Diversity and inclusion is an inherently great idea for a company. We live in a diverse world and our companies should encourage participation from all groups. Intuitively, I see a big benefit from diversity and inclusion -- it yields new thinking that can help a company stay ahead of its rivals and keep it from becoming stuck in its ways.
There's plenty of statistical research arguing for diversity. As an example, according to Barron's, the upshot is that gender diversity at the top echelons of a company boosts its profitability. I also learned that one company, Salesforce, found that gender diversity also increases employee engagement and productivity.
Research On Gender Diversity and Corporate Performance
Two studies from the Barron's report highlighted the correlation between gender diversity among top leadership teams and higher profitability.
A Credit Suisse study of 27,000 senior managers at more than 3,000 companies around that world found that companies where 25 percent of senior management are women achieve four percent higher cash flow returns on invested capital -- and companies with half of women in senior management earned 10 percent returns.
McKinsey found that more diversity and higher profitability -- as measured by earnings before interest and taxes divided by revenue -- went together as did less diversity and lower profitability. What's more -- diverse boards had a more positive effect than diverse management teams.
Does gender diversity cause higher profitability? Catherine Corley, the senior vice president of global learning products and programs at Catalyst, says the jury is out on that question. As Barron's wrote, she said, "We can show a correlation, but causation is hard."
Does Diversity Lead to Better Strategy and Execution?
A diverse team approaches a problem from different perspectives. When team members come to a meeting they know that not everyone will naturally agree with them. So they prepare before hand and listen carefully to those with different opinions. The result can be better ideas and better execution.
I am coordinating a gender-diverse group of professors trying to come up with new ways to teach problem solving to undergraduate students.
The professors have very different ideas and skills. A female professor wants to enhance students' ability to match the right people to a company's specific problems. A male professor views problems through the lens of a private equity investor -- helping them assess whether a company has a great business opportunity and how to capture it.
And I am seeking to teach students analytical methods to brainstorm, evaluate, define, and defend solutions to boost a company's market share and value. These diverse perspectives lead to more ideas, more experiments to test out the best ones, and ultimately, I am hoping, better prepare students to solve the problems they'll encounter when they enter the real world.
Creating A Company Around Neurodiversity
Diversity by gender, race, or economic strata are not the only kinds. A different kind of diversity -- neurodiversity -- can also lead to superior business outcomes. As the Boston Globe reported, neurodiversity refers to "people who can be highly intelligent but are wired differently -- those on the autism spectrum, or with obsessive-compulsive disorder, social anxiety, dyslexia, or communication challenges."
Not surprisingly, neurodiversity can make it hard to find a job. Jill Willcox -- the wife of a neurodiverse husband and mother of a neurodiverse son and daughter -- created a company in 2017 to tap into their superior skills.
The company in question is Boston-based Iterators, a software-testing firm. What she found was that when it comes to certain kinds of tasks, some neurodiverse people have "unique abilities to see patterns, think creatively, and focus on repetitive tasks," according to the Globe.
One of those employed at Iterators is her son, Oliver, an A-student in honors physics with a master's in applied math, who has ADHD and a speech and language disorder that makes him socially awkward.
Iterators believes that people like Oliver are great at delivering the company's service -- finding bugs -- say, in an app that won't let a user log in and doesn't say why. This laborious job "requires scouring the same pages over and over searching for the tiniest of inconsistencies," noted the Globe. Ms. Willcox told the Globe that the neurodiverse "tend to be the best testers."
What to Do About Diversity and Inclusion
Diversity-- whether that's gender, race, age, class, background, abilities or other identifiers-- can boost business performance. But simply setting and achieving targets for diversity throughout your organization won't necessarily get you there. Instead, investigate more deeply the specific skills your company needs to get and keep new and current customers. Next, assemble a diverse team whose members excel in those skills. Appoint a manager to coach your diverse team to higher levels of performance. Finally, experiment, learn and improve.