2 reasons diverse companies are more profitable

Several studies have shown that diverse and inclusive companies outperform their less-diverse peers, according to Business Insider

The most recent study cited by the publication was published by McKinsey & Co. in 2018. That study of 1,000 companies revealed organizations with diverse leadership teams saw higher profitability. Companies in the top quartile for gender diversity were 21 percent more likely to have high profitability. A 33 percent increase in profitability was associated with ethnic and cultural diversity, according to the report.

David Rock, a human performance coach, told Business Insider that more diverse teams drive profitability because they're better at sticking to the facts and examining the facts carefully. When there's a disagreement, diverse teams are more likely to remain objective and to re-examine the facts, he said.

Diverse teams also boost a company's performance because they're more innovative, Mr. Rock told Business Insider. A study of more than 4,000 companies in Spain showed organizations with more women had more innovative ideas over a two-year period. A study that analyzed data on more than 7,600 companies from the London Annual Business Survey showed organizations with culturally diverse leadership teams were more likely to develop new products than companies with less-diverse teams.

More articles on leadership and management:
Study: How makeup affects the perception of competence
'The percentage of women in leadership must grow': Why Ashley Schmidt founded Women in Healthcare
Michael Dowling: Challenging one of healthcare's savior myths

 

 

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