Why diversity is a win-win for the company, employees, and society
As we head into the holiday season to cap off an extraordinary 2020, I think of my parents – who came to America with practically nothing in search of a better future, and how that story has played out over and over again for centuries to build a stronger, greater nation. As Lyndon B. Johnson once said, “From a hundred different places or more they have poured forth into an empty land, joining and blending into one mighty and irresistible tide.” Without diversity, America would never have become the land of opportunity and prosperity it is today.
While the turbulent events of this year have shone a spotlight on social justice, they have also revealed how these persistent dynamics have manifested in our workplaces in the form of toxic environments, sexist cultures, and glass ceilings. Thus, a diverse and inclusive workforce is more important now than ever – instead of business reflecting society, business can actually transform society for the better.
This is hardly a new concept – researchers have touted the key benefits of diversity for years: higher profitability and innovation, stronger governance, and better decision-making. McKinsey and Company published Why Diversity Matters back in 2015, and this year published Diversity Wins. Their analysis found that companies in the top quartile for ethnic diversity on executive teams were 36% more likely to have above-average profitability than companies in the fourth quartile. The reverse was also true – those companies in the bottom quartile for both gender and ethnic diversity were 27% more likely to underperform on profitability than their peers.
Innovation gets a boost from a diverse workforce as well. Diversity forces us into nonlinear thinking and cognitive action while homogeneity nurtures complacency and groupthink. Tech companies, where you either innovate or die, have been criticized for lacking diversity for years. Without diversity, you end up with facial recognition technology that cannot properly identify people of color, as documented in a landmark study by the US government. Algorithms developed in the US were consistently bad at matching Asian, African-American, and Native American faces.
Progress may be slow, and in some cases it takes a step back. The McKinsey study found that of the companies tracked since 2015, a third significantly improved both gender and ethnic diversity on their executive teams, while the other two-thirds either stalled or went backwards. Today, the Fortune 500 has just four Black CEOs, and a new Stanford study shows that although women and racial minorities in academia offer more innovative ideas than white men, they are less likely to benefit. There is still a long way to go.
Part of what we can do to strengthen diversity is institutionalize equitable practices in our companies. This means providing education, encouraging dialogue, and setting up systems to prevent discrimination, bias, and prejudice. Top management needs to lead and be held accountable for transforming corporate culture and adding representation, especially at executive levels.
At Audienz we strive to become a leader known for our intrinsically diverse, equitable, and inclusive culture, with DEI as DNA. We want to create, support, and sustain an inclusive culture that encourages authenticity, advocacy, and transparency. Come join us!
This is how we, as employees, can work together to shape the future of our companies and chart a course to a more equitable society.