Executive Briefings

Is There a Payoff from Having Diversity in Top Management?

There are many reasons companies with more diverse executive teams should outperform their peers: fielding a team of top executives with varied cultural backgrounds and life experiences can broaden a company's strategic perspective, for example.

And relentless competition for the best people should reward organizations that cast their nets beyond traditional talent pools for leadership.

To understand whether reality is consistent with theory, McKinsey looked at the executive board composition, returns on equity, and margins on earnings before interest and taxes of 180 publicly traded companies in France, Germany, the United Kingdom, and the United States over the period from 2008 to 2010. To score a company's diversity, we focused on two groups that can be measured objectively from company data: women and foreign nationals on senior teams (the latter being a proxy for cultural diversity).

Between 2008 and 2010, companies with more diverse top teams were also top financial performers. That's probably no coincidence.

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Keywords: Business Strategy Alignment, HR & Labor Management, Supply Chain Analysis & Consulting, Global Supply Chain Management, Cultural Diversity, Boardroom Diversity

And relentless competition for the best people should reward organizations that cast their nets beyond traditional talent pools for leadership.

To understand whether reality is consistent with theory, McKinsey looked at the executive board composition, returns on equity, and margins on earnings before interest and taxes of 180 publicly traded companies in France, Germany, the United Kingdom, and the United States over the period from 2008 to 2010. To score a company's diversity, we focused on two groups that can be measured objectively from company data: women and foreign nationals on senior teams (the latter being a proxy for cultural diversity).

Between 2008 and 2010, companies with more diverse top teams were also top financial performers. That's probably no coincidence.

Read Full Article


Keywords: Business Strategy Alignment, HR & Labor Management, Supply Chain Analysis & Consulting, Global Supply Chain Management, Cultural Diversity, Boardroom Diversity