New Zealand European-staffed companies servicing New Zealand European customers have an unsustainable business model because the country's ethnic demographic is changing so rapidly, says the author of a major report into diversity.
Chen Palmer managing director and author of the Superdiversity Stocktake Mai Chen said almost 50 per cent of Auckland is Maori, Asian or Pacific Islander with these groups expected to make up more than half of the country by 2038, something businesses needed to think about.
"Businesses have been very focused on being gender diverse and only some of them are now turning their minds to ethnicity, but they really don't have a choice," Chen said.
"We all have an assimilation bias, we all like to deal with people who look like us and who are like us, so if the client base or customer base is transforming, you'll understand that some of those customers would like to be dealt with by service reps, advisers and staff who come from similar backgrounds to them," she said.
"The key thing for businesses is to leverage off ethnicity as a market advantage."
The Stocktake highlighted advantages of an ethnically diverse workplace, including providing access to a wider and more diverse customer base and an understanding of other cultures and languages.
Different ideas on innovation and greater export potential through international contacts were also highlighted. A number of Auckland companies were getting positive results from having an ethnically diverse workforce.
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For several years, Bank of New Zealand had been conducting annual surveys about its employees' ethnicity and gender.
In 2012 it conducted research to look into barriers that could be preventing more cultural representation in its senior management team.
Following this, the company introduced several changes in managing its staff as well as looking to actively hire leaders from some of the larger ethnic groups.
The bank has established a migrant and Asian banking division and an Indian banking community team and also sponsors the Chinese Business Awards.
Accounting firm Xero was also actively promoting diversity in its workforce, with managing director Victoria Crone saying this differentiation had been a benefit for the company.
"Bringing different styles, experiences and backgrounds together can be challenging but it is worth it," Crone said.
"As business leaders our teams need to represent the customers that support us - just take a look at Auckland's city streets and you'll see the vast array of diversity represented in today's population. Those people walking along the street are consumers.
"They decide on what they buy and what they use, so it's critically important that we know what they need and might want.
"We can only do this if we have diverse perspective on our teams."
Several of Xero's graduates said being from a different ethnic background was a benefit in their roles.
Developer Linda Chin said being able to speak Mandarin could help if Xero expanded into further Asian markets, while Suraksha Setty said it was helpful being able to speak the South Indian language Kannada. "Even without being involved in the languages that Xero is pushing towards, we can understand the challenges of using products that aren't in English, so even if we don't know the language in particular we can still try and tweak it to make it easier for customers," Setty said.
"I've also done a bit of reporting on things like where customers were dialling in from, and there's a lot of variety there so definitely a lot of potential for the future."
Despite the benefits, Chen said there were barriers that needed to be dealt with so companies could capitalise on the diversity dividend, with one of the main issues being the lack of awareness of the importance of gender diversity.
She said businesses needed to start looking at their customers and staff and trying to reflect the diversity in New Zealand.
"The message to business is this is about your bottom line," she said.
"It's not about equity, it's not about fairness, it's just about focusing on where your customers are from and what they want."
PwC Herald Talks
Mai Chen will be a panellist at next month's PwC Herald Talks breakfast event.
Subject: Changing Markets
Keynote: Sir Ray Avery
Date: November 4
Venue: SkyCity Theatre
Tickets: $89 from iTicket.
The PwC Herald Talks series are brought to you by the New Zealand Herald, PwC, Newstalk ZB and event partners SKYCITY and Kea.
Tickets for the Changing Markets breakfast on Wednesday, November 4 are $89 per person at iTicket.