Diversity and Company Profitability


Diversity and Company Profitability

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The potential for racial and gender diversity to increase profitability.

 

 

McKinsey & Company published a report in 2015 on why diversity matters, examining 366 public companies across several countries and seven industries and the relationship between diversity (gender and racial/ethnic diversity) in the senior leadership ranks and profitability (measured by EBIT).

They found that companies in the top quartile of racial and ethnic diversity where 35% more likely to have financial returns above their national industry median, and those in the top quartile of gender diversity were 15% more likely to have their financial returns above their national industry median.

While the authors make sure to point out that correlation does not mean causation, they correctly highlight that the correlation they discovered does offer important insight into the potential impact of diverse leadership on company performance.

 

See Related Diversity Remix Blog Post:

Business Case for Diversity

 

 

Reference:

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).