February has been designated Black History Month every year since 1976. In this month, we celebrate the achievements of African Americans and the central role they have played in America’s history.
Black History Month affords us a chance to reflect on diversity, and whether or not we are achieving an equable workforce where minorities are well represented. Current data would indicate that we’re still lagging and we need to change our approach – rapidly.
According to stats published by Built In, 78% of the US workforce is white, leaving very little room for diversity. 2019 stats show that Black (6.1 percent) and Hispanic or Latinx (4.3 percent) people experience higher unemployment rates compared to the national average (3.7 percent).
A mere 8 percent of Fortune 500 CEOs are women, and as at February 2021, only 4 Fortune 500 CEOs were Black. Only 22 of the Fortune 500 publish full diversity data, while just over half have published some data in the past year.
What this means for these businesses – obligations to be responsible corporate citizens notwithstanding – is that they are not performing as well as they could.
Diversity is good business, and it is good for business. For example, a 2009 study found that racially diverse companies achieve 15 times the sales revenue than their less diverse competitors. Another study shows that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to achieve better financial returns than the national industry average. Conversely, bottom-quartile companies are 27% more likely to underperform financially.
A 2013 report shows that racially and ethnically diverse companies are 70% more likely to reach new markets due to being more innovative. Supporting this finding, a Boston Consulting Group survey of 1,700 companies found that companies with above-average total diversity had, on average, 19 percent higher innovation revenues.
Why is this? Simple. A diversity of views, ideas, and lived experiences leads to better decision-making. Diversity also enables businesses to develop products and services catering to a wider variety of consumers. In other words, having a more diverse workforce enables businesses to tailor their products and services more effectively to their existing consumers, and to target a broader market.
The data is conclusive. Diverse companies perform better than their less diverse competitors. Businesses need to ask themselves: “Am I ready to embrace a more diverse workforce?” If not, they stand to fall even further behind.