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!