Most employers understand that having a diverse workforce can boost employee engagement and satisfaction, help recruit top candidates, and burnish the brand’s reputation with customers. But did you know diversity is also tied directly to your business’s bottom line?
As they prepped for the next webinar in Employers Council’s Exceptional Workplace Series, Alyssa Leonas, SHRM-SCP, SPHR, Organizational Development Consultant, and Chelsea Jensen, PHR, SHRM-CP, Human Resources Consultant, reported “Making DEI Real in the Workplace” would help organizations understand what diversity, equity and inclusion mean and teach them how to authentically integrate the principles into their organizations.
Among the many motivations employers might have for signing up for the latest installment of the popular series, said Alyssa and Chelsea, is better business performance. One of the less publicized ways diversity benefits organizations is by its correlation with profitability. Here are three surprising ways that diversity affects your company’s financial wellbeing.
1. More gender-diverse executive teams lead more profitable companies
In McKinsey & Company’s latest diversity survey, their research showed that the companies topping their list of gender-diverse executive teams were 25 percent more likely to show above-average profitability. The correlation was direct: the companies with the highest percentage of women in leadership were outperforming their less diverse peers. In fact, the most gender-diverse executive teams’ companies performed 48 percent better than the least. 1
If you look at board makeup instead of executive teams, the advantages of gender diversity are similar. The boards with the most gender diversity were 28 percent more likely to be over-performers.1 The diversity difference is stark!
2. More ethnically and culturally diverse workforces outperform at an even higher rate.
In the same study, McKinsey & Company showed that companies with ethnically and culturally diverse employees are 36 percent more likely to financially outperform organizations with more homogenous workforces.1 This study looked at more than 1,000 companies across the globe and in a variety of industries.
3. Diverse workforces have multiple bottom-line benefits
Another study published in American Sociological Review found many correlations between workplace diversity and better business results. Companies with greater racial diversity had better sales revenue, more customers, bigger market shares and higher profits than less diverse organizations. Higher levels of gender diversity were also tied to outperforming in revenue, customer and profit categories.2
But companies hoping for quick returns with a few quick changes to their diversity hiring policy, beware. As the Harvard Business Review warns, “Increasing diversity does not, by itself, increase effectiveness; what matters is how an organization harnesses diversity, and whether it’s willing to reshape its power structure.”3
Agreeing, the McKinsey report dove into the ways inclusion efforts impacted diversity work, noting that the companies making real progress weren’t focused on diversity alone: “There is evidence that inclusion is closely linked to employee engagement, itself in a turn a critical component of employee retention, productivity and financial performance.”1
The next Exceptional Workplace Series webinar will address diversity in the wider context of DEI. Alyssa and Chelsea will walk participants through how inclusion and equity can come alongside diversity to transform your organization. The webinar will:
- Explain what DEI is and why it matters
- Explore each element of diversity, equity, and inclusion
- Walk through a framework to build your organization’s DEI strategy
- Share resources and information to support your organization’s DEI journey
Alyssa and Chelsea will guide you through the steps needed to create the kind of comprehensive DEI programs that make a real difference, to both your employees and your bottom line.
JOIN US on October 13 at 9 a.m. (MT) learn how to create a culture that furthers diversity, equity and inclusion—and helps your business grow and succeed. The webinar is free for Employers Council members and $69 for non-members.
- “Diversity Wins: How Inclusion Matters,” McKinsey & Company. May 2020. Accessed 30 August 2022.
- “Does Diversity Pay? Race, Gender, and the Business Case for Diversity,” American Sociological Review. 1 April 2009. Accessed 30 August 2022.
- “Getting Serious About Diversity: Enough Already with the Business Case,” by Robin J. Ely and David A. Thomas. Harvard Business Review. November-December 2020. Accessed 30 August 2022.