PricewaterhouseCoopers conducts an annual survey of corporate directors, including questions on diversity and equity in the boardroom. In their 2020 survey they found that:
- 94% of respondents agreed that diversity of people brings a diversity of perspective to the table
- 85% believed that diversity appeals to investors
- Almost three-quarters of the directors surveyed thought that diversity on the board leads to better performance for the company as a whole
Research into the actual performance of companies backs up the considerable business impact of diversity.
- Companies with above-average diversity have 19% higher innovation revenues and 9% points higher EBIT margins, on average (source: 2018 Harvard Business Review, “How And Where Diversity Drives Financial Performance”)
- Companies in the top-quartile of culture and ethnic diversity on their executive teams outperformed those in the fourth one by 36 percent in profitability (source: 2019 McKinsey report, “Diversity Wins: How Inclusion Matters”)
- The greater the representation, the higher the likelihood of outperformance. Companies with more than 30 percent women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all. The most from the least gender-diverse companies are separated by 48 percent in profitability. (source: 2019 McKinsey report, “Diversity Wins: How Inclusion Matters”)
- Highly diverse teams are 13 times more likely to have engaged employees. With every 10% increase in diversity there was a 6% increase in engagement. (Source: 2014 RoundPegg engagement research at Nike. “The answer to disengaged employees is diversity and inclusion”)
Even with these impressive statistics, the average American boardroom is anything but diverse.
According to Take Your Seat, the company John and I discuss in today’s Purpose and Profit episode, while almost 40% of the people in this country are minorities, they only make up 10% of corporate board seats (i.e. 4x underrepresented). For Black Americans it’s only 4% of board seats despite making up 13% of the US population (i.e. over 3x underrepresented).
“There is a ‘black hole’ in boardroom placement and culture. We are on a mission to spur America’s boards to be ‘Black Whole’—to create a more inclusive culture/environment where boardrooms lean into the business imperative of diversity to support board health, innovation and shareholder value.” – Jerusha Stewart, CEO of Take Your Seat
Take Your Seat operates as a community, connecting board-ready and board-veteran candidates to public, private and non-profit companies looking to diversify their boards. They recognize that the lack of diversity in business isn’t due to a lack of ability, talent or creativity. It’s due to a lack of representation, mentors, and opportunity.
The world is changing, but overwhelmingly people continue to socialize at work and in life with others who look and sound exactly like themselves. It will take intentional action to break that cycle, create more equitable opportunities, and finally have leadership in America look like America.
Our companies and society will be stronger for it.
If you’re on the board of a company looking for diverse talent, or if you are looking to bring your unique talent to a board, I encourage you to check out Take Your Seat.