30 Sep The ROI Of Diversity: Delivering Business Success
Diversity. It’s something we as a country talk about frequently. We stress the importance of it in our nation’s political arena, in schools and, of course, in the workplace. However, diversity still isn’t reflected as much as it’s talked about in most areas of society. According to a report by Accounting Today, in the finance field specifically, more than half of individuals pursuing a degree in accounting are caucasian, while a mere 11% are Asian or Pacific Islander. Furthermore, women are considerably underrepresented in the finance realm, making up only 18%. When it comes to investment management, a report by the John S. and James L. Knight Foundation and the Bella Research Group, found that women and minority-owned firms manage just 1.1% of the industry’s $71.4 trillion of AUM.
As president of a nonprofit working to bring greater ethnic and gender diversity to the investment management industry, I feel a personal obligation to represent this minority in this field and express why diversity is imperative to the success of a business. The link between diversity in the workplace in finance and better financial performance is immense and cannot be ignored if a business wants to see growth in its employee engagement, reputation and bottom line. If more businesses followed suit with implementing diversity, certainly they would see success in the areas highlighted below. Research now supports the role of diversity on business, a McKinsey report, “Why Diversity Matters,” finding a direct relationship in the United States between racial and ethnic diversity and better financial performance.
I could go on about the positive impact diversity makes in the workplace, but I will limit it to four key reasons that cut to the core of a business. Better financial performance, better employee engagement, diverse perspectives and improved company reputation are all integral factors that lead to a better bottom line. That’s part of running a business, right?
1. Better Financial Performance
Better financial performance is at the forefront of success seen by businesses who have implemented more diversity in the workplace versus companies which have not. The McKinsey and Company report found that in the United States, there is a correlation between ethnic diversity and financial performance, pointing out that for every 10% increase in ethnic diversity on the senior-executive team, earnings before interest and taxes increase by 0.8%.
2. Increased Employee Engagement
Ethic and gender balance in the workplace is beneficial to your employees. Creating an atmosphere where each individual feels like they have a place at the table is imperative. When your colleagues feel their best, they’ll work their best.