Diversity and Inclusion Impact the Bottom-Line and Other Key Performance Metrics

The U.S. continues to undergo a dramatic demographic shift – in fact, according to the U.S. Census Bureau population estimates for July 2015, minority babies are now the majority, with 50.2% of U.S. babies less than one being of racial or ethnic minorities [i]. In addition, it’s projected that minorities in the U.S. will become the majority in 2045 [ii]. With regards to gender, approximately 50.8% of the U.S. population is female according to the most recent census data released in July of 2017 [iii]. Of these women, 57% participate in the workforce [iv].

Despite the reality that the U.S. will soon become a minority-majority population, this is not reflected in leadership, particularly in corporate leadership. Numerous studies show the lack of women in leadership positions.

Diversity in the C-Suite

For example, on average, men compose 79% of executive roles, while women occupy 21% of executive positions [v].

Women are also less likely to occupy leadership roles than staff roles. The same study conducted by McKinsey has found a lack of ethnic diversity within leadership. African Americans comprise approximately 10% of all U.S. university graduates but only hold 4% of senior-level executive positions; similarly, Hispanics and Latinos constitute 8% of graduates but comprise just 4% of executives.

These startling statistics highlight the lack of diversity in significant leadership positions, but why does diversity really matter? When a question like this is posed, typical answers frame the situation from a moral standpoint. However, there are economic and financial benefits to diversity. Diverse and inclusive workplaces ultimately impact the bottom line in numerous ways. Diversity supports business performance by helping companies generate unique ideas that can improve the quality of decision making [vi]. Individual identities shape how people experience, learn, and perceive the world. This is reflected in the different perspectives and skillsets they bring. This new source of insight and talent sparks creativity and leads to the formation of new ideas, which ultimately helps businesses progress.

Diversity and inclusion also increase access to those who comprise the marketplace. Consumer markets are becoming increasingly heterogeneous – along with the consumers’ needs.

Inclusion Impacts Your Marketplace

To effectively engage with the 21st-century marketplace, an understanding of the cultural dynamics is necessary. Without diversity, it is difficult to gain access and legitimacy to the organization [vii].

A thorough understanding of diversity can be better accomplished with diverse talent, who may better understand the uniqueness of diverse consumers and provide customer insights. Diverse talent also can increase customer participation and outreach and make the organization more accessible.

Furthermore, diversity and inclusion increase a sense of fairness in the workplace. These positive attributes of a workplace instill feelings of employee satisfaction, which in turn can influence commitment and productivity levels [vii]. Moreover, diversity in the workplace has been shown to increase a company’s profits. In addition, by promoting an inclusive culture, companies improve their image and can experience an increase in their ratings, making them a popular pick amongst customers. This can provide organizations with a competitive edge against their non-diverse counterparts, which may not be as reputable for this reason.

Increasing Diversity can Increase Profitability

The idea of increased diversity increasing profits can be backed by statistics. The Peterson Institute for International Economics states that companies with 30% of its leaders being female earn 6% more in profits compared to those without female leadership, indicating strong firm performance [ix]. Forbes states a similar statistic, with firms in the top quartile for racial and ethnic diversity being 35% more likely to have financial returns above the national industry means [x].

However, a diverse workplace is not the only way to promote diversity within an organization. Organizational processes and structures can contribute to disparities that exacerbate inequity. Companies should take the time to reflect on their efforts to ensure that they don’t reflect any unconscious biases. For example, an organization may find it difficult to tell their human resources department to recruit a diverse talent if the top leadership doesn’t reflect this. In this scenario, their organizational structure shows a lack of accountability, making it difficult for other members of the organization to follow through. Similarly, the proper processes can improve diversity. This can be seen in the Starbucks diversity training that occurred earlier this year [xi]. This program reflects the leadership’s commitment to diversity, which ameliorates the problem within the organization.

Clearly, diversity and inclusion are important not just from a moral standpoint. They produce tangible, financial outcomes that can benefit any organization. When people think of diversity in the workforce, most think of the representation of employees and executives within the organization. While a key factor for many reasons, there are other things to consider, such as the structures and processes within the organization that can promote or hinder diversity.

To further explore the influence of diverse leadership in healthcare, please contact The Kaleidoscope Group at 312-274-9000 or www.kgdiversity.com.


Joseph Gaspero is a Consultant with the Kaleidoscope Group. He is a diversity and inclusion expert with a specific focus on the healthcare industry. Joseph has extensive knowledge and expertise in areas such as diverse patient groups, diversity in healthcare organizations, employee and business resource groups, diversity in clinical trials, and shifting U.S. demographics. He also has extensive knowledge and expertise on the intersection of diversity and inclusion with financial performance and other key organizational metrics. Joseph is also the CEO and Co-Founder of the Center for Healthcare Innovation (CHI), an independent, non-profit research and educational institute dedicated to making healthcare more equitable for all patients. CHI’s mission is to bring together experts and ideas from all over the world to improve healthcare for everyone, regardless of socioeconomic status, gender, race, ethnicity, or other social determinants. Joseph’s leadership stems from a wide array of experiences, including founding and operating several non-profit and for-profit organizations, serving in the U.S. Air Force in support of 2 foreign wars. His skills include strategy, management, entrepreneurship, healthcare, clinical trials, diversity & inclusion, life sciences, research, marketing, and finance. Joseph has lived in six countries, traveled to over 30 more, and speaks three languages, which help him view diversity and inclusion through a global lens.





[i] http://www.pewresearch.org/fact-tank/2016/06/23/its-official-minority-babies-are-the-majority-among-the-nations-infants-but-only-just/

[ii] https://www.brookings.edu/blog/the-avenue/2018/03/14/the-us-will-become-minority-white-in-2045-census-projects/

[iii] https://www.census.gov/quickfacts/fact/table/US/PST045217

[iv] https://www.dol.gov/wb/stats/stats_data.htm

[v] https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

[vi] https://www.entrepreneur.com/article/316482

[vii] http://web.mit.edu/cortiz/www/Diversity/Ely%20and%20Thomas,%202001.pdf

[viii] https://www.americanprogress.org/wp-content/uploads/issues/2012/03/pdf/lgbt_biz_discrimination.pdf

[ix] https://piie.com/publications/wp/wp16-3.pdf

[x] https://www.forbes.com/sites/ruchikatulshyan/2015/01/30/racially-diverse-companies-outperform-industry-norms-by-30/#7295e63e1132

[xi] http://fortune.com/2018/05/24/starbucks-diversity-training/

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