Given the demographics of today’s population and workforce, it’s a straightforward argument the pursuit of diversity is a marker of an inclusive company culture, and that a diverse culture advances ethical goals.
Recent research by The Wall Street Journal underscores that diversity correlates with better performance and a competitive edge.
WSJ ranked corporate sectors and individual companies in the S&P 500 on how diverse and inclusive they are, using metrics such as the age and ethnicity of employees and board members, the number of women in leadership positions, and the number of diversity and inclusion programs.
The highest-scoring companies have better operating and performance results than their low-scoring counterparts, WSJ found. The most diverse firms attribute sales and profit increases to employee demographics, in particular. The 20 top-scoring companies in the study had a 4% higher average operating profit margin and larger annual returns over both five- and 10-year periods than lower ranking firms.
A study by BCG found when companies have more diverse upper management teams, their revenue-earning capacity jumps 19%.
Diversity and inclusion tighten the bond with customers, as well. Whether it be new product lines made by and for minority groups, or more diverse leadership, consumers like to feel the inclusiveness.
Procter & Gamble recently released the Head & Shoulders Royal Oils Collection, which was developed by a team of black scientists, and the Pantene Gold Series designed for black consumers. Other top-scoring companies echo similar sentiments, attributing diverse backgrounds across all company levels to successful product development.
“A diverse workforce promotes fresh innovative thinking that translates into a competitive advantage, which in turn translates into winning products for our customers,” said General Motors Chair and Chief Executive Mary Barra in the WSJ article.
Nielsen, another top 20 company in the rankings, said diversity in its products helps to ensure the company produces unbiased data, an important distinction as digital technology continues to disrupt industries.
According to an article in Harvard Business Review, the key to making diversity work within a company begins with organizational changes, such as fostering a non-hostile work environment, and creating an inclusive and ethical workplace culture where different ideas from a diversity of backgrounds are free to compete.