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McKinsey & Company have just released some very interesting research that reinforces the link between diversity and company financial performance—and suggests how organizations can craft better inclusion strategies for a competitive edge.

Awareness of the business case for inclusion and diversity is on the rise. While social justice typically is the initial impetus behind these efforts, companies have increasingly begun to regard inclusion and diversity as a source of competitive advantage, and specifically as a key enabler of growth. Yet progress on diversification initiatives has been slow. And companies are still uncertain about how they can most effectively use diversity and inclusion to support their growth and value-creation goals.”

McKinsey & Company’s latest research of diversity in the workplace, Delivering through diversity, reaffirms the global relevance of the link between diversity—defined as a greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies—and company financial outperformance. The new analysis expands on their 2015 report, Why diversity matters, by drawing on an enlarged data set of more than 1,000 companies covering 12 countries, measuring not only profitability (in terms of earnings before interest and taxes, or EBIT) but also longer-term value creation (or economic profit), exploring diversity at different levels of the organization, considering a broader understanding of diversity (beyond gender and ethnicity), and providing insight into best practices.

We have included the highlights below.

Read the full article here or download the report here

 

Gender and ethnic diversity are clearly correlated with profitability, but women and minorities remain underrepresented.

 

Gender diversity on executive teams is strongly correlated with profitability and value creation.

Even among top-quartile companies, women executives are more likely to occupy staff roles than line roles.
Ethnic diversity in the executive team and board correlates with stronger profitability.
Diversity leaders bring fresh perspectives on how to build an effective strategy by drawing on the stories of leading global companies.

 

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