Why diversity matters

Learn about the link between diverse workforces and higher financial performance.

Research from McKinsey & Company  makes it increasingly clear companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians.

Key findings:

  • Companies in the top quartile for racial and ethnic diversity are 35 per cent more likely to have financial returns above their respective national industry medians.
  • Companies in the top quartile for gender diversity are 15 per cent more likely to have financial returns above their respective national industry medians.
  • Companies in the bottom quartile both for gender and for ethnic and racial diversity are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).
  • In the United States, there is a linear relationship between racial and ethnic diversity, and better financial performance: for every 10 per cent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 per cent.
  • 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.
  • In the United Kingdom, greater gender diversity on the senior executive team corresponded to the highest performance uplift in the data set: for every 10 per cent increase in gender diversity, EBIT rose by 3.5 per cent.
  • While certain industries perform better on gender diversity and other industries on ethnic and racial diversity, no industry or company is in the top quartile on both dimensions.
  • The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator, shifting market share toward more diverse companies.

Highlights

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