Diversity pays off, literally
To some, this article might be stating the obvious, while for others, it is newly surfaced arguments. Now, what’s all the buzz about? Diversity and why it’s the secret sauce for not just a thriving work environment but also a boost to a company’s bottom line.
In the fast-paced realm of global business, a wave of research is surfacing, challenging traditional norms, and spotlighting the importance of diversity, equity, and inclusion. And we are uncovering compelling insights into why businesses must wholeheartedly embrace diversity.
Here is why.
Recent research outlines a direct link between diverse workforces and financial success. BlackRock being one of those with their 2023 report ‘Lifting financial performance by investing in women’ is revealing that higher representation of women in the workplace correlates positively with improved company performance. But neither too little nor too many, because a statistical sweet spot on best performing companies emerges with companies approaching a 50/50 gender representation, the study finds.
Generally, workforces with overall diversity outperform those with lower diversity rankings. In the broader context, overall diversity in the workforce consistently outpaces those adhering to lower diversity rankings. Notably, companies with female CEOs exhibit higher Return on Assets (RoA) when looking at the MSCI World Index. In contrast, firms led by male CEOs have experienced a lower RoA over the past decade compared to their female-led counterparts. Regrettably, only 6 percent of those corporations are run by women, BlackRock outlines. Maybe something to consider?
Give it up for team spirit
McKinsey & Companys’s "Diversity Matters" 2020 report echoes a similar message: companies championing gender and ethnic diversity are more likely to enjoy financial prosperity, debunking any myths that diversity is just a feel-good initiative.
For example, the report states that diverse teams have been shown to be more likely to radically innovate and foresee shifts in consumer needs and consumption patterns— helping their companies to gain a competitive edge being on the forefront of the development. But it does not end here. Furthermore, it demonstrates that if leaders embrace diverse talents, they are better equipped to handle and withstand a crisis. The study also indicates that greater diversity in terms of gender and ethnicity can be directly correlated with a higher likelihood of outperforming competitors.
Great leadership, woman!
In recent diversity and leadership studies, Leadership Circle’s survey of more than 84,000 leaders reveals that female leaders exhibit greater effectiveness across all management and age levels. The research highlights that women are superior in creating stronger relations and have greater skills in mentoring and developing employees. In a recent article in Forbes, a quote on the Ready-Now Leaders report from the Conference Board reveals that companies boasting a leadership team with a minimum of 30 percent women are 12 times more likely to secure a position in the top 20 percent for financial performance.
Looking into the studies it is evident that the business case for diversity is not just a moral matter but a strategic necessity. So, listen up, everyone: diversity, equity, and inclusion are not only paying off in terms of work environment and in sense of belonging but also in revenue and innovation capabilities.
It pays off. Really.
