Management consultancy McKinsey & Company has found that nearly four in 10 UK organisations had no ethnic minority board representation between 2014 and 2019.
Since 2014, McKinsey & Company has been tracking the performance of 1,039 companies across a number of countries, and reporting on how this correlates with gender and ethnic diversity at board level.
The consultancy reported that companies in the top quartile for board-level ethnic diversity financially outperformed their rivals in the bottom quartile by 36% on average in 2019, up from 33% in 2017 and 35% in 2014.
In addition, companies in the top quartile for gender equality in leadership positions had an EBIT (earnings before interest and tax) around 25% higher than those in the bottom quartile.
UK and Ireland managing partner of McKinsey & Company, Dame Vivian Hunt, said: “Yet again, our research has shown that aside from the moral imperative for increasing inclusion and diversity, many companies are missing out on the opportunity to critically boost to their bottom line. However, we must remain vigilant: as our research shows, progress is too slow.
“While there has been great enthusiasm from many companies on improving inclusion and diversity, these efforts are not cutting through to employees on the ground or are the wrong set of interventions. More than ever, leaders and managers will need a great deal of resolve and resilience on these matters as they seek to navigate an economically and socially viable path toward a ‘next normal’.”
The consultancy’s report, Diversity Wins, stated: “Research and experience warn us that diverse talent can be at risk during a downturn for several reasons, including that downsizing can have a disproportionate impact on the roles typically held by diverse talent.
“There is ample evidence that diverse and inclusive companies are likely to make better, bolder decisions – a critical capability in the crisis. For example, diverse teams have been shown to be more likely to radically innovate and anticipate shifts in consumer needs and consumption patterns – helping their companies to gain a competitive edge.”
This report comes at a time when organisations globally are reacting in different ways when it comes to D&I. Unfortunately, some have shelved initiatives as they put all their focus on addressing the pandemic’s impact on their business, but it is encouraging to see that some are continuing to prioritise D&I.
Covid-19 brings major challenge for organisations to address in order to survive, but halting D&I initiatives is not the answer, and may put businesses at future risk due to losing out on the chance to innovate and strengthen their operations.
McKinsey & Company’s report is an important read and outlines steps to build diverse and inclusive cultures that every business can consider – whatever your size and wherever you are on your D&I journey.