Diversity-4There has been much discussion recently about the disparity in pay and opportunity for women and minorities across a variety of industries. And although Silicon Valley companies have created many initiatives over the years to close the gap, the gap in hi-tech remains.  But here’s the thing.  Those companies who have successfully increased diversity and inclusion – especially at the senior management level – are significantly outperforming those who haven’t.

According to a recent McKinsey & Company report, companies that ranked in the top quartile on executive-level gender diversity outperformed their less diverse peers by 21%. Companies with the most ethnically diverse executive teams outperformed their peers by 33%. Conversely, the report showed that the least diverse companies underperformed their industry peers by 29%. Clearly there’s a correlation between diversity and the bottom line.

In addition to improving financial performance, proactively creating a culture of diversity and inclusion improves employee engagement and helps attract new talent. Companies that embrace differences and provide opportunities for all are far more attractive and motivating workplaces. This is important for leaders to remember, especially now that we’re in an environment where there’s competition for talent.

Although the McKinsey report looked at diversity primarily through the lens of gender and ethnicity, I think it’s important to consider a broader definition. All too often leaders fall into the trap of hiring someone very much like them – similar personality, similar background, similar way of approaching a problem or decision. Yet there is so much to be learned and gained from building a team and organization that includes a variety of personalities, backgrounds, and approaches. When different viewpoints and approaches are brought to the table it spurs innovation, which contributes to the organization’s competitive edge.

Creating a culture of diversity and inclusion can also help attract customers. Today’s consumers have myriad choices, and many are looking to do business with companies that demonstrate they care by providing opportunities, development and advancement for all.

Next time we’ll talk about some things you can do to promote diversity and inclusion in your culture and hiring practices.