The evidence is overwhelming. Diversity – gender, racial, ethnic, whatever – is good.
Companies that put a priority on innovation are worth more when women hold top leadership positions. These companies are $44 million more valuable, on average, according to a multiyear academic study of Standard and Poor’s top 1,500 firms.
Global companies with at least one woman on the board have higher average returns on equity, lower debt ratios and better average growth, according to a study of more than 2,000 global companies by the Credit Suisse Research Institute. Investors would have been better off, on average, investing in companies with women on their management boards than in those without, the study pointed out.
A Gallup survey of American retail and hospitality businesses found that gender-diverse retail and hospitality companies have better financial outcomes than those dominated by one gender. Companies in the hospitality business, for example, had 19 percent higher average quarterly net profit than less-diverse business units.
Wall Street traders set prices more accurately — meaning that financial asset bubbles may be less likely to form — when all of the other traders don’t look like them. Specifically, ethnically diverse groups became 21 percent more accurate over time while ethnically similar groups became 33 percent less accurate over time, according to an academic study.
Scientific research is of a higher quality when done by a diverse research group. People work harder, are more creative, and are more diligent when they work with or around a diverse group of people, according to Katherine W. Phillips, professor and senior vice dean at Columbia Business School, in an article published in Scientific American.
Academic papers written by diverse groups have a higher impact than papers written by people from the same ethnic group. Diversity in authors, whether by ethnicity, location, or references, leads to greater contributions to science, according to researchers at the National Bureau of Economic Research.
There’s a pretty obvious reason why diversity is important.
If all the viewpoints we hear come from people who are like us, we assume that we have the same information and the same perspective. We think we have the right answer and, since we don’t hear otherwise, we have no reason to think otherwise. It’s these beliefs, according to Phillips, that explain why creativity and innovation are more likely to spring from diverse rather than from identical groups.
It’s also why it’s paradoxical that seemingly innovative companies like Google, Apple, LinkedIn and Facebook have such homogeneous workforces.
As we learned earlier this year, the top tech and social media companies don’t have much racial or gender diversity. A chart from the Guardian newspaper shows the gender and racial diversity breakdown in the tech and social media industry. Facebook, Google, Twitter, Apple, Instagram are among the companies where women represent no more than 30 percent of the workforce. Add Flickr, Pinterest, Dell, eBay, HP, Yahoo and others to the list, and you’ll find that their workforce is at least 50 percent white.
Despite the benefits of diversity, there are a lot of people who don’t value diversity.
One-third of the 1,081 active and passive job seekers surveyed last summer by the career Web site Glassdoor, for example, have no opinion or say that diversity isn’t important when evaluating companies and job offers.
Some groups think diversity is less important than others. For example, 32 percent of men said diversity wasn’t important compared with 22 percent of women. On the flipside, 72 percent of women said diversity was important, while just 62 percent of men felt the same way. By race and ethnicity, 10 percent of black respondents said diversity was not important, 16 percent of Asians and 22 percent of Latinos said diversity was not important when evaluating a specific company or job offer. By contrast, 36 percent of white respondents said diversity was not important, according to the Glassdoor survey.
But diversity should be important to everyone. As Phillips explained, we work harder and prepare more thoroughly when we work with people who don’t look like us, because we anticipate receiving difficult questions or being challenged on our beliefs when we face someone with a different background.
This preparation is painful, which may be one reason why so many people don’t seem to value diversity. They have to work harder to make themselves understood. They have to consider alternatives. They might even have to change their mind.
Doing this takes a lot of work.
But, it also brings benefits. Or, as Phillips says while recalling the gym club slogan: “No pain, no gain.”
Creating a diverse workforce isn’t easy. But, as the evidence overwhelmingly shows, diversity is good for business and for society.