7 Studies That Prove the Value of Diversity in the Workplace

Andrew Marder profile picture
By Andrew Marder

Published
7 min read

I like working with people who are unlike me, because their opinions and experiences make me see the world in new and interesting ways—and that makes me a better person. Never have I met someone, learned about them, and then wished I hadn't met them.

Sometimes I'll disagree with them or think they're a jerk, but I still think those experiences make my understanding of the world more robust.

Diverse workplaces are also better. That's not just my opinion; it's the position that has largely been borne out by research. Not every workplace and not every study agrees (hey, more diversity!) but those scenarios are the exceptions, not the rule.

If you're interested in why anyone with an eye to the bottom line would care about diversity, you're in luck.

Here are seven stats and studies illustrating the real, tangible benefits of a diverse workplace.

diversity in the workplace

1. Diverse executive boards generate better returns

A study run by McKinsey found that diverse boards perform better than their less diverse cousins. (For the study, the consulting firm examined 180 companies across four countries over a period of two years.)

The standout statistics are:

  • Companies with top quartile diversity (defined as women and foreign nationals) on their executive boards generated ROE (returns on equity) that were 53% higher, on average, than the companies in the bottom diversity quartile.

  • Those more diverse businesses also generated a 14% higher EBIT (earnings before interest and tax), on average.

Everyone can agree: More money is a good reason to have a more diverse board of directors.

2. Diverse executive boards generate more money (continued)

Credit Suisse echoes McKinsey's findings in its own study, finding that large businesses with women on the board outperformed male-only boards. The diverse boards won on every front you would care about.

Boards that included women were found to have:

  • Higher ROEs

  • Lower debt to equity ratios

  • Higher price/book value

  • Higher average net income growth

3. Diverse groups uncover more angles

A study from Tufts (get 'em Jumbo!) looked at how juries react when they're comprised of one homogeneous racial group as compared to a mixed group.

“In the study involving mock juries, panels of whites and blacks deliberated longer, raised more facts about the case, and conducted broader deliberations [than white-only panels]. "

12-angry-men-jury

Twelve slightly less effective angry men

For businesses, this is a study pointing out the value of diversity in discussion. By bringing in external viewpoints, businesses can find new ways of looking at a problem and can overcome their tunnel vision.

It's easy to assume you are like your customers, but that's rarely the entire story. Diverse discussions can help you uncover more details and lead you to make better decisions.

4. Ethnic diversity leads to better stock picking

A selection of researchers from Columbia, MIT, University of Texas-Dallas, Northwestern, and a few other prestigious universities, studied stock picking in ethnically homogeneous and diverse groups.

By now, you know how this went.

More diverse teams made more accurate pricing decisions, leading to fewer bubbles in the market. Their picks were 58% better than the picks of the homogeneous groups.

Just as in the jury study, diversity produced a better outcome.

"Ethnic diversity was valuable not necessarily because minority traders contributed unique information or skills, but their mere presence changed the tenor of decision-making among all traders. Diversity benefited the market."

5. New viewpoints lead to better results

The point made by the previous study that the “mere presence [of diverse ethnicities] changed the tenor of decision making" comes up again in a study from Northwestern and BYU. In this one, they examine what happens when you have groups of "oldtimers" and "newcomers."

The researchers created groups of oldtimers—in this case, students from the same frat or sorority—and brought in newcomers with either a similar background or an unfamiliar background. The groups were then tasked with solving a murder mystery.

The groups with more diverse sets of participants were more likely to correctly identify the murderer than those with uniform members.

The interesting part about this one is that, even though the diverse groups did better, they felt less confident. Bringing in new opinions made them question themselves and their outcomes, but their outcomes were the right ones.

6. Diversity can carry the day

This might be the most interesting study on the list because it wasn't initially designed to prove the value of diversity.

An economics professor at the University of Michigan, Dr. Scott Page, was teaching a class on systems analysis, and he wanted to prove the value of this seemingly obscure field to the students in the class.

So, Page designed a simulation to show them that groups of "very able" people—the people in the class—would outperform "able and more diverse" groups—smart people who were not in the class.

However, Page's study did not show what he wanted—it showed instead that the diverse groups could outperform the very able groups.

Working with others—a classic solution.

Not every diverse group beat the very able groups, but some did, because they were open to a range of solutions not considered by the very able students.

The study is also interesting for its requirements. Page isn't making a broad claim that five random people from Podunk, USA are going to make better economic decisions than five from Harvard. He sets a bar for both ability level and selection pool.

The diverse group is also pulled from a big sample size, so you're getting a real reflection of the available diversity.

7. Diverse teams get more credit in their fields

Building diverse teams has also been shown to build a better product, when judged by peers. In academia, publishing is usually more important than teaching, so publishing papers that are cited widely and held in high esteem is the ultimate goal for most professors.

A study written up in Scientific American looked at 1.5 million academic papers and "found that papers written by diverse groups receive more citations and [had] higher impact factors than papers written by people from the same ethnic group."

However, homogeneous groups of authors still make up more than their fair share of the papers. The study found that "persons of similar ethnicity co-author together more frequently than predicted by their proportion among authors."

This suggests that we can get better things done when we work across boundaries, but we have to make an effort to do it. It is incredibly easy to seek out echo chambers and similar viewpoints, but it leads to inferior final products.

Isn't this all just a big hoax?

I want to finish with these paragraphs from the Credit Suisse study I cited earlier (emphasis added):

“Some academics suggest that there is no causation between more women on the board and greater profitability. They argue that there well may be reverse causation as bigger, higher-profile stocks that, by definition, have already done well, are the ones that are more likely to appoint women to the board. Hence, more women on the board could well be a signal that the company is already doing well, rather than a sign of better things to come.

“The Research Institute results did find that large-cap companies, which tend to be historical strong performers, are more likely to appoint women to their boards. However, even in an isolated comparison of the large-cap companies the outperformance of companies with women in the board held up. This indicated that the causation between greater gender diversity and improved profitability goes beyond simply pre-existing strength of the company."

So, companies that are successful and diverse are not sacrificing something just for the sake of diversity. In other words: they're not winning all the games and then saying, “Maybe we should round this place out."

Study after study finds that diversity is valuable to any team.

If you want to shoot me an email, I'd love to hear from you. How has diversity worked in your office? Maybe it's been a total failure, or maybe it's been fantastic, or maybe it doesn't exist. Our cousins at Software Advice have actually written a piece on using software to support workplace diversity.

As a quick postscript, remember to check out ways you can help the victims of Hurricane Harvey and maybe set something aside for the victims of Hurricane Irma.


Looking for Recruiting software? Check out Capterra's list of the best Recruiting software solutions.

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About the Author

Andrew Marder profile picture

Andrew Marder is a former Capterra analyst.

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