The long asserted claim that diversity benefits workplaces and outcomes has, in recent years, become axiom as study after study highlights the many ways in which qualities like productivity, innovation, and performance increase when workplaces are diverse.
Beyond the often echoed slogan "diversity for diversity's sake," there are very real and very measurable benefits that organizations and the world at large stand to reap if they focus on inclusion efforts.
We'll explore those below.
Diversity's impact on performance
A study from McKinsey of companies from various countries and industries makes a convincing case that companies with diverse executive boards see significantly higher earnings and returns on equity.
In findings that they describe as "startlingly consistent," Mckinsey's research showed that companies ranking in the top quartile of executive-board diversity had ROEs 53% higher (on average) than companies who placed in the bottom quartile. Their EBIT margins were also 14% higher.
Additional research published by McKinsey found that gender-diverse companies are 15% more likely to outperform those in the bottom quartile for diversity, and ethnically diverse companies are 35% more likely to outperform companies with minimal diversity.
Most are familiar with the anecdotal evidence that speaks to the value of diversity. The overwhelming wealth of studies, like these, helps to demystify the concept and argue for the encouragement of diversity in real, measurable business terms.
Diversity's impact on profits
You're about to notice a theme here: Yet another study from McKinsey gathered data from over 350 public companies and the results were stark. Of those companies, those in the top quartile for ethnic and racial diversity in management roles were 35% more likely to have financial returns above their industry mean.
The relationship between diversity and financial returns is not limited to just ethnic and racial lines, either. The same study also spoke to the benefits of having higher gender diversity scores. Companies ranking in the top quartile for gender diversity are also 15% more likely to have financial returns above their industry means.
Diversity's impact on innovation
Aside from just performance, perhaps the most powerful correlation consistently surfacing in diversity studies is the link between innovation and a diverse workforce.
A study from Boston Consulting Group in which 1,700 companies across a variety of industries and company sizes were surveyed found a "strong and statistically significant correlation between the diversity of management teams and overall innovation."
Additionally, organizations with "above-average" diversity metrics among their management and leadership teams reported innovation revenue 19% higher than companies with below-average diversity (45% of total revenue versus 26%).
Organizations have long known that, intuitively, they should be striving towards a more diverse work environment. This effort is now more supported than ever as the professional body of literature backing diversity's impacting on key business metrics swells in size and authority with each passing year.
Quick Leonard Kieffer (QLK)
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