Your Business Case For Improving Diversity In Your Leadership Team
In the current climate, there has never been so much focus on diversity. At Horton International, we have a duty to seek out the best talent for your team. This means attracting and securing diverse talent while supporting businesses in their inclusion practices.
The latest McKinsey report shows just what diversity can do for businesses. At Horton International, we’re here to make attracting, retaining and supporting diverse talent easier for your business, so that you can reap the rewards.
With this in mind, this post is the perfect starting point of building your business case for improving diversity in your team.
Business Lessons From Pandemic Leadership
Many lessons are coming out of the COVID-19 pandemic. There have been stark differences in the effectiveness of different nations responses to the crisis. It is hard to ignore the fact that if you collect together the most successful nations, you will find a lot of female leaders.
In Denmark, Mette Frederiksen gave clear, firm instructions which have spared the country considerably while also earning her wide praise for her response. In Norway, Erna Solberg was also praised for her response and effort to curb the virus by focusing on a science-driven approach. While in Finland, Sanna Marin – the world’s youngest head of government – also helped to ensure a minimal spread of the virus.
Another example, Germany, led by Angela Merkel, has one of the lowest death rates in Europe. These are a few extraordinary women in exceptional circumstances, but to ignore this trend would be foolish. Women in leadership positions can be highly successful.
So, how does this translate to business? The reality is that this is just more evidence for a trend that has already been shown to exist. The most recent McKinsey report has followed more than 1000 large companies, across 15 countries for the last five years. It shows that the most diverse companies are more likely to outperform less diverse rivals in terms of profitability. This doesn’t just mean gender diversity, but ethnic diversity too.
Benefits Of Gender Diversity In Leadership
The Mckinsey report found some compelling arguments for gender diversity in executive positions. They found that the top quartile of gender-diverse companies was 25% more likely to financially outperform their industries average, as compared to companies in the bottom quartile.
The report also found that the higher the representation of women, the more substantial the effect. So, when it comes to a company’s bottom line, it seems clear that having more representation of women is going to improve the chance of boosting profits.
Benefits Of Ethnic And Cultural Diversity In Leadership
The impact on profitability for ethnically diverse companies is even more significant than for gender diversity. The top companies outperform the bottom ones by a staggering 36%. And again, the larger the representation, the more substantial the effect. If you are looking for a business case for increasing diversity at the top of your company, then this is it.
What Is Behind These Effects?
It is not at all unreasonable to question why diversity within a leadership team would lead to these results. It comes done to having more options and more points of view. A simple way to illustrate this idea is with tomato ketchup.
Generally speaking, there are two types of people—those who keep ketchup in the cupboard and those who keep it in the fridge. If you are in a room full of people who only keep ketchup in the fridge, then you may not even consider looking for it elsewhere. More viewpoints increase your chances of finding what you’re looking for.
This explanation can help with understanding why nations with female leaders have done better in the current crisis. Typically their teams are more diverse. They had more points of view in the room. So, they had more options to deal with the crisis. It’s not that male leaders couldn’t have made the same choices; it’s more that they may not have known there are other choices to make.
Having a significant and clear female and ethnic presence within the leadership team is a way of signalling the company’s ethos. For any talented individuals that you hope to recruit the makeup of the company’s leadership will factor into their decision-making process. Having diversity at the top will become self-sustaining as it will draw more diverse talent into the company at all levels.
Why Inclusion Matters Just As Much As Diversity
It can be tempting to think that the task ends after you make some hiring decisions. Unfortunately, it’s not that simple. Nothing ever is. The next challenge comes from building a company where all the voices you have collected can feel included. Without a focus on inclusion, you may be able to get more diversity in the door, but you might not keep it. You also may not see the benefits.
You get benefits from diversity when the minority voices in your company can be heard. If those voices do not feel able to speak up, then you lose your advantage. To achieve this, you need to build a culture of inclusive leadership. There must be equality of opportunity, and communication should be open and free from discrimination or bias. This is a challenge that even the leaders in diversity are still working on mastering
How to Improve Your Company’s Diversity and Inclusion
So the next big question is how to go about bolstering the diversity and inclusion of your company. There are a few best practices that are common among the best performing companies in the McKinsey report.
Focus On Pushing Diverse Talent
To make progress on this front, the forerunners have used a data-driven approach. Following analysis of their starting position, they targeted the specific variety of diversity they needed. Every opportunity is taken to advance these talents once they are recruited.
The responsibility for diversity and inclusions shouldn’t solely rest with HR. All leaders within the company need to take responsibility for and be held accountable for promoting diversity and inclusion.
Remove Bias From Advancements
Advancement decisions, raises and promotions should be carried out openly and transparently. Where possible, they should be data and analytically driven. The aim is to remove bias from these decisions, whether is it conscious or not.
Managing Diversity And Inclusion In The Face Of COVID-19
There have and will continue to be many challenges for companies of all size over the coming months and years. The fall out of the pandemic will be felt for a long time. Unless care is taken, it can erode any progress that has been made in terms of expanding diversity.
As a company, you need to be aware of the risks. It would be best if you tried to focus on protecting the diversity you have. Your more diverse team members are the most at risk of being cut or lost. It would help if you also made plans to continue to build your inclusion policies. Remote working can easily chip away at morale.
Diversity within your leadership team has the potential to boost your company’s profitability in a significant way. To get there, it requires focus and policies aimed at building both diversity and inclusion at all levels of your company.
At Horton International, we’re here to help you find the right talent for your business. With this, it becomes easier to grow and develop inclusion throughout your business to foster exceptional talent and see the outstanding results that can come from a diverse and inclusive workforce.