Want to Double Your Business’ Cash Flow? Practice Diversity and Inclusion—and Really Mean It
A two-year analysis completed in 2015 evaluated over 450 companies—each with over $750 million in annual revenue—against a criteria of 128 different talent management practices, and determined that 70% scored poorly when it came to diversity and inclusion.
Companies that scored in the upper echelons took effective diversity measures not only in Human Resources, but across the boards. Even more revealing is that those same companies experienced a 2.3X higher cash flow per employee over a three-year period, while the smaller companies averaged 13X higher.
The more diversified your workforce is, the more profitable your organization will be. With different backgrounds comes different ways of thinking and different opinions, which in turn leads to a more holistic overview of a situation.
The work is highlighted by research that further demonstrates that diversity initiatives can pay off markedly in a company’s economic growth. One such study found that gender-diverse companies are 15% more likely to outperform their peers, while ethnically-diverse companies scored a full 35%.
The Harvard Business Review reported that companies that conscientiously implement diversity programs based on applicants’ and employees’ “inherent” and “acquired” traits are 45% more likely to experience growth and 70% more likely to capture a new market.
Before dismissing the data as “a bunch of numbers,” one must take a sober look at why and how diversity generates greater market share. Let me point out that a truly diverse and inclusive workforce could be compared to a diverse community. In a fully diverse community, you get multiple viewpoints, kinetic interaction, unique ways of deconstructing problems, healthy friction, and debate. True diversity cultivates innovation.