The diversity dividend

An old proverbSprichwortproverb says “two heads are better than one,” meaning another point of view is often helpful when it comes to making decisions. For a genuinelywirklich, echtgenuinely new perspective, however, the people must be different — come from different backgrounds with different experiences. In theory, this is what diversity offers a business, producing better (more profitable) decisions.

It’s taken them a while, but companies around the world have started taking diversity, equityhier: Chancengleichheitequity and inclusion (DEI) policyRichtliniepolicies seriously and making their leadership teams more diverse. They’ve hired more women and people of colour in management positions, for example, but also those from different socio-economic groups and people with disabilityBehinderungdisabilities. In Germany, for example, the number of female board memberVorstandsmitgliedboard members in large companies has doubled since 2021 — to almost 20 per cent. And, according to the consulting firm EY, 63 per cent of German DAX companies now have at least one female board member.

How does this affect sb./sth.auf jmdn./etw. Auswirkungen habenaffect business performance? McKinsey & Company has found a clear correlation, reporting that businesses with the most diverse executive teamFührungsteamexecutive teams were, on average, nine per cent more likely to outperform sb./sth.jmdn./etw. an Leistung übertreffenoutperform their peerhier: Fachkollege/ -kolleginpeers. On the other hand, the least diverse companies were 66 per cent less likely to outperform, on average. “For the first time, this correlation is statistically significant for both gender and ethnicityEthnieethnicity,” McKinsey wrote in their 2023 report.

One explanation for this is that diversity helps with recruiting. Gen Z, a growing presence in the job market, is attracted to employers with inclusive policies. And hiring is time-consuming and expensive. DEI helps businesses find and keep the right people. The UK recruitment company Robert Walters says that 51 per cent of British employers report seeing their talent pool expand thanks to DEI policies.

Employee satisfaction is another area that benefits from ­diversity. Workers who rate sb. as sth.jmdn. für etw. halten, jmdn. als etw. einschätzenrate their employers as inclusive report fewer problems with discrimination, for example. A Pew surveyUmfragesurvey from 2023 found that most workers say DEI policies, especially those that ensure fairness in hiring, promotions and pay, have been good for their workplace — in fact, only three per cent thought they had a negative effect.

A workforce that is diverse and representative of your stakeholders is good for business

Correlation or cause?

The question of how diversity is good for business is not an easy one to answer — in part, because of a difference in how diversity is understood. According to the EY European DEI Index, nearly two-thirds of managers say their organization has a culture of trust and transparency, but only about 44 per cent of employees agree. This suggest sth.hier: etw. nahelegensuggests that managers might have underestimated the task of making workplaces inclusive — and the speed with which some employers have backtrackhier: einen Rückzieher machenbacktracked on DEI commitments raises the question of how sincere they were.

The anti-DEI minority has got louder since the return of Donald Trump. The US government has even gone so far as to write to companies and organizations in Germany and other ­European countries, demanding that they stop all DEI activities.

There are some prominent defenders of DEI, however, such as the US wholesalerGroßhandelwholesaler Costco, which announced: “A diverse group of employees helps bring originality and creativity to our merchandise offeringWarenangebotmerchandise offerings.” And American billonaire Mark Cuban wrote on X: “The loss of DEI-phobic companies is my gain. Having a workforce that is diverse and representative of your stakeholderAnspruchsberechtigte(r), Interessenträger(in)stakeholders is good for business.”