{"id":327,"date":"2022-04-04T16:00:01","date_gmt":"2022-04-04T16:00:01","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/chapter\/advantages-of-employee-diversity\/"},"modified":"2022-04-04T16:00:01","modified_gmt":"2022-04-04T16:00:01","slug":"advantages-of-employee-diversity","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/chapter\/advantages-of-employee-diversity\/","title":{"raw":"Advantages of Employee Diversity","rendered":"Advantages of Employee Diversity"},"content":{"raw":"\n<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n \t<li>Explain the advantages of employee diversity within organizations<\/li>\n<\/ul>\n<\/div>\n<blockquote>While social justice, legal compliance, or maintaining industry standard employee environment protocols is typically the initial impetus behind [inclusion and diversity] efforts, many successful companies regard I&amp;D as a source of competitive advantage, and specifically as a key enabler of growth.\n\n\u2014McKinsey &amp; Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/delivering%20through%20diversity\/delivering-through-diversity_full-report.ashx\" target=\"_blank\" rel=\"noopener\"><em>Delivering Through Diversity<\/em><\/a>, Jan 2018.<\/blockquote>\n<img class=\"alignright wp-image-3336 size-medium\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2785\/2018\/04\/24223819\/man-3230661_1920-300x200.jpg\" alt=\"Four people holding hands.\" width=\"300\" height=\"200\">\n\nIn the workplace, employee diversity can be a source of competitive advantage. Here are a few specific advantages:\n<ul>\n \t<li>Leveraging a cross-cultural (in the broadest sense of the word) awareness to identify opportunities and avoid blind spots<\/li>\n \t<li>Increasing the productivity of employees who feel valued<\/li>\n \t<li>Improving an organization\u2019s employer brand and, therefore, ability to recruit and retain talent<\/li>\n \t<li>Improving the market relevance and market value of a company\/organization<\/li>\n<\/ul>\n<div class=\"textbox examples\">\n<h3>Apple's Health App<\/h3>\nAs a case in point, consider <a href=\"https:\/\/www.apple.com\/ios\/health\/\" target=\"_blank\" rel=\"noopener\">Apple\u2019s Health App<\/a>&nbsp;that claims to allow you to \u201ckeep tabs on a wide array of data that matters to you\u2014from measurements of your blood pressure and blood glucose to records for your weight and reproductive health.\u201d Despite the promised capability to track reproductive health, the app was launched without a provision for monitoring menstrual cycles in what was critiqued as a stereotypical case of gender blindness. TechCrunch writer Sarah Perez summarized the disconnect, noting that menstrual tracking is a key function that \u201croughly half the population would expect to see included in a comprehensive health tracking app.\u201d And as Perez noted<strong>,<\/strong> perhaps that\u2019s not surprising given that 80 percent of Apple\u2019s engineering staff is male.\n\nPerez concludes: \u201cthe issue with the Health app is a perfect example of how not having the right [gender] balance internally can actually impact innovations and technology developments.\u201d[footnote]Perez, Sarah. \"<a href=\"https:\/\/techcrunch.com\/2015\/06\/09\/apple-stops-ignoring-womens-health-with-ios-9-healthkit-update-now-featuring-period-tracking\/\" target=\"_blank\" rel=\"noopener\">Apple Stops Ignoring Women\u2019s Health With iOS 9 HealthKit Update, Now Featuring Period Tracking<\/a>,\" <em>Tech Crunch<\/em>, 09 Jun 2015. Web. 26 June 2018.[\/footnote] Over a year after the product\u2019s initial launch, Apple still hadn\u2019t addressed the oversight and didn\u2019t respond to <a href=\"https:\/\/splinternews.com\/apple-has-a-lady-problem-the-new-version-of-healthkit-1793846504\" target=\"_blank\" rel=\"noopener\"><em>Splinter<\/em> writer <strong>Kashmir Hill\u2019s<\/strong> request for comment<\/a>, prompting her to suggest that the answer to her question why there's still no period-tracking in HealthKit might be answered by the composition of the executive team: nine men and one woman.\n\n<\/div>\nFor a financial performance view, let\u2019s consider McKinsey Consulting\u2019s research on diversity in the workplace. In a 2015 report titled <em><a href=\"https:\/\/www.mckinsey.com\/business-functions\/organization\/our-insights\/why-diversity-matters\" target=\"_blank\" rel=\"noopener\">Why Diversity Matters<\/a><\/em>, McKinsey highlights the following findings, based on the composition of top management and boards:\n<ul>\n \t<li style=\"font-weight: 400;\">Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.