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More diverse = more profitable

Research suggests that diverse companies are more commercially successful than non-diverse ones. What do publishers need to do to improve their diversity and, thereby, profitability?

By James Evelegh

More diverse = more profitable
Sajeeda Merali.

In an article on last December, columnist Ashley Stahl noted that “companies with a diverse workforce are 35% more likely to experience greater financial returns than their respective non-diverse counterparts”.

In a report from McKinsey entitled ‘Diversity wins: How inclusion matters’, published in May 2020, the report’s authors said, “our 2019 analysis finds that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile – up from 21 percent in 2017 and 15 percent in 2014.”

Interestingly, the report “found that the greater the representation, the higher the likelihood of outperformance.”

The report continued: “In the case of ethnic and cultural diversity, our business-case findings are equally compelling: in 2019, top-quartile companies outperformed those in the fourth one by 36 percent in profitability, slightly up from 33 percent in 2017 and 35 percent in 2014. As we have previously found, the likelihood of outperformance continues to be higher for diversity in ethnicity than for gender.”

In her Forbes article, Stahl identified three business benefits of greater diversity: 1. Diverse teams boost creativity and innovation: “People from a variety of backgrounds offer a handful of solutions, rather than one uninspired solution which is based on the same cultural voice.”; 2. Workplace diversity creates greater opportunities for professional growth: “Companies that embrace ideas and practices from different perspectives create an inclusive culture where the employees become ambassadors for the company.”; 3. Better decision-making: “Diverse teams offer broader perspectives and bring more information to the table.”

Slow progress

Yet, despite these compelling arguments, progress remains slow.

Stahl reported that “roughly 57% of employees feel their company can be doing more. And 41% of managers admit to being “too busy” to implement diversity inclusion programs.”

Similarly, McKinsey reported that, “progress, overall, has been slow. In the companies in our original 2014 data set, based in the United States and the United Kingdom, female representation on executive teams rose from 15 percent in 2014 to 20 percent in 2019. Across our global data set, for which our data starts in 2017, gender diversity moved up just one percentage point – to 15 percent, from 14 – in 2019. More than a third of the companies in our data set still have no women at all on their executive teams. This lack of material progress is evident across all industries and in most countries. Similarly, the representation of ethnic-minorities on UK and US executive teams stood at only 13 percent in 2019, up from just 7 percent in 2014. For our global data set, this proportion was 14 percent in 2019, up from 12 percent in 2017.”

The subject of diversity and inclusion was one of the main topics of conversation in InPublishing’s recent podcast interview with Sajeeda Merali, CEO of the PPA.

When asked what she thought of the current state of play with regards diversity and inclusion, her straight answer was, “not great” but, on the plus side, we’re in the right industry to be able to affect change through our reach and influence.

I asked her whether company size made a difference.

Her view was that not having a large HR department was no excuse for lagging behind.

Whether you’re a large multi-national or a team of three, companies can still help drive meaningful change. Indeed, diversity and inclusion should not just be parked with HR as a “people problem”; it has to be something everyone within an organisation lives and breathes and informs how all decisions are made.

Listening to Sajeeda, there are four key things companies must do to become truly diverse and inclusive:

  1. Measure it. To be able to make any progress, you need to work out where you are now and where you want to be, then measure progress towards it. It doesn’t need to be overly complicated, she said, and references the BBC 50:50 project as a useful resource.
  2. Review your recruitment strategy and get creative. If your workforce all looks and sounds the same, that’s down to your recruitment. It’s something you can change.
  3. Look at your output. Who is writing for you and who appears in the pictures you publish? Does the mix reflect society as a whole?
  4. Make a start. Diversity and inclusion is a big subject and there’s always a danger that it gets kicked into the long grass. The first step is the most important, so … take it.

Don’t procrastinate, start somewhere and track your progress.

Addressing diversity and inclusion is not just the right thing to do, said Sajeeda, echoing the findings of Stahl, McKinsey and many others, research shows that it’s highly beneficial from a commercial perspective too.

Indeed, not to prioritise diversity and inclusion would be a bad business decision.

You can hear Sajeeda Merali being interviewed by James Evelegh on a recent episode of The InPublishing Podcast, which was sponsored by Air Business, a leading supplier of distribution and subscription management services.

This article was first published in InPublishing magazine. If you would like to be added to the free mailing list to receive the magazine, please register here.