BY THE NUMBERS
Organizations That Financially Outperform Industry Competitors Have More Leadership Diversity
Greater Diversity Helps to Drive Better Business Performance
Although organizations have placed increasing priority on driving diversity in recent years, women and minorities remain underrepresented in leadership roles globally. Overall, companies with greater gender and racial/ethnic diversity tend to outperform their peers financially.
Since we last surveyed organizations in 2020, we’ve seen a small drop-off of women leaders in top-performing companies, from 30% in 2020 to 29% in this year’s study. In underperforming companies, there’s been a steeper drop of women leaders, from 27% to 23%. These drops may represent the toll that the pandemic took on women leaders, which have not yet recovered.
Companies are gaining ground with ethnic and racial diversity, with numbers rising several percentage points since 2020.
On the other hand, companies are gaining ground with ethnic and racial diversity, with numbers rising several percentage points since 2020.
One of the key drivers of increased diversity is high-potential pools. However, high-potential pools still tend to have lower representation of women and minorities than their general leadership population. On average, only 14% of high-potential leaders are women and 11% are from minority backgrounds in low-performing organizations. By contrast, at companies that are top financial performers, women are 23% and minorities are 16% of high-potential pools, on average.
This focus on developing talent from diverse backgrounds earlier through planful succession management practices is paying off . Beyond the financial benefits, organizations that are developing more high-potential leaders from diverse backgrounds are also:
- 11X more likely to have high-quality leaders overall.
- 10X more likely to have a strong leadership bench.
- 4X more likely to have leaders who understand and act on changing customer needs and perspectives.
- 3.2X more likely to engage and retain top talent.
Organizations with above-average diversity are 2.4X more likely to outperform their peers financially.