<\/li>\n \t<li style=\"font-weight: 400;\">Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.<\/li>\n \t<li style=\"font-weight: 400;\">Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).<\/li>\n \t<li style=\"font-weight: 400;\">In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every ten percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.<\/li>\n \t<li style=\"font-weight: 400;\">Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, perhaps because earlier efforts to increase women\u2019s representation in the top levels of business have already yielded positive results.<\/li>\n<\/ul>\nIn their 2018 publication, <em>Delivering Through Diversity<\/em>,&nbsp;McKinsey Consulting again reported finding a \u201cpositive, statistically significant correlation between executive team diversity and financial performance.\u201d Although correlation is not causation, the report notes that \u201cthere is a real relationship between diversity and performance that has persisted over time and across geographies.\u201d[footnote]McKinsey&amp;Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/delivering%20through%20diversity\/delivering-through-diversity_full-report.ashx\" target=\"_blank\" rel=\"noopener\"><em>Delivering Through Diversity<\/em><\/a>, Jan 2018. Web. 26 June 2018.[\/footnote] The conclusion drawn from their 2015 <em>Why Diversity Matters<\/em> report still applies: \u201cdiversity is a competitive differentiator shifting market share toward more diverse companies.\u201d[footnote]McKinsey&amp;Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/why%20diversity%20matters\/diversity%20matters.ashx\" target=\"_blank\" rel=\"noopener\"><em>Diversity Matters<\/em><\/a>, 2015. Web. 26 June 2018.[\/footnote]\n\nIn May 2020, the <a href=\"https:\/\/www.mckinsey.com\/featured-insights\/diversity-and-inclusion\/diversity-still-matters\">McKinsey Quarterly published \"Diversity Still Matters\"<\/a>&nbsp;where they take a look at the risks and opportunities that Covid-19 presents to inclusion, diversity, and equality in business settings.\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\nhttps:\/\/assessments.lumenlearning.com\/assessments\/8690\n\n<\/div>\n<h2>Contribute!<\/h2><div style=\"margin-bottom: 8px;\">Did you have an idea for improving this content? We\u2019d love your input.<\/div><a href=\"https:\/\/docs.google.com\/document\/d\/19mw-bUNgpJmVzfr_EE1RxN7bsXLXp5a6YopxPOhUqfQ\" target=\"_blank\" style=\"font-size: 10pt; font-weight: 600; color: #077fab; text-decoration: none; border: 2px solid #077fab; border-radius: 7px; padding: 5px 25px; text-align: center; cursor: pointer; line-height: 1.5em;\">Improve this page<\/a><a style=\"margin-left: 16px;\" target=\"_blank\" href=\"https:\/\/docs.google.com\/document\/d\/1vy-T6DtTF-BbMfpVEI7VP_R7w2A4anzYZLXR8Pk4Fu4\">Learn More<\/a>\n","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Explain the advantages of employee diversity within organizations<\/li>\n<\/ul>\n<\/div>\n<blockquote><p>While social justice, legal compliance, or maintaining industry standard employee environment protocols is typically the initial impetus behind [inclusion and diversity] efforts, many successful companies regard I&amp;D as a source of competitive advantage, and specifically as a key enabler of growth.<\/p>\n<p>\u2014McKinsey &amp; Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/delivering%20through%20diversity\/delivering-through-diversity_full-report.ashx\" target=\"_blank\" rel=\"noopener\"><em>Delivering Through Diversity<\/em><\/a>, Jan 2018.<\/p><\/blockquote>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-3336 size-medium\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2785\/2018\/04\/24223819\/man-3230661_1920-300x200.jpg\" alt=\"Four people holding hands.