Diversity, A Competitive Advantage
By Alejandra Guzman
Click aqui para español- >La Diversidad: Una Ventaja Competitiva
I was recently invited to be a speaker representing the Hispanic Chamber of Commerce of Louisiana at the Women Can Drive Business symposium presented by the American Business Women’s Association (ABWA). The group wanted to hear about why diversity matters and I immediately jumped at the opportunity. It is a subject I have been passionate about since I started my professional career.
Before discussing diversity, we first have to discuss identity. We must recognize that there are many facets to identity and that having a sense of identity is important because it allows us to stand out as individuals and have a sense of belonging. In a corporate setting, there is no one-size-fits-all strategy, and it is important to understand the composition of the community your organization serves, as well as to recognize the potential barriers your population might have before entering the market.
My first encounter with diversity was through an initiative focused on the integration of people with disabilities into society and the workforce. Mexico-based Movimiento Congruencia(MC) is an alliance between companies, hiring agencies, and other institutions. MC began in 2000 with 11 participating companies, and eight years later, 51 organizations were taking part, and over 500 individuals with disabilities had participated. Since then, the MC program has been extended to Panama and Colombia.
Initiatives supporting gender diversity also seemed to require a lot of effort to push through. Many times management required for anyone like me interested in the topic to build the business case for diversity, and at that time there was very little information available.
Reputable organizations, such as the consulting firm McKinsey & Company, have published studies that support the business case for diversity. Their Diversity Matters tudy, published in 2015, looked at the relationship between the level of diversity (defined as a greater number of women and more mixed ethnic/racial composition in the leadership of large companies) and company financial performance (measured as average revenue from 2010-2013). They collected data from hundreds of companies across four different countries.
The study found that there is a significant correlation relationship between a more diverse leadership team and better financial performance. The companies at the top quartile for both gender and ethnic diversity were more likely to have financial returns that were above their national industry median. This is a powerful finding that suggests that diversity is a competitive advantage that moves market share towards more diverse companies.Diverse companies have a competitive advantage when recruiting top talent, have a better understanding of their customers, employee satisfaction, and better decision making. This all leads to a cycle of performance that ultimately leads to financial success.
If you are interested in building the business case for diversity, I would encourage you to take a closer look at the Mckinsey & Company study.
McKinsey & Company’s Diversity Matters Research found a direct relation to a more diverse leadership to better financial performance