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Diversity, inclusion and equity are topics on the radar of corporations around the world. Articles, white papers, reports and surveys have been investigating these areas, focusing on the advantages they have on corporate and government performance:
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Delivering through Diversity, a report produced by McKinsey & Company, notes that companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability.
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A Harvard Business Review study noted that companies going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share is associated with a one-percentage-point increase in net margin — which translates to a 15% increase in profitability for a typical firm.
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A global survey conducted by PricewaterhouseCoopers found that organizations are committing to diversity and inclusion (D&I) at higher rates than ever, with 87% of respondents indicating that D&I is a stated value or priority for their organization.
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Diversity in the age of your employees is also a key advantage. NBC News notes that millennials are changing the workplace, looking for work that will have meaning and purpose, use their talents and strengths to do what they do best every day. US News looks to the advantages of older workers, citing a survey of HR professionals that indicated: “77% of those surveyed look for experience first, followed closely by maturity/professionalism and a stronger work ethic – traits chosen by 71% and 70%, respectively, of 1,913 survey respondents.”
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Gender equality remains a major issue in the corporate world. There is still an imbalance and unrepresentation of women in management roles. Another report produced by McKinsey & Company states that for every 100 men promoted to manager, 79 women are promoted to a management role.
Ironically, women are seen as being “every bit as capable of being good political leaders as men”. In addition, a survey conducted by Pew Research Center, lists several areas where are stronger in key areas of both politics and business. Survey respondents noted that women:
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34% are better at working out compromises
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34% more likely to be honest and ethical
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25% more likely to stand up for their beliefs
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30% more likely to provide fair pay and benefits
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25% better at mentoring
Regardless of other studies and articles that confirm that companies with more women in the C-Suite are even more profitable there still remains a gender gap in the vast majority of companies.
In a 2019 report from McKinsey & Company, representation of women leadership in C-Suite positions only increased 4% between 2015 and 2019. A step in the right direction, but still out of reach for many women in the workplace.
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Global accounting firm Grant Thornton makes an interesting comparison between gender diversity and renewable energy. While it’s generally accepted that we need to move away from the use of fossil fuels because it’s bad for the planet, we are also well aware that it’s time to increase the number of women on the boards of companies because it’s good for business.
A McKinsey & Company report said that “gender diversity in 2014 meant top companies were 15% more likely to experience above-average profitability. Almost exactly three years later, this number rose to 21% and continued to be statistically significant.”
But while there are still some outstanding questions about what will power the future, there is no question about the advantages of increasing the number of women in the corporate world.
Numerous sources, including the aforementioned study, make it clear that having women on boards is materially better for companies. “Just as the world will grow faster and more sustainably powered by renewables, your business growth potential will increase with greater diversity in decision-making,” writes Francesca Lagerberg in Women in business: the value of diversity.
“Our analysis suggests that the profit foregone - or opportunity cost - by the companies with male-only boards is a staggering $655 billion across the three economies. In the UK and US the impact of moving to mixed boards on the S&P 500 and FTSE 350 could boost GDP by around 3%.”
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The direct(or) impact on giving
The knowledge that there are benefits to having women in leadership roles isn’t new, and that includes their effect on corporate giving programs.
“The research supports that, as gender diversity increases among key decision-makers, the C-suite and corporate boards, the number incidence of engagement of corporate social responsibility (CSR) increases, as does the quality of each engagement and the amount of financial resources devoted to these initiatives.
In short, CSR moves from being a quaint notion about doing nice things to being understood as meaningful to the culture of the company when the number of women in decision-making roles increases,” writes Naveen Mehta, a member of Legal Leaders for Diversity and Inclusiveness at Canadian Lawyer Magazine.
A report from Catalyst showed that Fortune 500 companies with at least 3 women on their board of directors made contributions that were 28 times higher than non-diverse boards. In addition, for every woman added to a board, annual giving increased by $2.3 million, suggesting gender-inclusive leadership is good for business and society.
The report goes on to say that:
“While it is plausible that companies committed to CSR could attract more diverse leaders, it is likely the connection works in reverse. Research examining the impact of gender-inclusive leadership, when taking time into account, suggests gender-diverse leaders are employed before increases in CSR are observed.”
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Leading the way
If there’s one group of women leading the charge on increasing the value of CSR programs, it’s Generation Z females. As we discussed in our recent blog, Why employers should start preparing now for Generation Z, this up-and-coming cohort places a high value on working for organizations that “make a difference or have a positive impact on society.”
While the eldest of this generation are still in their late teens, they’re already positioning themselves to make their mark in the modern workplace. Almost this entire segment (98%) believe companies should be actively supporting social and environmental causes.
But rather than see large companies as an impediment;
“They see companies as critical partners. In fact, this generation is the most likely to believe companies should help address urgent issues (94%) – more than their older millennial cohorts or the average American.”
Keep your options open
Gender-diverse boards are beneficial to your business as well as society as a whole. They’re better equipped to ensure corporate citizenship standards are not only met, but exceeded, building stronger, more sustainable companies.
Of course, creating and managing a CSR program of value takes a good deal of work, but it’s an essential component of employee engagement. Without one, your chance of attracting quality talent drops considerably; 85% of women in America have said they wouldn’t work for companies that don’t have a strong CSR offering.
Not only that, but organizations with a solid commitment to CSR also have more satisfied clients, leading to improved brand loyalty, so it’s a win-win situation all around.
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Diversity for employee engagement
Having an effective CSR program that moves beyond the superficial and provides a strong, meaningful approach to helping communities takes planning and commitment from all levels of your organization. And the more diverse your organization, the more diverse a program you will need to create to ensure complete employee engagement and participation.
Just as preparing for Generation Z should be top-of-mind today, other factors over the years – economics, generational shift, corporate growth and philanthropic trends, will constantly bring new CSR changes and challenges. That’s why SmartSimple's flexible, configurable platform will be important to keep you ahead of the curve in all your corporate and employee giving programs.
Next, we’ll take a look at diversity in the workplace, including ethnicity, disabilities, and the LGBT community.