Tags: companies | diverse | leadership | gender | racial

Companies Prosper by Embracing Diverse Leadership

Companies Prosper by Embracing Diverse Leadership
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By    |   Thursday, 01 August 2019 11:56 AM

Diversity is a hot topic in every industry. While most companies recognize the need to tackle it seriously, opinions can vary as to which initiatives are most effective. However, recent research points to one measure or indicator that is key: the diversity of a company’s executive leadership. Several studies have found that companies with highly diverse leadership teams are significantly more profitable.

A 2015 study by McKinsey found that companies with high ethnic and cultural diversity on their executive teams were 33 percent more likely to turn a profit. Also, enterprises in the top quartile for gender diversity were 15 percent more likely to have revenue above their industry median and 35 percent for racial and ethnic diversity.

The same study found companies in the bottom quartile for gender, racial and ethnic diversity were 29 percent less likely to achieve above-average profitability. PwC found that 85 percent of cross-sector CEOs testified that having a dedicated diversity & inclusion (D&I) strategy influenced their bottom line.

One of the most indicative realities is only 33 are women Fortune 500 CEO’s. When one considers how many women within companies are likely qualified for the C-Suite, the lack of female representation on major corporate leadership teams certainly seems disproportionate. In the tech sphere, 53 percent of women beginning their careers in tech end up leaving for other industries due to the hostility of male-dominated work environments, isolation, lack of mentorship, advancement opportunities or other related issues.

It doesn’t help with tech behemoths, Google and Facebook, just two percent and three percent of the employees are black. Hispanic employees number 4 percent and five percent as the U.S. population is about 13.4 percent African American and 18.3 percent Hispanic or Latino.

In order for most companies to achieve the milestone of representative diversity, or diversity that mirrors population distribution locally and across the nation, they have a long way to go.

The benefit of diversity, and particularly diversity among decision-makers on executive teams, is it facilitates a wider range of viewpoints and greater innovation. Progress doesn’t happen when people agree all the time. Some measure of productive conflic or discussion is necessary to keep things moving forward and push the envelope and innovate.

Additionally, a diverse team of executives – of different genders, ethnic backgrounds, and national origins – is likely to substantially widen your company’s network of connections, so that you’re not always drawing from the same network of people for resources and new business.

The challenge becomes how to develop this well-diversified leadership team. Many companies developing D&I initiatives start by shifting hiring practices, but another method, which makes for potentially stronger leaders, draws on a company’s internal resources: mentorship programs. Mentorship programs have been shown to significantly raise the diversity of management while developing a company’s current employees and strengthening their culture.

Harvard researchers found mentorship programs specifically designed to connect women and ethnically diverse employees with sponsors increased the proportion of black female managers by 18 percent, Hispanic women by 24 percent, and Asian women by 24 percent. This is unsurprising when one considers the real reason why one finds fewer women and racially/ethnically diverse workers in management and on executive teams to begin with: the simple in-group bias issue.

That’s why introducing diversity measures in your hiring practices alone won’t be enough: to reap the benefits of a strong, loyal, and diverse leadership team, you need to create plenty of opportunities within your company for diverse hires to climb the ladder.

Top companies such as PayPal and NetSuite have already introduced mentorship programs specifically for women with far more applicants than available spots. Of the 90,000 women who rate their employers on InHerSight, mentorship and sponsorship programs are consistently rated the lowest out of the ranking organization’s 14 employer evaluation criteria.

Imagine what a stellar and intentional mentorship program could do for organizations: increase leadership diversity, boost innovation, expand company culture and vastly attract top talent. All indicators lead to a company with higher potential, with better workforce synergy, that flat-out earns higher revenue.

Finally, executives would do well to remember that D&I will only become more urgent as the U.S. population diversifies: the U.S. population will be over 51 percent people of color by 2040. An overwhelmingly white (or white and male) workforce and leadership team will simply put a company out of touch with clients, consumers and out of business. A diverse leadership is an imperative. Commit to diverse hires, develop an efficient mentorship program and get your company on track for the future.

Vladimir Sidorenko is Founder and CEO of Performia CIS, an international personnel management consulting company. Created in 2001, they specialize in effective solutions to personnel problems and technology for hiring productive employees and contributing to higher profits for companies. Performia International is headquartered in Stockholm, Sweden and Performia CIS (Commonwealth of Independent States) is located is Moscow, Russia.

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Multiple studies show companies with gender and racial diversity on their executive teams turn a significant profit. Overall, mentorship programs have the track record of connecting employees with sponsors, leading to diverse managerial representation.
companies, diverse, leadership, gender, racial
Thursday, 01 August 2019 11:56 AM
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