Over the last two years I have spoken at seven human resource conferences in Australia and overseas on the issue of diversity and inclusion. Workplace inclusion is not something that is done well in Australia, however, we are better than most.

In the nineties, smart businesses began their battle for niche customers, targeting the lucrative DINK (Duel Income No Kids) market. Today that niche is redefined with the definitive DINK now being Pink.

If Australian businesses and employers were unaware of this shift, recent retail headlines should make some sit up and pay attention. The March 2011 article Myer joins fight for the Pink Dollar shows that battlelines have been drawn between rivals Myer and David Jones for what is described as the “lucrative gay market”.

Around the globe western press echoes the trend: Amsterdam targets Pink dollar; UK tourist industry eyes the Pink pound; Singapore the new Mecca for Pink dollar.

In 2010 Packaged Facts reported that the gay and lesbian market in the US had a buying power in the order of US$743 billion. Even back in 2004, The Age was reporting that Australian gay and lesbian households command an annual disposable income of AU$10 billion. But where are they going to spend it?

Pink purchasers are savvy and astutely aware of what sits behind the brand. There is much more sophistication at play than a quick glimpse of a gay couple in a 30 second TV commercial.

What is the company’s diversity track record? What does the company culture represent and how inclusive are their policies?

Lack of an inclusive culture can adversely impact on both customer retention and staff retention. Research by Harris Interactive found that three quarters of gay and close to a half (42%) of straight consumers in the US are less likely to buy products from companies perceived to hold negative views of lesbians and gay men (Stonewall, 2008).

More and more Australian companies and public sector agencies are developing robust diversity policies; policies that are inclusive of lesbian, gay, bisexual and transgender (LGBT) people. These organisations recognise the economic benefits not only in attracting customers but also in enhancing productivity and retaining staff.

At the heart of such policies is the simple (arguably too simple) idea of respect. Respect for individuals is not an LGTB issue. It is not a gender or race issue. It is simply a people issue: and it shouldn’t be as hard as it is.

Leadership author Ram Charan argues that the motto of successful CEOs is people first, strategy second.

Where there is respect, there is strong employee commitment, higher morale, lower turn over of staff, lower absenteeism and higher performance. This isn’t a new concept of course. Aristotle once said “pleasure in the job puts perfection in the work”.

A workforce that is respected also builds trust. A workforce that is trusted is a workforce that is more likely to challenge itself, think outside the box and create new opportunities.

For the last three decades, Gallup have been tracking employee engagement. Their most recent results again reveal the magnitude of employee disengagement: 82% of Australian employees are not fully engaged in their work. Gallup estimates that this disengagement amounts to lost productivity of around $39 billion per annum in Australia. Towers Perrin Research have described employee disengagement as a global epidemic.

Gallup also reveals that 21% of Australian employees are actively looking for work. Mercer suggests that the cost of replacing a single employee due to lost productivity, training, recruitment and so on, is anywhere between 50% to 150% of an annual salary depending on the specialisation. In the government sector, with an increasing reliance on security clearances being the norm, there is an added and lengthy time lag for replacement of staff adding further to costs and productivity loss.

According to the 2008 Gay Census: Same Same, some 50% of LGTB employees would feel more committed and loyal to employers who introduced inclusive policies and programs. This commitment equates to productivity, retention and word-of-mouth value.

The Australian labour market is already starting to dry up again having long passed the speed bump of the global economic crisis. Pride in Diversity points out that the new workforce of X and Y Gen are increasingly discerning about potential employers and their diversity track records.

Skill sets are at a premium. Potential staff are more discerning. Replacing staff has never been more difficult and never more expensive. More staff are actively looking for work than ever before. With all this, the impact on the bottom line has never been greater.

Stonewall argues that while some employers may be cutting or slowing down their work on diversity, now is the time to invest and establish a competitive advantage. Investing in policies and programs that are LGTB inclusive will provide a strong and long reaching return on investment. Investing in respect, of course, costs nothing.

The accountants out there may struggle with the causal link between something as soft as respect and something as precise as cash. The marketing and human resource practitioners will not struggle with this concept: the link is tangible.

Today, smart business (commercial and government) understand that diversity can be a significant competitive advantage in attracting customers and investment as well as for attracting and retaining skilled and committed staff.

According to Ireland’s Gay and Lesbian Equality Network, the arguments for ensuring your organisation’s diversity policies and practices include lesbian, gay and bisexual and transgender (LGBT) people have never been stronger.

Seven perspectives to consider to bring your stakeholders on board

Today’s human resource leaders work in complex and challenging workplaces, striving to deliver workforce solutions that are real-time, transparent and inclusive.

Whilst some organisations embrace inclusion: others remain slow to act. This hesitation can stem from individual managers, business functions and executive teams.

There are, I believe, seven persuasive business arguments for inclusion to enable HR teams to effectively engage business stakeholders and organisational executives.

1. The customer perspective: what will our customer base think?
2. The competition perspective: what does our competition do?
3. The risk perspective: is this approach too great a risk.
4. The leadership perspective: are there opportunities to lead the way?
5. The staff perspective: what will our staff think – will they leave?
6. The cost perspective: the costs associated are too great?
7. The individual perspective: what’s the right thing to do?

These seven perspectives will be explored in the next blog.

Stephen Walker is a Principal at Workforce Strategies and the former National Manager for Human Resources at the Australian Federal Police.