The Qantas story
Qantas in 2013 recorded their lowest points with a loss of AUD $2.8 Billion. However in 2017 they recorded a profit of AUD $850 Million. How did this happen? CEO Alan Joyce who openly identifies as gay; “reflects this to “having a very diverse environment and a very inclusive culture”.
According to him, those characteristics “got us through tough times…. diversity generated better strategy, better risk management, better debates (and) better outcomes. His story was highlighted in a published Deloitte Review (Issue 22) and an article titled ‘The Diversity and Inclusion revolution: Eight Powerful Truths by Juliet Bourke and Bernadette Dillon.
The biggest argument against the diversity and inclusion movement is they don’t have financial effects on the business’ bottom-line. Instead they are mere strategies which heavily rely on emotion and political correctness and not business logic.
Why diversity is important
Allowing a faction of employees to be decision-makers because it is ‘morally’ the right thing to do isn’t enough.
Why is a diverse workforce important? Do inclusion efforts really matter in the grand scale of things? Are safe work environments for women and minorities really that big a deal? Is gender pay gap in the organization really affecting your business?
According to a study titled ‘Delivering through Diversity‘ published by McKinsey & Company in early 2018;
- Diversity is correlated with both profitability and value creation.
- Companies in the top-quartile for gender diversity on their Executive Teams were 21% more likely to have above-average profitability
- For ethnic/cultural diversity, top quartile companies were 33% more likely to outperform on profitability.
- Companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform their national industry median on EBIT margin (Earnings before Interest and Taxes) and 27% on EP margin.
- Companies with the most ethnically/culturally diverse boards worldwide are 43% more likely to experience higher profits.
Boston Consulting Group surveyed 1700 companies in 8 countries across various industries and company sizes. Their study echoed similar findings. Companies with more diverse leadership teams reported Higher Innovation Revenue (45% average innovation revenue). Also, a study by The Peterson Institute for International Economics conducted a survey with over 21,900 firms from 91 countries which showed that having women at the C-Level significantly increases net margins.
In view of these findings, where does your organization stand today in relation to diversity and inclusion efforts? Are you missing out on strong talent who have the potential to elevate your business by not having a diverse workforce?