\" width=\"300\" height=\"200\" \/><\/p>\n<p>In the workplace, employee diversity can be a source of competitive advantage. Here are a few specific advantages:<\/p>\n<ul>\n<li>Leveraging a cross-cultural (in the broadest sense of the word) awareness to identify opportunities and avoid blind spots<\/li>\n<li>Increasing the productivity of employees who feel valued<\/li>\n<li>Improving an organization\u2019s employer brand and, therefore, ability to recruit and retain talent<\/li>\n<li>Improving the market relevance and market value of a company\/organization<\/li>\n<\/ul>\n<div class=\"textbox examples\">\n<h3>Apple&#8217;s Health App<\/h3>\n<p>As a case in point, consider <a href=\"https:\/\/www.apple.com\/ios\/health\/\" target=\"_blank\" rel=\"noopener\">Apple\u2019s Health App<\/a>&nbsp;that claims to allow you to \u201ckeep tabs on a wide array of data that matters to you\u2014from measurements of your blood pressure and blood glucose to records for your weight and reproductive health.\u201d Despite the promised capability to track reproductive health, the app was launched without a provision for monitoring menstrual cycles in what was critiqued as a stereotypical case of gender blindness. TechCrunch writer Sarah Perez summarized the disconnect, noting that menstrual tracking is a key function that \u201croughly half the population would expect to see included in a comprehensive health tracking app.\u201d And as Perez noted<strong>,<\/strong> perhaps that\u2019s not surprising given that 80 percent of Apple\u2019s engineering staff is male.<\/p>\n<p>Perez concludes: \u201cthe issue with the Health app is a perfect example of how not having the right [gender] balance internally can actually impact innovations and technology developments.\u201d<a class=\"footnote\" title=\"Perez, Sarah. &quot;Apple Stops Ignoring Women\u2019s Health With iOS 9 HealthKit Update, Now Featuring Period Tracking,&quot; Tech Crunch, 09 Jun 2015. Web. 26 June 2018.\" id=\"return-footnote-327-1\" href=\"#footnote-327-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a> Over a year after the product\u2019s initial launch, Apple still hadn\u2019t addressed the oversight and didn\u2019t respond to <a href=\"https:\/\/splinternews.com\/apple-has-a-lady-problem-the-new-version-of-healthkit-1793846504\" target=\"_blank\" rel=\"noopener\"><em>Splinter<\/em> writer <strong>Kashmir Hill\u2019s<\/strong> request for comment<\/a>, prompting her to suggest that the answer to her question why there&#8217;s still no period-tracking in HealthKit might be answered by the composition of the executive team: nine men and one woman.<\/p>\n<\/div>\n<p>For a financial performance view, let\u2019s consider McKinsey Consulting\u2019s research on diversity in the workplace. In a 2015 report titled <em><a href=\"https:\/\/www.mckinsey.com\/business-functions\/organization\/our-insights\/why-diversity-matters\" target=\"_blank\" rel=\"noopener\">Why Diversity Matters<\/a><\/em>, McKinsey highlights the following findings, based on the composition of top management and boards:<\/p>\n<ul>\n<li style=\"font-weight: 400;\">Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.<\/li>\n<li style=\"font-weight: 400;\">Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.<\/li>\n<li style=\"font-weight: 400;\">Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).<\/li>\n<li style=\"font-weight: 400;\">In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every ten percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.<\/li>\n<li style=\"font-weight: 400;\">Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, perhaps because earlier efforts to increase women\u2019s representation in the top levels of business have already yielded positive results.<\/li>\n<\/ul>\n<p>In their 2018 publication, <em>Delivering Through Diversity<\/em>,&nbsp;McKinsey Consulting again reported finding a \u201cpositive, statistically significant correlation between executive team diversity and financial performance.\u201d Although correlation is not causation, the report notes that \u201cthere is a real relationship between diversity and performance that has persisted over time and across geographies.\u201d<a class=\"footnote\" title=\"McKinsey&amp;Company. Delivering Through Diversity, Jan 2018. Web. 26 June 2018.\" id=\"return-footnote-327-2\" href=\"#footnote-327-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a> The conclusion drawn from their 2015 <em>Why Diversity Matters<\/em> report still applies: \u201cdiversity is a competitive differentiator shifting market share toward more diverse companies.\u201d<a class=\"footnote\" title=\"McKinsey&amp;Company. Diversity Matters, 2015. Web. 26 June 2018.