We know intuitively that diversity matters. It’s also increasingly clear that it makes sense in purely business terms. This is why it amazes me that a 2018 study by McKinsey found that 97% of USA companies and 78% of UK companies have senior-leadership teams that fail to reflect the demographic composition of the country’s labour force and population.
While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful. The same study by McKinsey found that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.
More diverse companies, I believe, are better able to win top talent, improve their customer experience and employee satisfaction, and have more effective decision making processes. All this leads to increased profits. This in turn suggests that other kinds of diversity—for example, in age, gender, physical abilities and experience (such as a global mind-set and cultural fluency)—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.
We live in a deeply connected and global world. It should come as no surprise that more diverse companies and institutions are achieving better performance. Most organisations must do more to take full advantage of the opportunity that diverse leadership teams represent.