by Brianna Crandall — January 22, 2016—Companies with the most diverse management teams have an operating profit margin of 12.6 percentage points more than the companies with the least diverse management teams, according to new research conducted by global facilities services provider ISS and consultancy firm proacteaur based on PwC data from more than 300 large and medium-sized Danish companies.
The conclusion applies both when comparing within specific industries and across all types of businesses, notes ISS.
Lotte Hjortlund Andersen, head of CSR at ISS Denmark, points out:
Diversity is first and foremost about respecting each other and seeing human diversity as a strength, but now we can also conclude that diversity management presents a significant benefit to the bottom line.
The research report shows that there is a significant difference in earnings between the most and the least diverse businesses, but also that the most diverse companies on average earn 5.7 percentage points more than the average of competitors in the same industry.
Millions to be gained in diversity
In 2011, another study was conducted by ISS together with PwC, and it concluded that diverse teams earn 3.7 percentage points more on average than non-diverse teams.
Andersen adds:
Now we have taken the next step, and we are able to substantiate that the difference is even greater when we talk about diversity in management. There are millions to be earned in linking diversity to business.
Large untapped potential
The new report also points out that there is still a huge untapped commercial potential in Danish management in relation to the diverse composition, which, among other things, includes gender and ethnicity:
Andersen concludes:
For our own part, we now have good and tangible arguments for working more actively on diversity management. And I hope that the report’s evidence-based conclusions will inspire other companies to work strategically with business-driven diversity.
ISS says it continuously works towards optimizing the work on diversity for the benefit of the business, employees and the community. In addition to the new study, the company has collaborated with one of the leading researchers in the field, Lotte Holck from Copenhagen Business School, who will investigate new ways to optimize diversity in ISS.
The new report, A Diverse Leadership Yields Higher Earnings, can be viewed or downloaded from the ISS Group Web site.
