The Business Case for Diversity By Jonathan Long, Vice President of Diversity, Equity and Inclusion, Tulsa Regional Chamber
In many cases, diversity of leadership drives profits. Research by the management consulting firm McKinsey and Co. finds that gender and ethnic diversity gives executive leadership teams an edge over their competition. According to the firm’s 2017 study of 1,000 businesses in 12 countries, companies in the top 25% for gender and ethnic/cultural diversity on executive teams are more likely to outperform their peers’ profitability by 21% and 33%, respectively. Inversely, companies in the bottom 25% for both categories of diversity were 29% less likely to achieve above-average profitability. Diverse teams tend to be more innovative, which impacts the type of revenue a company
generates. A 2018 survey by Boston Consulting Group found that companies with above-average diversity on their leadership teams derived 45% of their revenue from innovation, compared to 26% by companies with below-average diversity. A company’s employee diversity can translate into improved customer service and a deeper understanding of consumer behavior. A 2013 study by the Center for Talent Innovation found that when a team has one or more members whose gender, ethnicity, culture, generation or sexual orientation matches that of their target customers, that team is as much as 158% more likely to understand their customers. The same study also found that publicly traded companies with rich diversity among their leadership teams were more likely to improve their market share and capture new markets than companies without similar diversity.
Last but not least, diversity generates respect. According to the Gender Forward Pioneer Index, Fortune magazine’s “Most Admired Companies” have on average twice as many women in senior leadership positions as men. Gender diversity in the workplace increasingly matters to U.S. employees; a 2017 Pew survey found 78% of American adults ranked the issue as important. For all of these reasons, many companies find that — beyond simply being the right thing to do — developing diverse, equitable and inclusive workplaces benefits their bottom line. For organizations in search of additional resources, the Annie E. Casey Foundation’s “Race Equity and Inclusion Action Guide” may be helpful, especially since, in 2020, the pursuit of equity became increasingly urgent for many companies and communities.
Daniel Parham is the owner of Dragonslayer Games, a mixed-media gaming and hobby shop dedicated to providing its customers with a unique, customer-oriented experience.
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MICHELLE POLLARD; MOSAIC: COURTESY TULSA REGIONAL CHAMBER
Increasingly, companies around the globe are realizing there is a strong business case to be made for creating and maintaining diverse, equitable and inclusive workplaces.
