Nearly two-thirds of candidates (64 percent) say that diversity and inclusion is an important factor in their decision to accept a job offer. Despite this, only 55 percent of people agree that their organization has policies that promote diversity and inclusion. If you want to be able to recruit and retain a new generation of workers—and see improved business outcomes as a result—it’s time to build a stronger focus on diversity, equity, and inclusion.
Ethnically diverse leadership teams are 36 percent more likely to be profitable
Companies in the top quartile of ethnic and cultural diversity on their executive teams are 36 percent more likely to experience above-average profitability than peer companies in the fourth quartile. Further, companies in the top quartile for gender diversity on their executive teams were 25 percent more likely to experience above-average profitability than those in the fourth quartile.
This could be due, in part, to better innovation. Companies with diverse management teams report innovation revenue 19 percentage points higher than their less diverse counterparts. That is, they see a higher percentage of overall revenue (45 percent) from products and services that have launched in the last three years. The most significant gains came from diversifying the executives’ national origin, industry backgrounds, gender, and career paths. Age and educational focus showed a lesser effect.
Similarly, companies with diverse boards see more profitability. The most ethnically and culturally diverse boards are 43 percent more likely to experience higher profits. Companies whose boards are in the top quartile of gender diversity are 28 percent more likely than their peers to outperform financially.
68 percent of C-level executives are white men; 4 percent are women of color
Despite the direct financial benefits of a diverse executive team, progress has been slow. Representation of ethnic minorities on US and UK executive teams was only 13 percent in 2019, up from 7 percent in 2014. Female representation stands at 20 percent, up from 15 percent in 2014. More than a third of companies don’t have a single woman on their executive teams.
Further, 68 percent of C-level executives are White men, 18 percent are White women, and 10 percent are men of color. Only 4 percent of C-level executives are women of color.
Black, Native American, and Latinx women earn 25 percent less than White men
The lack of women and ethnic minorities in leadership roles factors into the uncontrolled wage gap. Black women, Native American women, and Latinas earn $0.75 for every dollar a white man earns, when data are uncontrolled for compensable factors like job type, seniority, industry, and years of experience. Pacific Islander women earn $0.80 for every dollar a White man earns, White women earn $0.81, and Asian women earn $0.95.
Black men earn $0.87 for every dollar a White man earns, Native American men and Latinos earn $0.91, and Pacific Islander men earn $0.95. Asian men earn $1.15 for every dollar a White man earns, though this is largely due to holding high-paying individual contributor roles and not leadership positions.
Once we factor in job type, seniority, location, industry, and years of experience, the wage gap persists. Compared to White men:
- Native American women earn $0.97
- Black men and women, and White women, earn $0.98
- Latinx men and women, Native American men, and Pacific Islander women earn $0.99
- Pacific Islander men earn $1.00
- Asian men and women earn $1.02
This controlled pay gap means that some people from underrepresented groups earn less than their peers simply because of their gender or ethnicity. Closing these pay gaps isn’t only the right thing to do; it’s the law. Compensation discrimination on the bases of race, color, national origin, religion, sex, age, marital status, political affiliation, and disability are prohibited in the United States.
61 percent of workers have witnessed or experienced workplace discrimination
Over three in five workers in the United States have witnessed or experienced discrimination in the workplace based on age, race, gender, or LGBTQ identity. The fear of workplace discrimination holds employees back from bringing their authentic selves to work, and can hinder innovation, creativity, and teamwork. It may also make employees feel uncomfortable at work, lowering their engagement and productivity.
Final thoughts on these diversity and inclusion statistics
When it comes to diversity, equity, and inclusion, there is still much work to be done. McKinsey reports that a third of companies are achieving real gains in diversity and inclusion. However, “the majority are remaining static or declining—even where their leaders have articulated noble aspirations for inclusion and diversity.”
Diversity and inclusion doesn’t often happen organically. It must be intentional and carefully cultivated—which will require an investment of time and financial resources. This will lead to happier, more engaged employees who feel comfortable bringing their authentic selves to work. It is precisely each employee's unique experiences and viewpoints that make them a valuable addition to your company, and help you drive business results and meet company goals. Companies in the top quartile for both gender and ethnic diversity are 12 percent more likely to outperform all other companies, so any investment should be returned through better business outcomes.