Racially Diverse Companies Are 25% More Likely to Financially Outperform Their Competition
The case for more gender and ethnic diversity is strong and has received massive support in the last decade. A recent McKinsey report found a consistent correlation between diverse leadership and stronger financial performance. Companies with gender diversity on their executive teams were 25 percent more likely to experience above-average profitability than companies who had low representation of diverse expression. There was also a 36 percent likelihood of out-performance for companies who had a more ethnic and culturally diverse workforce.
Yet efforts on the ground have remained stagnant. From 2015-20, only a third of the 1,000-plus large firms in 15 countries tracked by McKinsey significantly improved. The other two-thirds have stalled or lost momentum. Globally, the representation of women on executive teams rose by only a single percentage point from 2017-19, and that of ethnic minorities by only two points.
And for the last two years, women and diverse employees have been leaving organizations in record numbers due to burnout, record-level stress, and severe child care challenges. The U.S. Bureau of Labor and Statistics concluded that this mass exodus is costing $64.5 billion in lost income to the U.S. workplace.
Coré Cotton, founder of A Woman Evolves, LLC, says companies that have weakness-based development plans or inconsistent mentorship pipelines are also major contributing factors to why women and diverse employees leave an organization. She adds that providing "in-the-moment feedback, rather than year-end assessments" are vital to identifying the critical needs of an employee.
"The key to retaining talent is by empowering them," Cotton states, who coaches diversity-focused organizations on how to strengthen their talent retention strategy. "By focusing on strength-based plans that align their passions and organizational needs, it becomes a win-win for both the company and its team members. Research has shown that when talent are allowed to control their trajectories with strength, passion, and purpose, rather than falter by focusing on their weaknesses, they bring back to the organization complete, whole, and productive leaders with organizational runway because they feel valued and included."
Cotton, a Grammy Award-winning artist, attorney, and life coach speaks from personal experience. She said that for years she was reluctant to own her diverse strengths as she was rising through the ranks as a corporate attorney. Cotton asserts that she dimmed her passion and strength in music and "felt stuck between my passion and my dream. I was constantly vacillating between music and law, emotionally exhausted from ineffective "development" opportunities that lacked a connection to my strengths. I was hired for diversity, but managed similarly."
Emotional exhaustion in the workplace can cause employees psychological and physical health problems, affect work performance, and create burdens for the organization. A recent study from Frontiers Psychology found that employees who are highly empowered perceive more psychological safety, meaning that empowered employees have a more positive orientation towards their work. They also have confidence in shaping their work role which results in more positive forms of work performance.
Cottons says it is this empowerment that will create women to step into their purpose. "Women and minorities are fed up and marching out of companies with the company's competitive advantage in tow," she says. "Therefore, the mission for every organization should be to focus on how to be more intentional with talent while significantly mitigating organizational talent retention and diverse pipeline issues."
ABOUT A WOMAN EVOLVES, LLC
A Woman Evolves, LLC, provides coaching programs and entertainment that helps women show up as their authentic selves. As the creator of The Empowered Woman's Masterclass and The Elite Career Accelerator coaching programs, and the A Woman Evolves personal biopic, Coré Cotton empowers corporate professional women to unapologetically break free of statistical boxes and own their career and life trajectories through passion-driven lives without limitations. For more information visit https://corescotton.com, or follow on Facebook or LinkedIn.