Diverse leadership leads to higher profits, says new study

5th of February 2016
Diverse leadership leads to higher profits, says new study

Companies with the most diverse management teams have an operating profit margin of 12.6 percentage points more than the companies with the least diverse management teams. That's according to new research conducted by global facilities services provider ISS and consultancy firm proacteur based on data from PwC.

The study is based on data from more than 300 large and medium-sized Danish companies and the conclusion applies both when comparing within specific industries and across all types of businesses.

"Diversity is first and foremost about respecting each other and seeing human diversity as a strength, but now we can also conclude that diversity management presents a significant benefit to the bottom line," says Lotte Hjortlund Andersen, Head of CSR at ISS Denmark.

The research report shows that there is a significant difference in earnings between the most and the least diverse businesses, but also that the most diverse companies on average earn 5.7 per cent more than the average of competitors in the same industry.

In 2011 another study was conducted by ISS together with PwC, and it concluded that diverse teams earn 3.7 per cent more on average than non-diverse teams.

"Now we have taken the next step and we are able to substantiate that the difference is even greater when we talk about diversity in management. There are millions to be earned in linking diversity to business," adds Hjortlund Andersen.

The new report also points out that there is still a huge untapped commercial potential in Danish management in relation to the diverse composition, which, among other things, include gender and ethnicity:

"For our own part, we now have good and tangible arguments for working more actively on diversity management. And I hope the report's evidence-based conclusions will inspire other companies to work strategically with business-driven diversity," she concludes.

Click here to download the report

 

 

 

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