Diversity — Our most important challenge

We are entering a critical era for the cause of diversity. In the 50 years or so since the birth of the civil rights movement in the US, much progress has been made in terms of public awareness, legislative development and general attitudes and understanding of the issue.

But what do we have to show for it? If we are honest with ourselves, probably a lot less than those brave pioneers of the 1960s would have hoped. In the US and the UK, whether you are a woman or an ethnic minority, you are likely to be outnumbered in your company or organization by at least 2 to 1, and if you have made it to the executive level, that increases to more than 4 to 1. In the UK, more than 50 percent of executive teams and boards have zero ethnic minority representation. Zero. That’s a hard number to swallow, isn’t it?

I’m lucky enough to work for an organization that takes diversity very seriously and is now trying to lead from the front — not just in progressing our own diversity agenda, but in helping to create the next generation of fact and argument for advancing the cause of diversity more generally. We really need this if we are to make genuine progress in the numbers.

If we mean what we say about diversity, then the movement in diversity statistics in the coming decades must substantially outpace that of recent decades. This is both an immense challenge and an incredible opportunity.

Diversity can be linked to performance

In 2015, McKinsey and Company published Diversity Matters, one of the early pieces of research that directly linked greater ethnic and gender diversity to improved organizational performance, establishing a relationship between the two in the US and the UK. The more recent McKinsey report, Delivering through Diversity, reinforces this conclusion with greater breadth of research, larger sample sizes and consequently greater statistical certainty. Leaders who are looking for a business case for diversity shouldn’t really need to look any further. Among the conclusions in Delivering through Diversity are the following:

  • Companies in the top quartile for ethnic/cultural diversity were 33% more likely to have industry-leading profitability. Those in the top quartile for women on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation.
  • The highest performing companies on both profitability and value creation ‘bucked the trend’ on gender, in that they had more women in line roles (usually revenue generating roles) versus staff roles on their executive teams.
  • Laziness hurts. Those companies in the bottom quartile for both ethnic and gender representation on executive teams were 29% less likely to achieve above average profitability.

It’s important to note that causality is not established or claimed in this research. Improved performance may not be a direct result of diversity in and of itself, but could be a second order effect of, for example, a more positive, open and inclusive culture driving higher employee performance and engagement.

Diversity requires patience and tolerance

For those who read the academic literature on diversity, the McKinsey report should not come as a great surprise. One fairly consistent conclusion about diversity from the work of organizational psychologists and behavioral scientists is that the results of diverse teams are better along multiple performance outcomes, for example generating greater innovation or higher sales revenues.

But the research also says that diverse teams are not easy to get used to. There is a greater breadth of cognitive perspective, different norms of communication, alternative views of the world. That usually means that decision making is not as smooth and less efficient than in a more homogeneous group, and conflict is more likely. But of course the consideration of those opinions and conflicts in the problem solving process is exactly why the decisions are better. Achieving the benefits of diversity requires patience, tolerance and belief in the importance of the end goal, no matter how hard the journey is to get there. In the age of agility and efficiency, tolerance and patience should not be sacrificed.

Diversity should permanently top the agenda

As the McKinsey report highlights, there are numerous cases to celebrate when it comes to making progress on diversity. Some organizations clearly buck the trend and should be congratulated. Whether it is executive or board representation or entry level recruiting, a good year should absolutely be celebrated.

But rest on your laurels at your peril. In my experience, those pats on the back are the first indications of a turn in the numbers. The celebration of a good set of representation statistics is usually accompanied by a relaxation in efforts. Not through any deliberate intention or decision, but just through the natural processes of the issue suddenly appearing less urgent, or other priorities temporarily winning out.

In many ways, this creates the danger of diversity becoming a cyclical issue rather than a permanent priority in organizations. Every few years there is an injection of effort, a subsequent improvement in the numbers, a celebration, relaxation and then a drop back to — or close to — where things were before.

Perhaps this cyclicality helps explain why our predecessors might be disappointed with our progress over the past half century. I hope you take the time to read the recommendations of the McKinsey report, and to consider how we keep diversity at the absolute top of our agenda, unassailable by any other priority, for the decades to come.

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