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Teams with ethnic and gender diversity better for business, study reveals
Businesses perform better when they have a greater ethnic and gender diversity, with less diverse companies being 29% more likely to be less profitable, according to a study conducted by McKinsey & Co.
McKinsey found the main reason for increasing levels of diversity in the workplace was part of the social justice movement, but more companies had begun to look at it as a competitive strategy and a key enabler of growth.
The report explained that diversity has the largest impact when it is found in the executive roles of the company, saying that more diverse companies were better able to attract top talent, improve customer orientation, employee satisfaction and decision making.
The survey analysed over 1,000 companies in 12 countries and found that in 2017, 21% of companies that had gender diversity in their executive teams were likely to witness an above-average profitability.
And for companies that have more ethnic and cultural diversity, there was a 33% of likelihood of outperformance but highlighted the fact that ethnic minorities had still been vastly underrepresented in executive teams globally.
In the UK, 22% of university students identify themselves as being an ethnic minority but only 8% will hold executive roles and overall, in the UK and US companies researched, black women held a disproportionately small share of executive positions with the possibility of becoming a chief executive (also women of colour including Asian and Latina women), although ethnically diverse representation on UK executive teams increased on average 6% every year since 2014.
Australian companies led the way when it came to women's share of executive roles at 21%, against the 19% in the UK.
McKinsey's UK managing partner, Vivian Hunt, said the report aims to "build a more nuanced and holistic understanding of the link between diversity and company profitability."
"Provide some clear, practical guidance on how companies can use diversity to help achieve their key business objectives," she added.