Points of View

Study Shows Diverse Companies Perform Better Financially

Sam Stebbins

McKinsey & Company study found that there is a “statistically significant relationship between a more diverse leadership team and better financial performance.” The study, outlined in the 2015 report “Diversity Matters,” followed organizations and executive teams in the US, United Kingdom, Latin America, and Canada. The authors note that the findings show a correlation between diversity and success, rather than definite causation. 

Of the organizations analyzed, those with increased diversity of ethnicity and race, gender, age, and sexual orientation (as well as diversity of experience) are likely to bring a competitive advantage in both financial returns and talent attraction and retention.

US companies with both higher gender diversity and racial/ethnic diversity showed financial returns above their national industry median. These companies were 15% and 35% more likely to see greater financial returns, respectively. However, the study also found that improved performance correlated with gender diversity was not observed unless women made up at least 22% of the company’s senior executive team.

  

Diversity Correlates with Success in Many Areas

Financial success was not the only improvement correlated with increased diversity. The report also found that diverse companies showed advantages in:   

  • Talent Attraction,
  • Customer orientation,
  • Employee satisfaction,
  • Decision making and problem solving, and
  • Company image.

Increased diversity allows companies to make connections in and reach more communities, and commitment to more diverse hiring practices expands the potential talent pool. Additionally, employee satisfaction improves. Commitment to diversity and inclusion fosters a more supportive workplace culture and boosts employees’ self-esteem and confidence.

More diverse leadership also appeals to potential customers and improves company image. According to the report, LGBT consumers in the US controlled $790 billion in 2012, and African Americans were estimated to control $1.1 trillion in 2015. Diverse leadership teams more intuitively appeal to these customers and understand their perspectives.

Finally, decision making and problem-solving improves when organizations have more diverse teams. A wider range of experiences and backgrounds means that teams are better able to come up with creative solutions to problems and draw from a broader range of thinking.

Commitment to diversity and inclusion is more than just the right thing to do; it strengthens workplace culture and business.  


Will you be attending Talent 2025’s Inclusive Leadership Development event on January 30th? Has your company seen improvement due to diversity and inclusion? Let us know on TwitterFacebook, or LinkedIn