Business Case for Diversity


Business Case for Diversity


 

Racial and gender diversity can have a positive impact on key performance indicators.

 

 

Research by Cedric Herring published in 2009 on the business case for diversity establishes a correlation between racial and gender diversity and certain business financial performance indicators.

Using data from a national representative sample of over 500 for-profit U.S. companies, he examined the relationship between racial and gender workforce diversity and the following indicators of business performance: sales revenue, number of customers, market share, and profitability. He tested eight hypotheses and the research results supported seven of the eight.

He found a significant positive relationship between racial diversity and increased sales revenue, more customers, greater market share, and greater relative profitability. He also found a significant positive association between gender diversity across each of these performance indicators, other than market share. For example, the results revealed that companies with the highest levels of racial diversity had, on average, almost 15 times more sales revenue than those with the lowest levels of racial diversity.

More recent research by McKinsey & Company finds a positive correlation between racial and gender diversity and company profitability.

See Related Diversity Remix Blog Post:

Diversity and Company Profitability

 

 

 

Reference:

Herring, Cedric, Does Diversity Pay? Race, Gender, and the Business Case for Diversity, American Sociological Review, Vol. 74, No. 2, April 2009, pp. 208-224.

Hunt, Vivian, Dennis Layton, & Sara Prince, Why Diversity Matters, McKinsey & Company, Jan. 2015 (digital article based on the McKinsey & Company Report, Diversity Matters, Feb. 2, 2015)