Why diversity is good for your business (and not just your bottom line)

Focusing on the bottom line is dangerous and counterproductive. Here’s the real business case for diversity.

We’ve heard a lot about the business case for diversity and inclusion recently. “Inclusion is key to your bottom line”, argued the CEO of the Royal Academy of Engineering. In 2015, McKinsey examined the finances and composition of top management and boards of 366 public companies in Canada, Latin America, the US and the UK. Their results suggested that the more racially and ethnically diverse companies were also 35% more likely to have higher financial returns. For companies with higher gender diversity, the figure was 15%. Academic research conducted by MIT economists in 2014, which looked at data from one large US company, demonstrated that revenues increased when offices became more gender diverse. Stephen Frost’s The Inclusion Imperativeshowed how the London Olympic and Paralympic Games created a more diverse workspace and better business. These are but a few examples of a wider trend. As one Financial Times article summarised, “the evidence is growing – there really is a business case for diversity”.

However, equating the “business case” with the financial bottom line only is both dangerous and counterproductive. Even studies like McKinsey’s are careful to stress that correlation does not equal causation. Other factors matter too. Untangling them to demonstrate robust causal links is exceedingly difficult, especially in larger samples. Beyond this, there is also the question of what this line of argument assumes. In particular, as scholars like Cordelia Fine suggest, the “bottom line” argument places an unhelpful onus on women and minorities to justify their inclusion by positively contributing to corporate financial performance, rather than on the majority to justify their continued prevalence. In a context where non-inclusive organisations continually fail, including financially, this is curious to say the least.

Instead, if there should be a “business case” for diversity and inclusion, this is more productively focused on how greater diversity and inclusion contributes to better work and business more broadly: for individuals and for organisations.