While the connection between diversity and business results is not surprising to human resource professionals, only recently has the broader corporate community internalized the effects of diversity and inclusion on the bottom line.
SOURCE: Keysight Technologies
By Ingrid Estrada
Ingrid Estrada is Chief Administration Officer (CAO) and Chief of Staff of Keysight Technologies.
Growing evidence connects diverse leadership and workforces with positive business performance. From a management perspective, a BCG report noted that earnings before interest and tax (EBIT) margins for more diverse organizations “were 9 percentage points higher than those of companies with below-average diversity on their management teams.” Likewise, a McKinsey & Company report found that “companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile.” And, related to ethnic and cultural diversity, the same report noted that “top-quartile companies outperformed those in the fourth one by 36 percent in profitability.” On the workforce front, a Gartner report noted that “gender-diverse and inclusive teams outperformed gender-homogeneous, less inclusive teams by 50%, on average.”
The investment community has taken notice, particularly as this causality has strengthened over time. ESG-focused investment firms as well as large institutional investors are making clear their expectations for board and leadership diversity, as well as increased disclosure of workforce and human capital data. All in an effort to build confidence in their investment portfolios for future financial performance.
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KEYWORDS: NYSE:KEYS, Keysight Technologies