Why Should We Care About Managing Diversity?

Diversity brings vividness of thoughts, opinion and intellect. For successful stories, we shouldn't be limited to the gender based diversity but span it through the diversity of culture, genre and intelligentsia. It often invokes a variety of attitudes and emotional responses in people.Diversity matters for the broader issue of economic fairness, as companies led by women have lower gender-based pay disparities throughout their organizations. (Heck, companies run by men with daughters have lower gender-based pay disparities.)
Diversity matters for economic growth. If women were fully engaged in the US economy, GDP would be 9% larger than it is today. This is growth our economy could sorely use. (And, no, it’s not a zero sum game of new entrants taking others’ jobs; history shows that the economy can grow as a result of new entrants, in a virtuous circle.)
Diversity matters for US company performance and competitiveness. Study after study after study has shown that companies with diverse management teams outperform those with less diverse teams. And that diverse teams outperform even more “capable” teams. And they don’t outperform non-diverse teams by a little, but with ROE differentials of 30%+, with lower earnings volatility.
And diversity can even be a matter for the safety of our economy and financial markets. Which industry could use the lower volatility, more customer focus and the longer-term perspective that women have been shown to bring? The banks.
And, yet, the progress of women into senior roles has stalled in broader corporate America. And, on Wall Street, an industry that was substantially white, middle-aged and male has become whiter, middle-aged-er and maler coming out of the downturn, essentially doubling down on that bet.
In my experience, CEOs and Boards "get" the issue and the benefits of improving diversity. But on a case-by-case-by-case basis, as promotions are decided, they choose the known entity, who tends to be someone who looks and sounds a good bit like those already in leadership roles; and this seems to be particularly true when businesses are under stress.
As the above demonstrates, our current approach to diversity is yielding significantly diminishing returns. We need new ways of thinking about how to encourage greater diversity in business, employing some of the innovative thinking that is driving such great strides in solving other challenges. More (much more) to come on this topic and potential solutions