How and Where Diversity Drives Financial Performance

Does diversity really drive performance? To assess this claim, the Boston Consulting Group surveyed more than 1,700 companies across eight countries to examine the relationship between managerial diversity, the presence of enabling conditions, and innovation outcomes. They examined the correlation of multiple aspects of diversity — gender, age, national origin, career path, industry background, and education — both individually and collectively. They found that companies with above-average total diversity had both 19% higher innovation revenues and 9% higher EBIT margins, on average. The presence of enabling conditions for diversity — such as fair employment practices, participative leadership, top management support, and open communications — is worth up to 12.9% in innovation revenue. These relationships between innovation and diversity were strong in all geographies, though the precise patterns of diversity and performance varied across cultures. There are, therefore, multiple paths to harness diversity. A broad-based approach that values multiple aspects of diversity produces the best results.