How Diversity Impacts the Business

Author: Steve Tennessen

Ever heard of the Rooney Rule? In the National Football League (NFL), the highest level of professional competition in American football, the rule requires teams to interview minority candidates for head coaching and senior football operation jobs. A straightforward concept, makes you wonder how it evolved and if it has positively impacted diversity hiring in the NFL. A more provocative thought – what if a scenario like this existed in Corporate America.

In 2002, civil rights attorneys Cyrus Mehri and Johnny Cochran released a NFL study revealing, amongst other findings, that minority head coaches had averaged more wins per season than their white counterparts. American football is fiercely competitive, who can argue with results. And the same can be said for Corporate America. In 2009, sociology professor Dr. Cedric Herring published a study exhibiting that a diverse workforce leads to better business results. In 2014, McKinsey produced a report listing similar conclusions.

These studies on Corporate America, although insightful and highly compelling, reflect a broad sampling with little to pinpoint specific achievements. Relatable stories inspire us, the oral tradition has guided mankind for centuries. Not to mention, these studies acknowledge that correlation does not imply causation. To gain more perspective, we inquired across our global network about distinct success stories, where workplace diversity had a strong influence on business performance.

One corporate officer disclosed how diverse leadership initiated game-changing performance in their business. The company then was an $800 million technology equipment manufacturer. International growth had been a strategic mandate for years, with little success. Certain markets in Europe and Asia were key targets. Expatriate leaders from America failed. Executives from local industry struggled. It was not until the company formed a diverse international leadership committee, that fortunes changed. In the following year, their international business enjoyed more than 20% growth, and most years since have sustained double-digit increases.

When it came to one stagnating business, a board member shared that a diverse leadership team turned around its performance. Nearly half a century old, the company was a $450 million specialty consumer product maker. As its competitors were prospering, this business had churned through several C-level appointments with minimal improvement. Eventually, board members noticed that for each executive role, it was recruiting the same profile. Thereafter, the board commenced intentional diversity for C-level hiring. Within a few years, the organization had reduced its debt, redeployed enterprise capital, and launched a promising new business line.

One HR executive raved about the positive influence of workplace diversity. Once the executive team made diverse talent a strategic initiative, their recruitment department quickly felt the effects. With a longstanding national brand, this company was a $7 billion retailer. As their workplace achieved greater diversity, this HR executive witnessed a marked uptick in job applicants, especially among Millennials and students graduating from desired universities. Their recruitment department also enjoyed faster time to hire, as well as higher scores on quality of hire. This HR executive is currently in the midst of tracking how such activity syncs with the company’s revenue growth.

These real-world examples provide depth to what the diversity studies show us. What is especially laudable about the Mehri and Cochran, Herring, and McKinsey studies is that they advance the subject of workplace diversity beyond ethos and sentiment – they offer logical and economic gravitas. Albeit, literature does exist contesting that the impact of workplace diversity is largely positive, often alleging a failure of implementation. To that extent, we hope in the near future to observe the conditions of various diversity programs in action.

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