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Diversity signals profitability

| Posted by: Paul Donovan | Tags: Paul Donovan Weekly

  • A prejudiced country or company cannot be economically great. Diversity means better decision making and better economic results.
  • Prejudiced hiring rejects people for no good reason. The company fails to pick the best person for the job, on irrational grounds. This is bad business. Failing to provide a diverse culture will demoralize staff. Demoralized staff are less productive, which is bad business. A company that hires only one group risks having a monoculture of thinking. That "group think" means poorer quality decisions. Worse, "group think" may fail to spot risks that would be obvious to more diverse group.
  • Investors should focus on gender diversity. Gender diversity is not more important than other forms of diversity. Gender diversity is a more easily measured form of diversity. Political and media attention often focuses on the number of women managers. This misses the point. A diverse company will have equal opportunities at all levels. 
  • Data shows that gender diverse companies have better profits. The share price of gender diverse companies tends to do better too. This does not mean women produce better results than men. It means a company that hires the best people it can is more likely to be a well-run company.