More than ever, businesses are examining their leadership teams closely and rating them according to a new standard. Being knowledgeable or experienced is no longer enough. Executives are pondering the question, “Is our organization diverse enough? ” More specifically, they want to know if they have enough diversity in leaderships’

Diversity means having individuals from different backgrounds make up your workforce. The big categories are gender, culture, race, and age, but the concept of diversity has now expanded to include religion, sexual orientation, economic background, political leanings, etc. It is also important to note that diversity isn’t just about how an individual identifies. Diversity also means having a company mentality that is accepting of those who are different and willing to promote their voices. To see the full benefits of workplace diversity, a company must make inclusion a definitive part of its culture. 

Diversity refers to the traits and characteristics that make people unique while inclusion refers to the behaviours and social norms that ensure people feel welcome. Diversity is the “what” and inclusion is the “how” in the workplace. The more diverse an organization gets, the more important inclusion becomes. Inclusive efforts need to focus on making every single employee feel like they are respected and trusted, regardless of their background. Though diversity and inclusion may be different, you cannot have either without first establishing a culture that embraces different perspectives. It is leadership’s responsibility to acknowledge that different perspectives matter.

A study by McKinsey indicated that there is a statistically significant relationship between a diverse leadership team and better financial performance. Companies in the top quartile for gender diversity are 21% more likely to outperform the industry average compared to companies in the bottom quartile. Other research has also shown many benefits over and above financial performance such as:

1. Greater depth and breadth of experience and perspective

Diversity in leadership means greater depth and breadth of experience and perspective, which in turn allows for a greater ability to relate to employees, clients and prospective clients. This facilitate innovation, which is critical to capturing and maintaining market share. 

2. Innovative thinking

Diversity in leadership means diversity in thought. For example, a management team of 10 individuals all from different backgrounds has a higher likelihood of developing ideas that cover a broader spectrum. A diverse workforce and management team ensures that a company doesn’t get boxed into a single lane of thinking.

3. New Opportunities

Diverse leadership teams bring perspectives that help to pressure-test assumptions and judgments. This will uncover new ways of thinking, promote a growth mindset and enable a learning organization that is open to testing and new ideas. This leads to greater employee engagement, empowerment and faster decision making.

4. Enhance company culture

A diverse leadership, if inclusive, opens up avenues for better employee-employer relationships. Employees feel important and witness their representation, which in turn builds trust and psychological safety in the organization and the leadership. Employees are more likely to stay longer in the company as they envisage their future there. 

5. Build multi-cultural competencies within the organization

When there is greater diversity in leadership, the organization’s leaders can play the vital role of mentor and sponsor for a much broader group of diverse professionals. They’re able to form meaningful connections with a variety of people, as they’re able to empathize, relate and motivate more effectively.

Although not all of the benefits of diversity in leadership are measurable or tangible, that doesn’t make them any less impactful on a company.