There are many factors that affect a company’s profit, but diversity may not be the one that springs to mind. Business leaders are seeking out different ways to achieve a diverse and inclusive workforce. It’s fair, it’s the right thing to do and it’s better for company culture.
But, there’s strong evidence to suggest that having a diverse workforce is more than just the right thing – it can really improve the bottom line.
Research from McKinsey & Co found companies with the highest gender diversity were 35 percent more likely to do better financially. In fact, the research found, for UK companies, having a gender diverse senior-executive team saw a 3.5 percent rise in earnings.
Gender isn’t the only side of the story though, companies with more culturally and ethnically diverse executive teams were 33 percent more likely to see better-than-average profits. But achieving such diversity is still something companies in the UK struggle with.
Is it still a problem?
Disappointingly, 78 percent of UK companies have boards that don’t reflect the demographic of the UK’s labour force or population.
Looking at the finance industry as one example, only 19 percent of management are from a non-white background with women only making about a quarter of senior management teams. To fight this, a charter was created by HM Treasury in 2017 to encourage financial services firms to increase the representation of women in senior management.
Clients and customers are diverse, so, what better way to understand them than to make sure you have people just as diverse making the decisions?
It’s not just the financial industry struggling with diversity though. The technology sector has come under fire too, with only 17 percent of IT workers being female.
In the creative industries, such as advertising, it’s been long known that achieving diversity has been a challenge, although it is something people are acutely aware of and on a mission to change.
The diverse boardroom
Having a diverse workforce means getting a broader input from those with different experiences and ideas. And that is so valuable for innovation and growth. Diversity means more debate and perspectives, which leads to better business practices and improved decision making.
Great ideas come from moving away from the norm. In the boardroom, having diverse skills, experience and perspectives is important to avoid group thinking. A board will be at its strongest when it’s at its most diverse.
This is great news for companies looking to innovate, stay ahead of competitors and find new solutions. Bringing in people who can challenge the status quo will reap rewards.
Having people from different backgrounds will also make a company more adaptable, something that cannot be taken lightly in these ever-changing and uncertain environments. Whether it’s remaining agile against political changes and economic shifts or chasing the next consumer trend, being adaptable is essential to success.
Diversity not only impacts the running of the company, but also improves the day-to-day. The truth is, clients and customers are diverse, so, what better way to understand them than to make sure you have people just as diverse making the decisions?
Diversity isn’t just important in the boardroom. Companies that are underrepresented by gender, ethnicity, sexuality or disability at any level will discourage talented people from applying for a job.
Before potential applicants have even stepped through the door, they’ve made a decision that the team around them would be too different. They may even feel that their lifestyle choices could be judged or hinder their progression.
There is a reason why company culture is so high on the agenda right now. It has a big role to play in ensuring everyone is dedicated to the success of the organisation.
Undoubtedly this won’t be the case, but where’s the proof? McKinsey’s research has also shown that top workers prefer to be in more diverse companies.
Ultimately, if companies aren’t diverse, they won’t attract the best talent, so competing in the market will be a serious challenge.
Staff and culture
There is a reason why company culture is so high on the agenda right now. It has a big role to play in ensuring everyone is dedicated to the success of the organisation, in a sustainable, ethical and healthy way. This culture is led by values often crafted by senior leadership, but it is the employees at every level that live and breathe it.
Having an inclusive culture will ensure a fair and well represented workforce, made up of voices from all different groups. This team unity is a key motivator for individuals which can have a huge positive impact on productivity.
There’s no doubt that a lot still needs to be done to make companies more inclusive. Companies should embrace all types of people with diverse experiences, skills and understanding. This will ultimately put companies in a better place to compete in a competitive market.