The Business Case for a Diverse Team
Study after study has shown that diverse and inclusive teams outperform their homogeneous counterparts. In this article we’ll explore some of these findings and share a bit of our own diversity story.
McKinsey & Company has been studying diversity in the workplace for years and has consistently found a link between diversity and greater financial performance. McKinsey’s latest study of diversity in the workplace, Delivering Through Diversity, draws on a data set of more than 1,000 companies covering 12 countries, measuring profitability (in terms of earnings before interest and taxes, or EBIT) and longer-term value creation (or economic profit). Their findings were clear:
- Companies in the top quartile for racial and ethnic diversity at the senior leadership level are 33 percent more likely to have financial returns above their respective national industry medians when compared to companies in the bottom quartile.
- In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance. For every 10 percent increase in racial and ethnic diversity on the senior leadership team, earnings before interest and taxes (EBIT) rise 0.8 percent.
Many other studies show the positive impact of diversity on businesses. For example, researchers at the Hamilton Project have shown a direct correlation between high-skilled immigration and an increase in innovation. Boston Consulting Group has found that companies with more diverse management have 19% higher revenues due to innovation.1 A Peterson Institute for International Economics survey has found that an increase in the amount of women in the C-Suite makes firms more profitable. And diversity helps you recruit top talent, better understand and address customer needs, and an inclusive environment creates more engaged employees.
Diversity and inclusion have always been central to our approach to architecture and business in general. DREAM Collaborative is a black-owned business founded by Caribbean immigrants so we have a cosmopolitan viewpoint about what our team can be like. We have deliberately assembled a team that is as diverse as the communities we serve. One strategy we employ is to give opportunities to talented people who might be overlooked by traditional hiring practices and procurement processes. This aligns with our core values and our company culture. It’s nice to know our focus on diversity also makes good business sense.
The Bottom Line
The business case for diversity is extremely compelling. Organizations that prioritize creating and fostering a diverse team stand to outperform the competition. In uncertain economic times, having a diverse and inclusive team is a competitive advantage in the marketplace. Furthermore, in a people-focused profession such architecture, where empathy is essential to a good design process, having a diverse group of voices in the room is critical. Creating a diverse and inclusive team requires visionary, sustained, and inclusive leadership. It take real ongoing work but can yield stronger business performance. And this impact is something that not only shows up in the financial data, but also benefits employees, clients and our community in less measurable but important ways that we witnessed everyday at DREAM.
We’ll dive deeper in future articles. Learn more about what sets DREAM apart.
1) Innovation revenue refers to “the share of revenues that companies have generated from enhanced or entirely new products or services in the most recent three-year period.”