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It only took one week for Starbucks employees to stop writing #RaceTogether on the coffee cups. While the leadership at Starbucks may have had good intentions, many thought their awareness initiative was opportunistic, shallow and insincere. Case in point: the company demographics do not point to diversity. About 60% of the employees are white, and 85% of the leadership are white. businesswoman going places

Is Starbucks showing a commitment to diversity and inclusion? Are they walking the walk?

McKinsey & Company, a leading research firm, makes a strong business case for diversity. Data keep rolling in – all pointing in the same direction. The summary of their findings include:

• Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
• Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
• Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).
• In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
• Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, perhaps because earlier efforts to increase women’s representation in the top levels of business have already yielded positive results.
• While certain industries perform better on gender diversity and other industries on ethnic and racial diversity, no industry or company is in the top quartile on both dimensions.
• The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator shifting market share toward more diverse companies.

When there is a business case to be made, there is usually someone at the top who will listen.

In our next posting, we’ll discuss how to set up a Diversity Council.

Source: McKinsey & Company, “Why Diversity Matters,” Vivian Hunt, Dennis Layton, and Sara Prince, Jan. 2015