Companies that lag behind their competitors in diversity will find it more difficult to attract top talent and build a good reputation among employees.

By: Alina Polonskaia and Mark Royal | December 10, 2019

Although many organizations have made great strides in becoming more diverse and inclusive, news headlines demonstrate how far we still have to go before all employees have full opportunities to contribute and succeed and workforces reflect the demographics of society.

The #MeToo movement has spread far beyond the entertainment industry and has shed new light on the challenges women face in the workplace and why it’s imperative that organizations establish strong policies to protect employees from negative behaviors.

In the wake of an incident at one location last year, Starbucks—which scores high on D&I—shut down all its stores for several hours on May 29 to conduct racial-bias training for its employees, an action that underscored the problem of unconscious bias in the workplace and throughout society.

Despite their best efforts to become more diverse and inclusive, organizations sometimes are their own worst enemy. Companies as disparate as Papa John’s Pizza and Fisher Investments have experienced substantial business losses following unacceptable remarks by their founders.

The negative headlines reflect a broader truth: workplace bias—both overt and unconscious—continues to impede the hiring, development, and promotion of underrepresented groups.

All told, workers filed over 76,000 complaints with the U.S. Equal Employment Opportunity Commission in 2018, with charges of retaliation accounting for just over 50% of complaints, followed by discrimination based on gender or sexual orientation, disability and race.

A McKinsey report, Women in the Workplace, which included input from 279 companies, concludes that progress on gender diversity has stalled. For more than 30 years, the report states, women have been earning more bachelor’s degrees than men. They’ve been asking for promotions and negotiating salaries at the same rates as men. And, contrary to conventional wisdom, women are staying in the workforce at the same rate as men.

Yet, despite all this, women continue to be underrepresented in all levels of management. The lack of progress is even more stunning in light of the overwhelming evidence that diverse companies are more productive, innovative, and perform better financially. Studies show that diverse management teams:

• are 33% more likely to generate better-than-average profits;
• are 70% more likely to capture new markets; and
• generate 19% more revenue from innovation than companies with below-average leadership diversity.

Diversity is no longer just a matter of regulatory compliance or even social justice. It’s a clear and present business-performance issue. Organizations that lag behind their competitors in diversity will find it more difficult to attract top talent, break into new markets, innovate and build a good reputation among employees, customers, and outside stakeholders.