Want to boost your bottom line?

John Amaechi OBE, Psychologist-2282

Want a real competitive advantage?

New McKinsey research, published in the FT, reinforces earlier assumptions about the importance of diversity and calculates that the gains can be even greater than previous stats.

Simply put, companies run by diverse teams perform better.  McKinsey have analysed gender diversity at exec level across 754 companies across the globe.

Companies in the top quartile are 22% more likely to outperform the national industry average than bottom quartile companies in terms of profitability (ebit) or return on equity.

22% is substantial.  But that’s the conservative figure.  Using “economic profit” (ie the company’s ability to create value in excess of weighted cost of capital) the difference between top and bottom quartiles is 67%.

How do you deliver diversity according to McKinsey?

–      A ceo who is committed publically and internally to improving diversity with a tailored strategy for the business

–      More women in executive positions

–      Diversity goals as part of the business strategy and value chain

It is a year since we published “The Glass Wall, success strategies for women at work and businesses that mean business”.  Kathryn Jacob and I have done over 60 talks about the book.  It’s clear that despite the economic benefits of diversity at senior levels many sectors still haven’t managed to deliver the conditions or the outcomes that are needed.  Many businesses are working towards this, and making great strides, but there is more to be done.

Rhetoric about diversity, an awayday, a spoken commitment are not enough.

At the FT Women on Top conference last month psychologist John Amaechi introduced the concept of “plausible deniability” as a crucial factor in holding back real change.

He thinks that this a core reason that things stay the same.  Without diagnosing this in an organisation, calling it out and dealing with it, there is a real danger that any amount of training will be in vain.  Plausible deniability is specifically a legal term.  At its most serious it is a term used for the ability of people to deny knowledge of or responsibility for any damnable actions committed by others in an organizational hierarchy because of a lack of evidence that can confirm their participation, even if they were personally involved in or at least willfully ignorant of the actions.

However on the broader spectrum of plausible deniability we may all have witnessed some version of it.  Certainly it came through in some of our investigations for the book.  People who witnessed behaviour that they could be expected to change but found it easier or politically expedient to ignore.

Some of the Glass Walls preventing talent from rising to the top of business that we spotted in our research have a whiff of this.  Team leaders who don’t spot that there is someone in the team who is unhappy with the tone of the banter that supposedly is crucial for bonding.  Keeping up the tradition that the Christmas outing is still to go to Spearmint Rhinos because everyone always has gone along with it.  Assuming that everyone will acquire the same ability to clamour for promotion when there is clear evidence that there is a gender divide.

Amaechi didn’t mince his words that this kind of behaviour needs to be eliminated.  Unconscious bias training might make the business feel like it is doing something but it is no more effective than taking antibiotics for a virus.  You’re taking some action certainly but it’s going to have absolutely no effect on the problem

Targets for diversity in senior management must be set, monitored, and delivered.  Why wouldn’t you if it is going to deliver this kind of competitive advantage?




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