These nontraditional kinds of experiences may actually be as valuable in terms of preparing people for senior management roles as any traditionally recognized experiences. In any case, customers may perceive that someone of their own sex or ethnicity is better able to serve their needs, and this can influence them to switch to or stay with one organization rather than another. While the costs associated with specific aspects of doing business are difficult to pinpoint, estimates of cost savings in areas such as personnel are increasingly used to justify investment in diversity. The cost involved in recruiting, training, relocating, and replacing employees, alone with providing a competitive compensation package, is a major expense for most organizations. Reducing these costs can make a big difference in profitability.
Some replacement costs are especially painful.
For example, the cost to replace high-potential, nontraditional managers can be very high because of their influence on others and the substantial investment that has already been made in finding and developing them. High legal fees and settlements emphasize that failing to address diversity can be an expensive proposition. Although a diversity effort is expensive, it can result in significant savings that will offset the expenses. Despite the complexities of human motivation and ability to perform and the difficulty of measuring human productivity, a compelling case can be made that diversity efforts do have a positive impact. There is strong reason to think, for example, that people are motivated to work harder and more productively when they believe they can be successful.