The Financial Argument for Diversity in the C-Suite

Decisions and strategies generated in the C-suite affect and respond to the public market as well as employee dynamics. With increased globalization and demographic shifts in the U.S., and with more women making consumer financial decisions and joining the workforce, a culturally-diverse C-Suite can benefit company employee morale and productivity as well as marketing tactics for a wider reach.

Financial Benefits of Diverse Leadership

A 2012 study from McKinsey & Company showed that of 180 international firms studied, those that ranked in the highest quartile in terms of executive board diversity had an average of 53% higher returns on investment. Another global study found that going from 0 to 30% representation of women in the C-Suite increased profits by about 15% in a typical company. These figures make sense in a world where communicating and partnering across cultures leads to bU.S.iness growth, and where the U.S. workforce is nearly 50% female. C Suite executives mU.S.t be savvy in working with both.

The State of Diversity Today

In 2014, 90% of Fortune 500 CEOs were white men, while only 35% of the U.S. fits that demographic. In the U.S., women make up 40% of MBA graduates and 40% of managers, yet globally on, yet women only make up 14% of the top five positions in companies. African Americans only make up around 4.7% of the executives in the top 100 U.S. companies even though they make up 13% of the U.S. population. These numbers remain low despite comprehensive and high costing initiatives to diversify companies. Nearly every major company has a diversity strategy and 90% of the Fortune 100 companies have a chief diversity officer.

Challenges to Overcome

So why, after years of financial investment and human resources, is the executive suite still so homogenously white male? A 30-year analysis of the diversity programs in 708 U.S. companies showed that such programs made little long term progress. A lot may have to do with culture and the difficulty of introducing change. Older executives may have grown up in another era and are not attuned to working with people different from themselves. In the case of women, male leaders often make blanket assumptions about how to accommodate female needs without considering individual female talent. Women also point out that they are more commonly “mentored” where men are more often “advocated for” or supported, so men actually get to be pushed up by seniors where women play a more passive learning role. Finally, there seems to be a catch-22 in diversity programs; white men become more sensitive to and possibly threatened by initiatives that focus. on giving jobs to minorities.

Companies wishing to grow should consider diversifying the C-Suite strategically to keep communication strong and maintain a positive work environment.

1 comment

  • Cristobel Nalini do Carmo Rodrigues

    Give us a SIMPLE ‘roadmap’ to get to GOD’s goal for us.

    Thank You for your Holy Leadership.

    :)))

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