“More ideas, more angles to resolve a problem from, and more fun!” – Story Terrace, Rutger Bruining, Founder & CEO.
We wanted to take a moment this month to celebrate diversity in all its forms and to explore the many advantages diverse teams can bring to businesses. In the world of startups particularly, where creative problem solving, innovation, and an understanding of diverse markets and users are invaluable, a team that does not represent a diversity of perspectives, experiences and backgrounds can leave you at a disadvantage. Of course, we support diversity and inclusion as a moral direction regardless of the business case, but it’s encouraging to see the benefits extend to business performance too.
“A diverse team allows us to come together as separate pieces and create an entire puzzle.” ScaleXP – Suezann Holmes, CEO.
McKinsey’s 2020 report ‘Diversity Wins: How Inclusion Matters’ 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. Not only this, but the higher the representation, the greater the likelihood of that company outperforming others, to the extent that the performance differential between the most and least gender-diverse companies is an incredible 48 percent.
For ethnic and cultural diversity, the findings are even more noteworthy: companies in the top quartile outperformed those in the fourth by 36 percent.
“Our latest research reaffirms the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership—and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform non-diverse companies on profitability” – McKinsey & Co.
“Diversity and innovation move together, and the relationship is statistically significant – meaning that there is a high probability of its repeating in any large population of companies.” – BCG.
A 2018 study by BCG and the Technical University of Munich set out to explore the relationship between diversity at all levels of management (not just senior) and innovation. It found that not only is there a statistically significant relationship – companies with above-average diversity scores reported 19% more innovation revenue than those with below-average scores – but that this boost in innovation for diverse companies applied across all types of diversity. The presence of managers who are female or from other countries, industries, or companies can cause an increase in innovation. Other factors play a role however, such as the openness of managers to contributions from lower-level employees and an environment where people feel free to speak their minds.
Significantly, the study found that innovation performance only increased significantly when diversity in management, in this case gender diversity, was above 20%. It also found that there is a positive correlation between a high percentage of female managers and disruptive innovation, where a new product or service replaces entirely what existed before – think Netflix and DVD rental businesses.
“If we want to remain competitive, we need to attract the best minds” – Hoptroff, David Hulbert, Director.
An emphasis on diversity and inclusion is more important than ever in establishing a positive reputation for your business and attracting the best talent, and brands that are perceived to be more socially responsible are easier for customers and candidates alike to relate to.
A survey conducted by PwC in 2017 showed that more than 60 percent of female participants looked at the diversity of the leadership at a company before making a decision about accepting a role. In a 2015 survey of 10,000 millennials (born between 1980 and 1995), more than 80 percent of participants said an employer’s policies on diversity, inclusion and equality was important was deciding whether to work for them.
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