benefits of a diverse work place
A Boston Consulting Group study found that companies with more diverse management teams have 19% higher revenues due to innovation. This finding is significant for tech companies, start-ups and industries where innovation is the key to growth. It shows that diversity is not just a metric to be strived for; it is actually an integral part of a successful revenue-generating business.
By the year 2025, 75% of the global workforce will be made up of millennials - which means this group will occupy the majority of leadership roles over the coming decade. They will be responsible for making important decisions that affect workplace cultures and people's lives. This group has a unique perspective on diversity. While older generations tend to view diversity through the lenses of race, demographics, equality and representation, millennials see diversity as a melding of varying experiences, different backgrounds and individual perspectives. They view the ideal workplace as a supportive environment that gives space to varying perspectives on a given issue.
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 in the workplace when sizing up potential employers.
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. Different perspectives on customer needs, product improvements and company wellbeing fuel a better business. In the original research, using 2014 diversity data, we found that companies in the top quartile for gender diversity on their executive teams were 15 percent more likely to experience above-average profitability than companies in the fourth quartile. In our expanded 2017 data set this number rose to 21 percent and continued to be statistically significant. For ethnic and cultural diversity, the 2014 finding was a 35 percent likelihood of outperformance, comparable to the 2017 finding of a 33 percent likelihood of outperformance on EBIT margin; both were also statistically significant.
Top-team ethnic and cultural diversity is correlated with profitability.
In our 2017 data set, we looked at racial and cultural diversity in six countries where the definition of ethnic diversity was consistent and our data were reliable.1As in 2014, we found that companies with the most ethnically diverse executive teams—not only with respect to absolute representation but also of variety or mix of ethnicities2 —are 33 percent more likely to outperform their peers on profitability. That’s comparable to the 35 percent outperformance reported in 2014, with both figures being statistically significant.
Companies report that materially improving the representation of diverse talent within their ranks, as well as effectively utilizing inclusion and diversity as an enabler of business impact, are particularly challenging goals. Despite this, multiple companies worldwide have succeeded in making sizable improvements to inclusion and diversity across their organizations, and they have been reaping tangible benefits for their efforts.
We found that these companies all developed inclusion and diversity (I&D) strategies that reflected their business ethos and priorities, ones that they were strongly committed to.