According to the U.S. Office of Personnel Management:
“America was founded on the ideal that from many, we are one, a whole that is greater than the sum of its parts. That is the rationale for inclusion. To gain the maximum benefit from our increasingly diverse workforce, we must make every employee feel welcome and motivated to work their hardest and rise through the ranks. We must affirm that we work better together because of our differences, not despite them.”
It’s true. New research is making it clear that companies with a diversity & inclusion policy – no – commitment – in place outperform companies who lack such commitment.A study by Catalyst based on 520 companies found Fortune 500 companies with the highest number of women board directors attained significantly higher financial performance than those with the lowest representation of women board directors. On average, companies with the highest percentages of women board directors outperformed those with the least by 42% in return on sale, 53% in return on equity, and 66% in return on invested capital. A report from McKinsey and Company examined proprietary data sets for 366 public companies across a range of industries in the United States, Canada, Latin America, and the United Kingdom. The findings were clear:
- Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
- Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
- The unequal performance of companies in the same industry and the same country tells us that diversity is a competitive differentiator, shifting market share toward more diverse companies.
Statistical research by Cedric Herring at the University of Chicago found diverse teams drive 6% greater revenue, win 15% more customers, and create a significantly higher market share. Forbes Insights published a 19-page study (based on a survey of over 300 senior executives in global companies with revenues ranging from $500 million to over $20 billion), concluding that a diverse and inclusive workforce is necessary to drive innovation, foster creativity, and guide business strategies. Forbes also interviewed more than a dozen executives in these companies. The chief findings, quoted directly from the study, are:
- Diversity is a key driver of innovation and is a critical component of being successful on a global scale.
- A diverse and inclusive workforce is crucial for companies that want to attract and retain top talent. Competition for talent is fierce in today’s global economy, so companies need to have plans in place to recruit, develop, and retain a diverse workforce.
- Nearly all respondents reported that their companies have diversity and inclusion strategies in place.
- Organization’s diversity goals and priorities won’t change significantly over the next three years.
- Responsibility for the success of company’s diversity/inclusion efforts lies with senior management. In order for a diversity/inclusion plan to have real meaning, there needs to be accountability and oversight.
- Significant progress has been made to build and retain diverse workforces, but there are still some impediments to companies’ efforts. Respondents feel they’ve made progress in gender diversity, but they feel they’ve fallen short in areas such as disability and age.
Diversity in the workplace today means more than gender or race. It includes sexual orientation, disability, religious affiliation, age and so on. With so much statistical and empirical evidence of increased success, it begs the question – what are you doing to make your company more diverse? Need help? Contact us!