THE DIVERSITY DIVIDEND

McKinsey & Company study reveals that results demonstrate a positive correlation between diversity and performance, rebutting any claim that affirmative action and other such programs are social engineering that constitutes a financial drag on earnings

Diversity need not be a financial drag on a company, measured as a cost of compliance with no return on the investment. A recent McKinsey & Company study concluded that companies that adopt diversity policies do well financially, realizing what is sometimes called a diversity dividend.

Positive correlations do not equal causation, of course, and greater gender and ethnic diversity do not automatically translate into profit.

Rather, they enhance creativity and decision-making, employee satisfaction, an ethical work environment, and customer goodwill, all of which, in turn, improve operations and boost performance.

The study examined twenty thousand firms in ninety countries, found that companies in the top 25 percent for executive and/or board diversity had returns on equity more than 50 percent higher than those companies that ranked in the lowest 25 percent.

Companies with a higher percentage of female executives tended to be more profitable.