The Wall Street Journal‘s first ranking of corporate sectors and S&P 500 companies for diversity and inclusion is almost depressing to read. It’s certainly predictable.
It shows – again – how diverse and inclusive cultures provide companies with a competitive edge over their peers.
The results, compiled by WSJ research analysts, showed that the top 20 most diverse and inclusive companies had better operating results on average than the lowest-scoring firms, and their shares generally outperformed the least-diverse firms.
The WSJ rated S&P 500 companies on 10 individual performance indicators and ranked them as such.
“Too often we have seen companies fail or make poor decisions where teams are populated with individuals who all think the same, or who are unwilling or unable to challenge the status quo.” https://t.co/NGDx6eJrwF
— Jennifer Smith (@jensmithWSJ) October 26, 2019
For example, top diversity performers had an average operating profit margin of 12% compared with 8% for the lowest ranking companies.
“The bottom line is that companies that are able to attract and retain talent are going to be more successful financially over the long term” Valeria Piani from UBS Asset Management told WSJ.
The financial industry overall was the best performing sector in the study with banks and insurers dominating the top 20 diversity leaders.
One explanation for this is because the banking and finance industry has faced so many lawsuits on account of both gender and race in the past few decades, it was forced to take steps to ensure it builds a diverse workforce.
Where responsibility for diversity and inclusion sits in an organisation is indicative of its efficacy. Where they are placed in the C-suite, they are better placed to effect change than if they sit within HR.
The decision to place a diversity and inclusion officer in the C-suite is a “game-changer,” says Karen Carter of Dow, because support from the top is essential to making meaningful changeshttps://t.co/X30EgpUmYy
— The Wall Street Journal (@WSJ) October 27, 2019
“We knew we needed to not only make short term progress, but to embed it (diversity and inclusion) into the way we do business as a company,” Karen Carter, the Chief Inclusion Officer at Dow, said.