Diversity matters even more in 2023 than before: There is a correlation between diversity and holistic impact metrics for gender and ethnicity !

?? Gender diversity is strongly correlated with impact across all components, especially at board level and companies in the top quartile for gender diversity are 39% more likely to outperform peers!

?? Considering the “talent attraction and retention” and “labor practice” indicators, a 10% increase in women on Leadership team is correlated with an around 2.1 point increase in each score.

?? While ethnic diversity had a slow start on boards, significant progress has also been made here in recent years. The more diverse the leadership team, the more likely they are to have made public, mature commitments to diversity, equity, and inclusion (DEI) in their decision-making strategies.

?? There is a strong correlation between diversity in influential company leadership roles and multiple indicators of holistic impact across workforce, community, and environmental components. Companies in the top quartile for both gender and ethnic diversity in executive teams are on average 9% more likely to outperform their peers, according to a new interesting research published by 麦肯锡 using data ?? from 1,265 companies across 23 countries.

?Using ESG to find a correlation

Researchers use environmental, social, and governance (ESG) scores as a lens for observing the link between leadership diversity and broader impact.

They focus on the social (S) and environmental (E) pillars, using sub scores which do not overlap with diverse leadership metrics.

Researchers also highlight that companies can make a positive impact in ways not measured by ESG scores

Researchers found a positive correlations between diversity and holistic-impact metrics for gender and ethnicity at both board and executive level:

?? For every 10% point increase in women’s representation on executive teams, E and S holistic-impact metrics collectively went up by one point.

?? For boards : for every woman added to a company board with ten directors, there was a 2 points increase in holistic impact scores.

?Gender representation is better on Boards

Researchers noticed that gender representation has accelerated, and about 15% of women on boards are still in their first year of serving.

As in previous analyses, boards tend to be more diverse than executive teams 29% women and 19% underrepresented ethnic groups versus 20 and 15% respectively.

?Diverse teams still outperform their peers

Researchers found that companies in the top quartile for gender diversity are 39% more likely to outperform peers, continuing an upwards trend from 15% in 2015.

Also researchers noticed that companies with representation of women exceeding 30% (and thus in the top quartile) are significantly more likely to financially outperform those with 30% or fewer.

?? Similarly, companies in the top quartile for ethnic diversity show an average 27% financial advantage over others.

Researchers segmented these companies into five cohorts based on both 2015 levels of executive-team diversity and progress since then:

1?? Diversity Leaders

2?? Fast Movers

3?? Moderate Movers

4?? Resting on Laurels

5?? Laggards

Researchers noticed that diversity Leaders have attained gender parity and equitable ethnic representation, showing that equitable representation at the top is not just a lofty dream but a realistic goal.

?? Researchers conclude with sharing the five strategies to effectively turn words into action:

1?? Commit to a systematic, purpose-led approach to benefit all stakeholders.

Embracing purpose-led capitalism and a mission-driven culture is now a core part of a compelling business strategy.

2?? Embed your DEI strategy in company-wide business initiatives while tailoring to local context.

DEI aspiration is a company-wide goal, owned and led by top leadership. The critical “and” here is that local teams across the organization also get the needed support and license to tailor this strategy to local contexts.

3?? Prioritize belonging and inclusive practices to unlock performance.

While representation is important, it is insufficient for achieving the performance outcomes researchers believe serve as the drivers of the DEI business case.

4?? Embolden and activate champions and allies by providing adequate resources and support.

To ensure diverse leaders are supported and their efforts are recognized, companies can mentor and sponsor diversity champions, as well as encourage and celebrate allyship. Support can also include debiasing training for leadership, as well as measurable aspirations for leaders on contributions to DEI and employee wellness, bolstered by frequent qualitative feedback sessions.

5?? Act on feedback, including dissenting voices

Establishing a culture of feedback on DEI strategy from the workforce and wider stakeholders can provide valuable insights, identifying both strengths and opportunities for change.

These wonderful findings highlight the role of inclusion, which is as important as representation when it comes to building a diverse workforce. Companies with more diverse leadership at the top and a commitment to inclusive practices have the potential to be a driving force in developing more inclusive work environments and fostering a happier workforce.

?? ???? ???????????????? ????????: This magnificent research confirms Mckinsey's analyzes over the last decade by showing that the more diverse an organization is, the better its financial results and this has a direct impact on People results. We therefore hope that companies will have to increase their investments in 2024 for DEI topics.

Thank you ?? 麦肯锡 researchers team for these insightful findings: Sundiatu Dixon-Fyle Celia Huber Maria Del Mar Ibi Martinez Marquez Sara Prince Ashley Thomas Dame Vivian Hunt Diana Ellsworth Pablo Halkyard Illanes , JP Julien Lucy Perez Nina Spielmann Kandis Wood Jackson

Dave Ulrich George Kemish LLM MCMI MIC MIoL

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