The 3-minute Case for Diversity & Inclusion

November 2013

“Diversity & Inclusion”− just in fashion right now?

Or just indispensable right now?

Imagine how powerful it would have been if … New Zealanders of Asian origin got on the phone or used social media to contact their families, friends, and networks back in their home countries to assure them that milk powder was safe and that the food safety standards in NZ are world class.

– Mai Chen, Founder: NZ Asian Leaders, Founding Partner: Chen Palmer

EBITup 14%

Source: McKinsey & Company (2012)

Companies in the top quartile for diversity, compared with those with the bottom quartile, show

Companies in the top quartile for diversity, compared with those with the bottom quartile

return on equityup 53%

Source: McKinsey & Company (2012)

Yes, but for me to be convinced I need to

understand how exactly D&I improves my company’s

performance.

Diverse teams are better at generating new ideas and problem solving

• Bringing a diverse set of voices into the strategy dialogue

• Creating opportunities for conversations about opportunities in unserved markets

• Focusing on passions that lie outside of the normal firm repertoire

• Developing new perspectives on both capabilities and customer needs

• Launching low-risk market experiments.

– Source: Hamel (1998)

It’s about a wider pool of information and experiences

You also increase market share …

• Through higher sales to minority ethnicities (Cox 1993)

• Through improved understanding of consumer preferences (Slater, 2008)

…and make all employees happier

• Because they like working in more inclusive and open environments (Chevrier 2003)

• Which makes them easier to recruit and retain (Morrison 1993)

Investors are not dumbThey see that for more diverse companies

• Growth is higher• Innovation is higher• Employee satisfaction is higher• Profit is higher• Return on equity is higher

So let’s be smart“Being recognised as one of the top companies for diversity and diversity management may serve as an effective signal to investors about a firm’s future earnings prospects”

– (Roberson and Park 2006)

www.diversenz.org