Diversity and Inclusion isn’t just a great morale booster or ethical cornerstone, nearly all substantive research shows strong correlations between diverse perspectives and a higher level of innovation and profitability in companies.

Source: McKinsey
Published: January 2018

The benefits of diversity

Companies with more diverse leadership teams are more likely to outperform financially. A recent McKinsey study of 1,007 companies in 12 countries placed them into quartiles for gender and ethnic diversity. Companies in the 1st quartile for gender diversity were 21% more likely to outperform on profitability than those in the 4th quartile, while companies in the first quartile for ethnic diversity were 33% more likely to outperform those in the 4th.

The chart below shows the financial performance above national industry median. If diversity had no effect, all quartiles would have a 50% likelihood to outperform.

Gender Diversity

4th Quartile (Least Diverse): 45%

1st Quartile (Most Diverse): 55%

Diversity Boost (to financial performance): +21%

Ethnic Diversity

4th Quartile (Least Diverse): 44%

1st Quartile (Most Diverse): 59%

Diversity Boost (to financial performance): +33%


Diverse talent attracts diverse talent

When decisions and strategic conversations are taking place at senior levels, without diversity at the top levels, voices are missing from the table, including in strategic planning, bar raising for interview loops, policy conversations, and employment decisions. It is important that organizations invest in change from the top down, showing the company that diversity is represented at all levels, and the company embraces ensuring all voices are heard during strategic and large decision conversations. It will help with innovation, retention, morale, and recruitment. Biggest bang for our buck!


Talent looks for Diversity, Diversity Attracts Talent

An inclusive environment allows companies to recruit, retain, and support a more diverse workforce. This is a huge benefit in competitive industries.  The 2018 Deloitte Millennial Survey shows that 74% of these individuals believe their organization is more innovative when it has a culture of inclusion. If businesses are looking to hire and sustain a millennial workforce, diversity must be a key part of the company culture. This 2016 survey shows that 47% of millennials are actively looking for diversity and inclusion when sizing up potential employers.


Diversity Increases Innovation

Diverse perspectives ensure new innovations, take into account larger percentages of the population, and thus align better with consumer demands. Varied perspectives spark creativity and reduce the number of ‘groupthink’’ ideas that make it to the top.  Studies also show that because increased perspectives identify errors fasters, they also solve problems faster.
  • Studies show when companies establish inclusive business cultures and policies. According to the International Labour Organization, Women in Business and Management:
    • 1% report increases in creativity, innovation, and openness,
    • 9% report better assessment of consumer interest and demand.

Diversity Increases Financial Performance

Diversity increases revenue by higher levels of innovation, market share, and faster product to market averages.  Diverse teams also thrive during economic periods of uncertainty because of product and mission alignment with customer base. A Boston Consulting Group study found that companies with more diverse management teams have 19% higher revenues due to innovation and design.  This is key for tech companies, start-ups, and industries where innovation is the key to growth.


Gender Diversity Increases Profitability

Focusing on gender diversity, especially in leadership roles, has been shown to create more competitive teams and increase profitability.  A recent global study published in the Financial Times found that with a 10% increase in gender diversity comes a 2-4% rise in profits.   McKinsey’s most recent Delivering Through Diversity report found corporations that embrace gender diversity on their executive teams were more competitive and 21% more likely to experience above-average profitability. They also had a 27% likelihood of outperforming their peers on longer-term value creation.


Gaining Clients, Marketing, and Reputation

Employees want to see leadership that reflects them. Customers want to believe in brands that align with their values.  Inclusive leadership is effective leadership. This is critical to leading innovative teams where everyone is empowered to do their best work in an integrated and holistic environment. A wealth of research supports the importance of designing inclusive mission-oriented organizations: when people don’t feel they can bring their full selves to work, typically they either leave the organization, or they use some bandwidth to cover up and assimilate. Internally this creates expensive turnover and retrain issues, externally this creates risk and less goodwill from consumers. Many clients are actively seeking vendors, organizations, outside counsel, and support from organizations who embrace diversity.