Hiring for diversity isn’t just a fad companies follow to make themselves appear progressive and trendy. Research shows organizations that embrace diversity in hiring and leadership often show better business results.
- According to a recent Gallup study, gender-diverse business units showed higher revenue and profits than less-diverse units.
- The Center for Talent Innovation found companies with leaders who exhibit inherent diversity (traits they’re born with, such as gender and race) and acquired diversity (knowledge they’ve gained through experience, such as living in another country) are 45 percent more likely to report a growth in market share over the year before, and 70 percent more likely to report they’ve captured a new market.
- Research from McKinsey and Co. found companies that rank in the top 25 percent of executive-board diversity have more than 50 percent higher returns on equity than those in the bottom 25 percent.
Clearly, diversity pays off. But it’s not just about the bottom line. It’s about reflecting your community and customers, and living your company’s values.
“Companies should start with the initial areas of gender and race, and then move on to include people with disabilities and LGBT (Lesbian, Gay, Bisexual, Transgender),” says Stan Kimer, president of Total Engagement Consulting by Kimer. Additional consideration should be made for generational and cultural diversity, veteran status and even diversity of thought.
Building a diverse leadership team can provide different perspectives and approaches to business issues, Kimer says. Here are four more reasons your company needs diverse leadership.
To Show You Value Employees’ Differences
When your organization has a diverse leadership team it sends the message that you appreciate many differences and perspectives, says Suzanne Robitaille, principal at abledbody & co. Seeing diverse leadership helps employees be comfortable with who they are and builds confidence that their differences will be celebrated, not looked down upon. If employees have disabilities, for example, they will be more likely to disclose them to a boss or hiring manager and ask for what they need to do their jobs well, such as a more flexible work environment or different technology.
To Improve Retention
Having diverse leadership can also inspire rank-and file employees. “When they see a diverse leadership team where they see themselves represented, they are encouraged to stay longer and work harder, becoming more engaged,” Kimer says. “They get the vision of aspiring to senior leadership roles themselves.”
To Build Better Business Connections
Your clients and customers are likely interested in seeing more diversity in senior leadership, Kimer says. “People want to do business where they see themselves represented. The diverse management team can be more attuned to product and service requirements of a diverse marketplace, and develop and deliver products and services that best meet the needs of all customers.”
To Reach a Wider Variety of Employees
It’s important for all leaders to be aligned with organizational values, but different types of leaders will have different work and communication styles — and that’s a good thing, says leadership coach Erica Peitler. This style diversity allows for leadership overall to connect with and influence a wider variety of employees. “The diversity of talent in today’s workforce is so vast, having a broad range of leaders with different leadership styles and approaches that can reach out and ensure that all of your talent pool is aligned is critical.”
Success Labs is a leadership development and management consulting firm in Baton Rouge, Louisiana. For more than 25 years, our expert team of consultants has worked with hundreds of companies to explore their business potential and improve their company and cultural performance. Contact us to get proactive about your people strategy.