Diversity Makes Business Sense

| By TMA World

Recent research from McKinsey & Company demonstrates once again that diversity makes business sense.

Recent research from McKinsey & Company demonstrates once again that diversity makes business sense.

A recent report, Diversity Matters, examined data from 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States.

Some of the key findings were:

  • Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.  
  • Companies in the top quartile for gender diversity are 15 percent more likely.
  • In the UK, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in McKinsey’s data set: for every 10 percent increase in gender diversity, earnings before interest and taxes (EBIT) rose by 3.5 percent.
  • Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, “perhaps because earlier efforts to increase women’s representation in the top levels of business have already yielded positive results.”  However, women account for an average of just 16 percent of the members of executive teams in the United States.  The numbers in the UK and Brazil respectively are 12 percent and 6 percent.
  • Seventy eight percent of UK companies have senior-leadership teams that fail to reflect the demographic compositions of the country’s labor force and population.  The number for Brazil is 91 percent, and 97 percent for the United States.
  • The focus on diversity has evolved since the 1960s – from compliance to supporting innovation and growth by attracting the best global talent.  The potential of diversity, however, remains largely untapped.

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