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working womanIt’s common knowledge that our world is becoming more diverse. The U.S. Census Bureau reports that the U.S. will become “minority-majority” in 2043. Corporations are recognizing this shift with multicultural efforts including diversity training. And yet, at the top of the corporate pyramid, the changes have been slower than at the other strata.

If there is one truism about business, it is that if it makes good business sense – it will get done. It turns out that it makes good business sense to have a diverse leadership team all the way to the top.

It was recently reported that diversity on the board of directors is directly tied to the business success, or output, of corporations. DirectWomen is a networking group dedicated to promoting women in leadership. One of its leaders, Washington university in St. Louis Professor of Law and Professor of Management Lucy Sale said, “When companies make an effort to build the diversity of their board, corporate leadership is generally surprised by the depth and quality of candidates available that are out of their typical networks. There is lots of evidence to support the argument that diverse teams produce better outcomes.”

This isn’t new news. A study by Catalyst revealed the following facts about gender diversity on boards:

  • Return on Equity: On average, companies with the highest percentages of women board directors outperformed those with the least by 53 percent.
  • Return on Sales: On average, companies with the highest percentages of women board directors outperformed those with the least by 42 percent.
  • Return on Invested Capital: On average, companies with the highest percentages of women board directors outperformed those with the least by 66 percent.

It seems as though any company that wishes to succeed, may want to get on board with diversity at all levels.

Source: Washington University in St. Louis, “Board diversity a significant opportunity for corporations,” Jessica Martin, April 17, 2014

Source: Catalyst, “Companies With More Women Board Directors Experience Higher Financial Performance, According to Latest Catalyst Bottom Line Report,” 2007