How and where diversity drives financial performance

By Rocio Lorenzo and Martin Reeves
Harvard Business Review, January 20, 2018

Advocates of workplace diversity have argued their case not only based on intrinsic fairness but because such programs are seen to bring tangible benefits to organisations.

Not everyone accepts the second part of the proposition. Some contend that there is absolutely no evidence that organisations which have a diverse leadership and employee profile perform any better than organisations which are homogenous. Others such as Thomas-Premuzik, writing in an earlier article published by HBR (June 2017) suggests that any relationship between diversity and increased financial performance or even creativity and innovation is tenuous at best and that these are not the strongest arguments for trying to promote a diverse workplace.

Symmetra’ selected article by Lorenzo and Reeves reports on an extensive survey conducted on the issues outlined above. Their article and the underlying survey are a profound rebuttal of the sceptics and a cogent affirmation of the clearest correlations between diversity in organisations and the degree of innovation they generate.

The authors conducted a survey across more than 1700 companies in eight countries (the US, France, Germany, Switzerland, China, Brazil, India and Austria). They track 6 separate diversity dimensions: gender, education, age, migration, industry and career path against the percentage of revenue coming from new products for the previous 3 years as a proxy for innovation. The data was subjected to stringent statistical analysis by the University of Munich.

The findings were that all six dimensions of diversity are positively correlated with innovation. Further, that those companies with above average diversity had 19% higher innovation revenues and 9% higher EBIT margins.

What made the study even more compelling is the fact that the data revealed that different facets of diversity played varying roles in each specific country. .
This article is important because it represents a major step forward in presenting objective data and a robust analysis of the question which is often at the heart of the diversity debate- what benefits does diversity truly bring?

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