As someone working in the area of inclusion and diversity, I long ago realised that change tends to come as part of a long and gradual process. Shifts in society and work culture will always take time. And while many people in businesses are happy to talk about diversity there is often a lack of urgency when it comes to implementing change – for most, the status quo is absolutely fine, thank you very much.

But then 2020 came along: with the death of George Floyd, the emergence of the Black Lives Matter movement and the fallout of Covid-19 there was a sudden change in society and a noticeable acceleration in people’s awareness of the inequalities in the system. Those in positions of power began to realise that whole sections of society were being excluded from the game. And that it was time for change.

These events were not limited solely to civil society. They immediately impacted the private sector – people across a whole range of business sectors were suddenly demanding rapid accountability of corporate institutions and their leaders. Boards and management teams were being asked what they were doing about gender balance and racial justice. Many founds themselves deeply underprepared.

And no wonder that boards felt unnerved. According to research carried out by Equality Group in 2021, there were more FTSE 100 CEOs called Andy and Steve, than there were women or ethnic minorities combined. Nor was there a single Black CEO or woman of colour in the list. For too long inclusion and diversity had sat in the realm of human resources or grassroot employee initiatives. At many firms, it may have only taken the form of a women’s network. It was not being discussed regularly at board meetings, with the most senior company stakeholders, as a core part of the business strategy. It was not being considered an area of potential company risk or weakness and equally, a strength and opportunity. This reality is a problem for any organization.

The importance of inclusion in business is not a new one. On the eve of the 2008 global financial crisis, a toxic work culture and a lack of diversity at senior decision-making levels were all cited as contributary reasons for the Lehman Brothers crash. As an analyst at the bank at the time, I saw first-hand how rapidly the culture deteriorated into one of suspicion, sharp elbows and presenteeism before the bankruptcy. As the markets became increasingly volatile and the redundancy rounds ever more frequent, the fault lines in the culture were painfully apparent. I can remember walking into the office on a number of occasions and seeing desks that were once occupied suddenly empty. Although the bank did not fail just because of a lack of diversity, one wonders if having a few more Lehman sisters in the boardroom at the time could have helped better manage the fallout.

The response to the COVID-19 pandemic has provided us with an interesting counter example to Lehman Brothers. In the pandemic’s early stages, we saw remarkable results from female national leaders, some of whom managed to almost halve the number of deaths in their countries compared to their male counterparts. They did this through a combination of greater collaboration, emotional intelligence, effective communication and shrewd risk management. The popular belief that women are more risk-averse has been shown to depend more on the type of risk involved. In managing the pandemic, female leaders have reacted more decisively to protect lives and been more innovative in their thinking about the possible economic risks involved. Many female leaders also tend to take a more interpersonal and collaborative approach to problem-solving than their male counterparts, ensuring that they take more people with them once a decision is made.

There is substantial research to show that diversity brings many advantages to an organisation: stronger governance, better problem-solving abilities, increased creativity and profitability.[1] Employees with diverse backgrounds will inevitably bring a wider range of perspectives, ideas and experiences. This then helps to create organisations that are resilient and effective, and which outperform organisations that do not invest in diversity.

McKinsey’s global study of over 1,000 large companies has found that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile. For ethnic and cultural diversity, top-quartile companies outperformed those in the fourth by 36 percent.

A  study* found that companies with more diverse management teams have 19% higher revenues due to innovation.[2] This finding is significant for industries where innovation is the key to growth. It shows that diversity is not an aspect of corporate social responsibility or a PR exercise – nor is it just a metric to be strived for – it is an integral part of a successful revenue-generating business.

This is why the leaders and firms that embrace and embed inclusion and diversity into their business will win. They will be the businesses that innovate and adapt more rapidly. They will have a workplace culture that talent seeks out and stays with. They will reach a wider set of customers and clients, who will feel valued and understood. They are the ones who know that to achieve all these benefits you have to take inclusion and diversity seriously. Businesses that continue to think of diversity as just “nice to have” will be left behind.

[1] Diversity Wins, McKinsey, 2020

[2] Diverse Leadership Teams Boost Innovation, BCG, 2018

*Study by Boston Consulting Group