5 Groups of Organizations in Terms of Diversity

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Diversity refers to the representation of races, ethnicities, and other minority groups inside an organization. Inclusion, on the other hand, refers to the extent to which the contributions, presence, and viewpoints of various groups of persons are recognized, as well as their level of integration into an environment.

A tiny percentage of firms, according to a McKinsey study, make a very strong business case for D&I and are moving substantially more forcefully on Diversity representation.

The study then aimed to assess if these few companies were also beginning to outperform their competitors financially.

Close inspection found that firms in the top quartile for both Gender and Ethnic Diversity were anticipated to outperform the rest of the companies in the data set by an additional 12%.

It was anticipated that enterprises in the 4th quartile of both Gender and Ethnic Diversity would underperform on profitability by 27% relative to all other businesses in the data set.

Slow overall progress on representation disguised a rising divide between prominent D&I practitioners and companies that have not yet adopted Diversity. The chance of a performance penalty rose as the discrepancy between the top and poorest performers grew.

In the 3rd study, approximately 1000 prominent businesses from 15 nations and 5 continents were analyzed. The research measures both Ethnic and Cultural Diversity in addition to Gender Diversity.

Research on organizations whose success over the years has been measured, has shown 5 groups, to 1 of which a business may belong:

1. Diversity Leaders

2. Fast Movers

3. Laggards

4. Moderate Movers

5. Resting on Laurels

Since the 1st data set was analyzed in 2014–2015, the possibility of diverse firms surpassing their counterparts in the same industry in terms of profitability has grown substantially.

Let’s explore a couple of the categories in further depth.

Diversity Leaders

Businesses on the edge of attaining Diversity are Diversity Leaders. These organizations have taken and continue to take significant steps towards Diversity, and they may attain gender parity.

Female Diversity Leaders represented around 5% of the data set. In 2019, the average number of female executives was 40%, up from 26% in 2014, which was already a respectable proportion.

In the 2014 Ethnic Diversity data collection, they made up 17% of the data. In addition, ethnic representation rose from 17% in 2014 to 46% in 2016.

Typically, these organizations pursued a systematic, business-led D&I strategy for at least 5 years.

Fast Movers

The ‘Fast Movers’ category consists of companies that have achieved substantial progress throughout the period of study.

In 2019, women formed an average of 27% of the labor force in Fast Movers, up from 7% in 2014. Regarding Ethnicity, the share of enterprises in the corresponding category climbed from 1% in 2014 to 18% in 2019.

Laggards

Laggards are at the opposite extreme of the spectrum. Their already poor Diversity performance has deteriorated dramatically.

Laggards made up 28% of the Gender and Ethnic Diversity data set. They reduced significantly during the previous 5 years.

Interested in learning more about Diversity & Inclusion (D&I): Leaders vs. Laggards? You can download an editable PowerPoint presentation on Diversity & Inclusion (D&I): Leaders vs. Laggards here on the Flevy documents marketplace.

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Mark Bridges

I blog about various management frameworks, from Strategic Planning to Digital Transformation to Change Management. https://flevy.com