more customers, greater market share, and higher relative profits. Workforce diversity leads to positive business outcomes because growth and innovation depend on people from various backgrounds working together and capitalizing on their differences.

Paralleling these widely understood benefits for private firms, my recent research shows that the business case for diversity can also apply to higher education.

The U.S. Supreme Court is now considering whether states have the right to ban affirmative action in universities and colleges, highlighting the debate over an essential question: does diversity hurt or harm America’s institutions of higher learning? Rather than making the business case for diversity, proponents have typically argued the necessity of diversity in higher education from a cultural education perspective. Diversity allows students to interact with people from different backgrounds, encouraging them to explore new experiences rather than clinging to the familiar. And a great deal of research shows that this is true.

But survey research on the matter shows that diversity in higher education also has its skeptics. Some believe that having greater gender and racial diversity among students or faculty is a drag on the prestige, quality, and rankings of their academic programs, perhaps because they feel that it places lower performing people in positions for which they are not suited. At best, skeptics see including diversity in higher education as a moral obligation, a strategy to mitigate potential public relations disasters, a way of keeping pace with what their peers are doing, or just the politically correct thing to do.

However, my recent analysis of the National Academy of Sciences Rankings of U.S. Research Universities shows that universities actually have a compelling business interest in promoting diversity. Just as it does for the financial bottom line of firms, diversity enhances a research university’s reputational bottom line. And a university’s academic reputation is pivotal to its success on a number of dimensions, from student and faculty recruitment to gaining research funding.

My studies show that academic departments with more racial and gender diversity have higher national academic rankings, while less diverse departments are overrepresented among those with low rankings. When other things that affect departmental rankings — like program size, region, prominence of faculty publications, grants, and whether the institution is public or private — are taken into account, the relationship between diversity and program rankings becomes even stronger.

These findings clearly run counter to the expectations of affirmative action skeptics.

Diversity is related to success because it allows organizations to think outside the box by bringing previously excluded groups into their social and decision-making milieus. This process enhances an organization’s creativity, problem solving, and performance. It is likely that diversity in universities — much like in business settings — produces positive outcomes because growth and innovation depend on people from various backgrounds working together and capitalizing on their differences. In short, diversity is not only good for educational institutions because it contributes to a cultural education. It also offers a direct return on investment by promising better reputational rankings.

Higher education is a fiercely competitive market in which organizations compete to recruit a diverse body of students and faculty. Leading universities strategize about how to gain a competitive edge in the rapidly changing academic marketplace and its new demographic reality.

Diversity is an essential ingredient for realizing and keeping a competitive advantage over other educational institutions.

Cedric Herring is a professor in the sociology department and in the Institute of Government and Public Affairs at the University of Illinois at Chicago.

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