Few of us immediately think of diversity as a major driver of business growth. It’s often seen as a ‘nice to have’. Not a ‘must have’.

But this perception couldn’t be more wrong.

Diversity directly impacts your financial returns and overall performance.

Here are three reasons why you should prioritise creating a diverse team for your business.

Diversity is proven to increase profitability

McKinsey’s 2015 study found that companies with the highest gender diversity on their executive teams were 15 percent more likely to experience above-average profitability than companies with the lowest. In the follow-up study in 2017, this number rose to 21 percent.

For ethnic and cultural diversity, the 2015 finding was a 35 percent likelihood of outperformance. In 2017, it was 33 percent.

And there’s a penalty for not being diverse.

In both studies, companies with the lowest levels of both gender and ethnic diversity were more likely to underperform their industry peers on profitability: 29 percent in the 2017 data.

Diversity creates innovation

Researchers at NC State’s Poole College of Management looked at the hiring policies of the 3,000 largest publicly traded companies in the United States to see if companies with a diverse workforce were better at developing innovative products and services.

And it turns out they are!

The researchers found that companies with policies encouraging the retention and promotion of workers across the race, sexual orientation, and gender spectrum were more innovative and released more products.

It makes sense. Businesses need customers to grow. Customers are people, and people come from all kinds of backgrounds. Diversity = diverse ways of thinking. Harnessing this will help you create products for the huge array of customer needs out there.

The public expects it

To stay relevant, you need both customers and potential talent to perceive you as diverse and inclusive. Why? Because it’s a topic the public is growing more aware of and considering more important every year.

More than two-thirds of executives rate diversity and inclusion as an important issue. A 10% increase from the 2014 Deloitte study that asked the same question.

Diversity is also proving especially important to the millennial and post-millennial generations, which by 2025 will make up 75% of the workforce.

Whether you’re a start-up or well-established business, the research confirms you can’t afford to ignore diversity.

Next time you’re hiring, think about strategies for attracting and hiring diverse candidates and help your business grow!

3 COMMENTS

  1. I have to admit this wasn’t something that was top of mind for me, but it makes SO much sense! Thanks for getting all the stats and info on this and shedding light on something we should all know more about.

  2. Fantastic post Briar! I’m happy to see more awareness being raised around this topic. In addition to diversity being typically defined through the lens of gender, ethnicity, and culture, I think “experiential diversity” is going to increase amongst hiring criteria in the coming years. Specifically, more study abroad, gap year, soul-searching type of experiences that employers can look at and assess that this individual will be joining the team with a higher conscious of self, meaning and purpose. Versus, a resume solely based on standard corporate ladder climbing or the “I slept under my desk for a few years” startup success. Those are important too as they demonstrate a person’s hard skills and grit but I think that can also be taught or trained. On the other hand, what can’t really be taught are experiences which allow someone to know him/herself on a deeper level like a gap year might allow him/her to do. If everyone operated at a higher conscious level, this will positively elevate our global business culture because we’ll each see ourselves as one part of a bigger whole (the world). Just some thoughts your article triggered. Thanks again!

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