Diversity is good for business. Not only from an ethical, moral or legal point of view, but also from a financial perspective. I have here I've already written about why diversity is something for CFOs.
And I think it is important to emphasise this again and again: because the financial argument takes Diversity & Inclusion (D&I) as a management principle out of the corner of "soft nice-to-have". In its recently published follow-up study Delivering through Diversity, the global management consultancy McKinsey has once again pulled out the financial card and formulated the business case. I'll get to what I don't like about that later. First, the results of the study.
Delivering through Diversity
The consultants analysed more than 1,000 companies from twelve countries for Ebit margin (earnings before interest and taxes) and longer-term value creation and confirmed - as in the study Why Diversity matters published in 2015 - that companies with a diverse senior and C-level management are financially more successful. The dimensions of gender and ethnicity were examined. 65 companies in Germany took part in the study. The majority of respondents were from the USA, Great Britain, Australia, Singapore and South Africa.
What are the new findings compared to 2015?
It is now confirmed more than in 2015 that gender diversity in management positions increases the profitability of companies much more: with a gender-mixed top management, companies were more than 15 percent more likely to expect above-average profits in the 2015 study. This probability has now increased to 21 percent with the current and larger data set.
Germany and female leaders
In German companies with a high proportion of female managers, this probable increase in turnover is even said to be particularly significant: Here, the probability of above-average business success even doubled in the study.
Cultural and ethnic diversity also correlates with financial business success: companies with ethnically and culturally diverse management positions are 33 per cent more likely to perform more profitably within their industry.
These correlations, according to McKinsey, are related to the fact that gender diverse and ethnically diverse companies - better than other companies in the industry - attract the best talent, have happier employees, make better management decisions and have a better understanding of customers due to their diverse workforce.
Diversity: a human right, not a business case
So recognising diversity is an economic factor. McKinsey calls it the business case for diversity. However, I don't like this term in relation to diversity & inclusion in the company. Why? Companies that have not yet introduced diversity management and want to be successful with it must clearly want it - and for that they must be intrinsically motivated, starting from the top, supported by all employees.
Promising sales figures can give a boost, but should not be the only driver. For me, implementing diversity & inclusion is about human rights and they don't need a cost-benefit analysis. I argue that this inner motivation can never be provided by profit-promising figures. As a company, I want to do it wholeheartedly and either have the staying power or not.
Numbers still count
Which is definitely not to say that Diversity & Inclusion and the measures associated with it should not be measured in numbers: on the contrary. Once D&I is firmly anchored in the company, numbers are mandatory. If, for example, I have linked manager bonuses to diversity successes, it is obvious why I have to record the figures. Software manufacturer Microsoft relies on this measure.
Or have I set myself the goal of having a maximum of 60 per cent same-sex top management by next year? Then of course I should have the corresponding HR data and reward the successes. The car manufacturer Porsche has committed itself to diversity and equal opportunities and has introduced clear promotion quotas - and has thus been able to get many more women into top management in a shorter time.
And a third example: The music streaming service Spotify has now asked all employees for the second time in its inclusion survey how much they feel included within the company and derived measures from this - including, for example, inclusive leadership training and self-care workshops for mental health.
The examples show: It works. And especially when I as a company have recognised what an enrichment D&I means. According to the motto: "Those who want to will find ways - those who don't will find reasons." Of course, it is not always easy because D&I also creates more complexity.
But the advantages are obvious: it's worth it. Financially, but especially from a human point of view.