\" id=\"return-footnote-327-3\" href=\"#footnote-327-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a><\/p>\n<p>In May 2020, the <a href=\"https:\/\/www.mckinsey.com\/featured-insights\/diversity-and-inclusion\/diversity-still-matters\">McKinsey Quarterly published &#8220;Diversity Still Matters&#8221;<\/a>&nbsp;where they take a look at the risks and opportunities that Covid-19 presents to inclusion, diversity, and equality in business settings.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_8690\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=8690&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_8690\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<h2>Contribute!<\/h2>\n<div style=\"margin-bottom: 8px;\">Did you have an idea for improving this content? We\u2019d love your input.<\/div>\n<p><a href=\"https:\/\/docs.google.com\/document\/d\/19mw-bUNgpJmVzfr_EE1RxN7bsXLXp5a6YopxPOhUqfQ\" target=\"_blank\" style=\"font-size: 10pt; font-weight: 600; color: #077fab; text-decoration: none; border: 2px solid #077fab; border-radius: 7px; padding: 5px 25px; text-align: center; cursor: pointer; line-height: 1.5em;\">Improve this page<\/a><a style=\"margin-left: 16px;\" target=\"_blank\" href=\"https:\/\/docs.google.com\/document\/d\/1vy-T6DtTF-BbMfpVEI7VP_R7w2A4anzYZLXR8Pk4Fu4\">Learn More<\/a><\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-327\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Advantages of Employee Diversity. <strong>Authored by<\/strong>: Nina Burokas. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>hands. <strong>Authored by<\/strong>: rawpixel. <strong>Provided by<\/strong>: Pixabay. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/pixabay.com\/en\/man-people-achievement-african-3230661\/\">https:\/\/pixabay.com\/en\/man-people-achievement-african-3230661\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-327-1\">Perez, Sarah. \"<a href=\"https:\/\/techcrunch.com\/2015\/06\/09\/apple-stops-ignoring-womens-health-with-ios-9-healthkit-update-now-featuring-period-tracking\/\" target=\"_blank\" rel=\"noopener\">Apple Stops Ignoring Women\u2019s Health With iOS 9 HealthKit Update, Now Featuring Period Tracking<\/a>,\" <em>Tech Crunch<\/em>, 09 Jun 2015. Web. 26 June 2018. <a href=\"#return-footnote-327-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-327-2\">McKinsey&amp;Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/delivering%20through%20diversity\/delivering-through-diversity_full-report.ashx\" target=\"_blank\" rel=\"noopener\"><em>Delivering Through Diversity<\/em><\/a>, Jan 2018. Web. 26 June 2018. <a href=\"#return-footnote-327-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-327-3\">McKinsey&amp;Company. <a href=\"https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/business%20functions\/organization\/our%20insights\/why%20diversity%20matters\/diversity%20matters.ashx\" target=\"_blank\" rel=\"noopener\"><em>Diversity Matters<\/em><\/a>, 2015. Web. 26 June 2018. <a href=\"#return-footnote-327-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":395986,"menu_order":4,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Advantages of Employee Diversity\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"hands\",\"author\":\"rawpixel\",\"organization\":\"Pixabay\",\"url\":\"https:\/\/pixabay.com\/en\/man-people-achievement-african-3230661\/\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"e6c4c8f4-862d-4066-b0b4-55f330fffc96, f5d91008-1fbf-45a8-84bd-0b01f6ad783f","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-327","chapter","type-chapter","status-publish","hentry"],"part":323,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/chapters\/327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/wp\/v2\/users\/395986"}],"version-history":[{"count":0,"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/chapters\/327\/revisions"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/parts\/323"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/chapters\/327\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/wp\/v2\/media?parent=327"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/pressbooks\/v2\/chapter-type?post=327"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/wp\/v2\/contributor?post=327"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/esc-businesscomskills\/wp-json\/wp\/v2\/license?post=327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}