Why diversity matters in business

One of our previous posts discussed the role of HR professionals in furthering diversity in the workplace. However, beyond its obvious social benefits, various studies suggest that workplace diversity is also beneficial for a company’s bottom line.

diversity in business statsAccording to a report Diversity Matters by McKinsey & Company, a global management and consulting firm, companies that have more diverse workforces perform better financially. In fact, according to the study, companies that are in the top quartile of gender diversity are 15 percent more likely to outperform their national industry median while companies that are in the top quartile of ethnic diversity are 35 percent more likely to outperform.

The study is careful to point out that correlation does not necessarily mean causation. However, it does suggest a possible link between a company’s diverse workforce and its ability “to win top talent and improve …customer orientation, employee satisfaction and decision making, and all that leads to virtuous cycle of increasing returns.”

Beyond financial performance, diversity can also benefit other aspects of corporate success. According to a Harvard Business Review article, How Diversity Can Drive Innovation, companies that have diversity in leadership out-innovate those companies that do not. These findings are supported by a study involving 1,800 professionals, 40 case studies, and numerous focus groups and interviews.

According to the study, “When minorities form a critical mass and leaders value differences, all employees can find senior people to go to bat for compelling ideas and can persuade those in charge of budgets to deploy resources to develop those ideas.”

The article also makes a point about various types of diversity as it relates to business. The first is inherited diversity involving gender, ethnicity, race, and sexual orientation, etc. The second is acquired diversity and has to do with work-related experience such as working in another country or having experiential knowledge of working with specific audience segments. And both types of diversities are important factors in fostering innovation.

At Limestone College, students earning a Bachelors in Business Administration will explore the topic of diversity as it relates to organizational management. In MG 300 Principles of Management, students will learn about the functions of management including planning, directing, controlling, organizing, staffing, communicating, and decision-making from a balanced perspective. In the context of staffing, students will examine the value of diversity from management and HR perspective.