Diversity matters. It is important for humanity, for education and, most notably, for business.
Diverse leadership teams ignite more creativity and innovation, with a range of backgrounds, experiences and mindsets all contributing to business, customer and product development.
This, in turn, encourages and promotes more inclusive attitudes, which attract the top talent that every business needs for fast financial growth.
Examining the board
To address the diversity in any business, we have to start by looking at the top. Is your board reflective of the different markets and types of consumers that you have? The most likely answer is ‘no’.
When we talk about diversity, it shouldn’t only be based on the background of someone that we focus on – it should also be about diversity of thought. How many FTSE 100 boards have a director who is in their mid-30s, has worked for tech companies and has a very different way of looking at the world?
Having spent many years in the Executive Search and Interim Management industry, I have watched hundreds of businesses thrive as they have become increasingly diverse. I have also been very fortunate to help them evolve, too.
Stating the case for diversity in business
In my experience, companies with a diverse range of age, gender and ethnicity are able to win the best talent and have greater employee engagement, leading to better business performance.
McKinsey conducted a well-cited study in 2015 looking into the benefits of gender, racial and ethnic diversity in businesses.
They discovered, as expected, that companies that were more diverse performed better financially. Indeed, having examined over 1000 companies in 12 countries, they found that companies with higher levels of ethnic diversity were 33% more likely to have higher profits than average. Another compelling finding was that, in the UK, greater gender diversity on the senior-executive team had the highest performance amongst the companies they were researching. For every 10% increase in gender diversity, EBIT rose by 3.5%.
However, despite compelling evidence, the Chartered Management Institute found in July 2017 that fewer than one in 10 management positions are held by Asian, black and ethnic minority employees. They also found that only 21% of FTSE 100 leaders publish their current diversity levels, and only 54% are seen to be proactively driving greater diversity within their companies.
But change is coming.
Committing to diversity
Last week, Lloyds Bank became the first FTSE 100 firm to set an ethnic diversity target for senior management roles. They want all senior jobs to be filled by at least 8% of people from an ethnic minority background. For the whole workforce, they have set a target of 10%. Currently, only 5.6% of senior roles and 8.3% of the whole workforce are filled by people from a black, Asian and minority ethnic (BAME) background.
By having a workforce that is diverse in age, gender and ethnicity, business leaders are enabling their employees to have a more in-depth understanding of all of their customers and also actively encourage innovation.
BCG who looked into 1700 companies for a study in 2017, found that companies with the more diverse teams were earning almost half their revenue from new product launches and services. That is 20% more than companies who were less diverse.
I urge all my colleagues and friends within the Executive Search industry to keep diversity at the forefront of their mind when helping companies to find the personnel that they need to thrive. Let’s start making faster movements towards creating a workforce that’s representative of all consumers and uses diverse voices for greater innovation.