By Andrew Seaman | LinkedIn News | February 8, 2021
A diverse workplace is better for everyone — regardless of your race, gender and identity.
A manager at a previous employer of mine put a special focus on diversifying our overwhelmingly white workforce. After examining the data and working on internal policies, the company put programs and partnerships in place to make sure we were recruiting and promoting people from all backgrounds. Soon, people began to notice that we were all doing better work and — even better — we all were enjoying work more than ever.
Beyond those experiences, there is a ridiculously powerful business case for companies to create and cultivate diverse workforces. A substantial and continuously growing body of evidence shows that companies with diverse workforces perform better than those with employees that look a lot like each other.
The Wall Street Journal did an analysis in 2019 of companies based on their diversity and inclusivity performance. The 20 most diverse companies were found to outperform the least diverse companies. The most diverse companies had an average operating profit margin of 12%, compared to 8% for the least diverse. Additionally, the analysis found that shares of companies with higher diversity scores tended to outperform their counterparts with lower scores.
Why would diversity be tied to better business? Paul Gompers and Silpa Kovvali wrote about an experiment trying to answer that question a few years ago in Harvard Business Review.
The researchers focused on diversity in the world of venture capital, which is easier to analyze than more traditional and established companies. They found that the more a venture’s investment partners looked alike, the lower their investment’s performance.
The research found that the value of diversity emerged as the investment partners had to make decisions to help the venture survive. Diversity led to creativity, helping the project thrive.