Bidiversity

We’ve all heard the corporate mantra that diversity makes good business sense, but recent research provides concrete numbers that link diversity to positive business outcomes.

 
In particular, higher levels of racial and gender diversity within an organization’s workforce are associated with increased sales revenue, more customers, greater market share and greater relative profits, according to research published in the American Sociological Review.

 
“Not only are racial and gender diversity related to sales revenue, number of customers, market share and relative profitability, but they are among the most important predictors of these business outcomes,” said Cedric Herring, professor of sociology and public policy and interim head of the sociology department at the University of Illinois at Chicago, who conducted the research.

Herring said he sought to provide concrete data that quantified the business outcomes of diversity in order to refute individuals who are increasingly skeptical of the claims about the business case for diversity. For instance, racial and gender diversity in organizations have an impact on sales revenues.

“The average revenues of organizations with low levels of racial diversity are roughly $51.9 million compared with $383.8 million for those with medium levels and $761.3 million for those with high levels of diversity,” Herring said. “[Similarly], the average revenues of organizations with low levels of gender diversity are roughly $45.2 million compared with $299.4 million for those with medium levels and $644.3 million for those with high levels of diversity.”

In addition, the research shows a correlation between a larger customer base and higher levels of racial and gender diversity. While the average number of customers for organizations with low racial diversity is 22,700, that number jumps to 30,000 for businesses with medium levels of diversity, and 35,000 for those with high levels of racial diversity, Herring said.

In terms of gender diversity, the average number of customers for organizations with low levels of diversity is 20,500 compared to 27,100 and 36,100 for those with medium- and high-levels of gender diversity, respectively. Furthermore, greater levels of racial and gender diversity in an organization’s workforce also are associated with increased market share.

Suurce: Diversity Executive