Perhaps more than any other executive in the company, CIOs have long known that having a diverse workforce is a good thing. Now research is starting to back them up. Diverse and inclusive cultures are providing companies with a competitive edge over their peers. This is the result of research analysts ranking of corporate sectors based on how diverse and inclusive they are.
The Power Of Diversity
It turns out the 20 most diverse companies in the research not only have better operating results on average than the lowest-scoring firms, but their shares generally outperform those of the least-diverse firms, the research shows. Many of the high-scoring companies in the study say that having a well-rounded workforce has helped them create better products and be more innovative, leading to growth in sales and profit. Analysts agree that diversity can help fuel innovation, which is critical to success in a fast-changing world where technological disruption has become the norm.
What CIOs realize is because they understand the importance of information technology they also understand that diversity helps create long-term shareholder value. Too often people with the CIO job have seen companies fail or make poor decisions when teams are populated with individuals who all think the same, or who are unwilling or unable to challenge the status quo. Following a string of gender- and racial-discrimination lawsuits over the past few decades, firms in recent years have worked to narrow pay disparities and recruit a more diverse workforce. Other companies have had to make changes to attract and retain millennial workers and to reach an increasingly diverse U.S. customer base.
Consumers have many different options and higher expectations for products and services that reflect and meet their unique needs. This makes constant and concerted attention to diversity and inclusion a business imperative. Larger companies tended to score better than smaller companies in the research, probably because bigger firms have more resources to devote to D&I programs. The person in the CIO position understands that it could be that smaller companies haven’t faced the same kind of pressure larger companies have to create more diverse and inclusive workplaces.
Next Steps In Diversity
The rest of the company is starting to learn what CIOs have known for a long time. The biggest takeaway from the study is that diversity and inclusion appear to be good for business. The research showed that the 20 most diverse firms in the ranking have an average operating profit margin (the profit a company generates from its core business before interest and tax, as a percentage of sales) of 12%, compared with 8% for the lowest-ranking companies. Their shares, meanwhile, had an average annual total return of 10% in the past five years. The bottom line is that companies that are able to attract and retain talent are going to be more successful financially over the long term.
A diverse team supported by an inclusive environment that values each individual will outperform a homogenous team every time. Diversity and inclusion are essential to everything CIO’s do, not just their company’s financial performance. What CIOs understand is that a company’s products need to be diverse and inclusive to ensure the company produces unbiased data. Not all of the top-ranked companies have products aimed specifically at diverse customers, but most say that cultivating workers from different backgrounds and having diversity at the highest levels helps with product development. A diverse workforce promotes fresh, innovative thinking that translates into a competitive advantage, which in turn translates into winning products for customers.
As companies seek to attract and retain younger workers in a competitive hiring landscape, more of them are seeking advice on diversity programs, consulting firms say. Clients are increasingly looking for best practices and strategic advice on how to improve their diversity and inclusion efforts. This year, a Deloitte survey estimated that 63% of millennials would consider quitting if their employer didn’t prioritize diversity and inclusion. Leaders are coming for tangible advice on what they need to do to dip into the advantages a diverse and inclusive work environment brings.
What All Of This Means For You
Perhaps more than anyone else in the company, CIOs have understood the true power of diversity for a long time. There’s a good chance that we’ve know about this simply because our IT departments have been diverse due to the different types of people who go into IT. Slowly the rest of the company is starting to understand that if they can become more diverse, then they can become more successful.
It turns out that diversity helps a company to create long-term shareholder value. Companies have been trying to recruit a more diverse workforce. Being diverse allows a company to better match its customers. The larger companies appear to do a better job of being diverse than the smaller companies do. More diverse companies make more money. Having a diverse workforce helps in product development. Younger workers are starting to seek out companies that are more diverse.
Becoming more diverse is just good for business. CIOs have known this for a long time and now it appears as though the rest of the company is starting to catch up with them. However, CIOs need to keep in mind that they can always become more diverse themselves. Diversity has to be something that the IT team is always considering. The more diverse an IT team can become, the better the team will work together and the better products they will produce.
Question For You: What do you think is the best way to measure diversity in the IT department?
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What We’ll Be Talking About Next Time
So would you say that you are a good CIO or a bad CIO? If, somewhat oddly, you answered that you are a bad CIO, I may have some good news for you. As we are all very much aware, the past year has been completely upside down. However, despite creating a great deal of uncertainty about what everyone should be doing and making the job of being a CIO that much harder, it may have also created some opportunities for us. What this means is that if you went into the pandemic looking like a bad CIO, you just might be able to come out of it looking like a good CIO.