Making diversity and inclusion a reality is good for the bottom line
Companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. And companies in the bottom quartile in these dimensions are statistically less likely to achieve above average returns.
These are some of the findings in the latest research from McKinsey, which has been examining diversity in the workplace for several years. It points to a clear linear relationship between racial and ethnic diversity and improved financial performance: in the UK, for every 10% increase in diversity on the senior-executive team, earnings before interest and taxes rise 3.5%.
The McKinsey report looking at the unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator, shifting market share toward more diverse companies.
Focusing on the importance of businesses embracing and including diverse talent, Ennis & Co, in partnership with Auto Trader, and supported by Auto Retail Network, is gathering together key leaders and stakeholders within the automotive industry, to embark on an industry mission to inspire change to reap the benefits of a truly diverse and inclusive workforce.
The inaugural event, held at Auto Trader’s London head office on 12 June, will explore the latest thinking on where we are now, and where we need to be as an industry both in promoting inclusiveness and creating a culture of diversity and inclusion (D&I) across the automotive sector.
Ennis & Co founder Lynda Ennis said: “While every other business function is benchmarked and measured against impact on the bottom line, how is diversity performance being evaluated? We’re not the only ones seeing a looming problem here. Together with Auto Trader and Auto Retail Network, we’re instigating an industry-wide debate on this issue, a mission to build a voice and inspire change.”
The event will share the latest diversity and inclusion research into the automotive industry, showing how diversity is being tackled by vehicle manufacturers and retailers, as well as by the supply chain and technology organisations. It will also investigate what is going on in other sectors, and set out meaningful measures and benchmarks.
“Let’s break down the diversity wish list into what is sensible and business critical, and eradicate the parts that don’t drive anything,” said Ms Ennis. “Let’s challenge our own diversity programmes. Let’s ask if they are fit for purpose and where they go from here.
“In the automotive industry, we are used to seeing some often surprising collaborations between OEMs in areas such as vehicle platform sharing and joint powertrain programmes. I’m hopeful and excited that we can do the same for our pressing HR and leadership issues.”
The McKinsey report highlights the work that needs to be done. Women – accounting for an average of just 16% of the members of executive teams in the United States, 12% in the UK, and 6% in Brazil – remain underrepresented at the top of corporations globally.
The UK does comparatively better in racial diversity, albeit at a low level: some 78% of UK companies have senior-leadership teams that fail to reflect the demographic composition of the country’s labour force and population, compared with 91% for Brazil and 97% for the United States.
The McKinsey report concludes that most organisations must do more to take full advantage of the opportunity that diverse leadership teams represent. That’s particularly true for their talent pipelines: attracting, developing, mentoring, sponsoring, and retaining the next generations of global leaders at all levels of organisations.
Given the higher returns that diversity is expected to bring, we believe it is better to invest now, since winners will pull further ahead and laggards will fall further behind.