“Diversity Matters Even More” was the title of a 2023 report by McKinsey, the fourth in a series tracking the relationship between leadership diversity and company performance. The report lays out the business case for diversity, equity and inclusion (DEI) based on research across 1265 companies in 23 countries. Companies that include gender and racial diversity on its executive teams have a 39% percent greater likelihood of financial outperformance than those that don’t.
Research from the Unsterotype Alliance, led by Said Business School, shows inclusive advertising, including diverse representation and positive gender portrayal, produces a 3.5% boost in short-term sales, more than 16% long-term sales, and 15% higher customer loyalty. Accenture research shows 41% of LGBTQ+ shoppers would switch to a retailer committed to inclusion and diversity. Google research from back in 2017 showed that LGBTQ+ representation in advertising doesn’t just attract LGBTQ+ people, but more women, too.
Pew Research finds 56% of Americans say focusing on DEI is a good thing (only 16% said it was a bad thing). Women are more likely than men to value DEI at work – only 9% of women thought it was a bad thing. More than two-thirds of Black (78%), Asian (72%) and Hispanic (65%) workers say that focusing on DEI at work is a good thing. Unsurprisingly, the people who object to DEI programmes are those with the most to lose.
Boston Consulting’s ‘BLISS’ research finds that DEI improves motivation for employees and reduces attrition. Research from Bain & Company finds doing DEI well correlates with the ability of a company to change, which in turn links to its performance, leadership and employee engagement.
DEI programmes drive success
DEI programmes should be a no-brainer. Apart from being morally the right thing to do, DEI is a strategic imperative. It improves performance, widens the talent pool and helps retain the best people. The World Economic Forum says inclusive policy making “promotes sustainable growth and resilience in the face of global risks and challenges.”
Common sense says we all need to work with people who think differently and have different lived experiences. Creativity and innovation comes from seeing different perspectives and challenging the status quo.
Diverse experience means fresh thinking, greater empathy, and faster problem-solving. The alternative is group-think, which can be incredibly dangerous. I’ve written for Elite Business before about the importance of creating a culture of psychological safety to allow people who challenge your thinking and decisions – something I nearly got very wrong in the past.
And yet DEI programmes are being rolled back by so many companies. Amazon, Meta and others are dialing down their DEI policies to come into line with Donald Trump’s view of DEI being ‘radical ideology’ or ‘woke’. Some are resisting: Apple, Target and Costco have publicly defended their programmes.
As leaders, we must take a long-term view
While part of me loves the idea of McKinsey, Boston Consulting and the World Economic Forum being the work of woke radicals, the politicisation of DEI is incredibly dangerous. It distracts from the important role it plays in business growth.
It’s also short-term. We cannot build businesses based on a four-year political cycle, political whim or extremism. As leaders, we need to take a longer and more balanced view. And that long view must include DEI.
