• Skip to main content
  • Skip to primary sidebar

JP Cornerstone

Just another Cornerstone Accelerator site

  • JP Cornerstone
  • About
    • About JP Cornerstone
    • Code of Ethics
    • Professional Practice Guidelines
    • External Privacy Notice
  • Offices
    • Stockholm
    • Helsinki
    • Oslo
    • Copenhagen
  • Services
    • Executive Search
    • Board Search
    • Leadership Consulting
    • Interim Management
    • JPC Selection
  • News
  • Contact

The Benefits of Diversity in Executive Recruiting

July 8, 2019 by Cornerstone International Group Leave a Comment

woman CEO brings diversity to company executive

The growing number of companies that specify diversity in executive recruiting are not doing so because it’s the “right thing to do”.  It may indeed be a social benefit, but a company’s mission must be performance based or it goes out of business.

And, since creating a culture of inclusion and a welcoming environment for diversity usually means altering long-standing, strategic plans, the evidence and result must prove greater value than the systems in place.

Put another way, businesses are unlikely to change until there is a foundational reason to do so.

Modern diversity research, (particularly when diversity is intentionally surrounded with an inclusive culture) shows that women in leadership positions positively impact bottom-line revenue, profitability and client perceptions while increasing a brand’s total value.

Businesses with inclusive, diverse cultures achieve three important competitive advantages more easily:

  • Better decision making – diverse backgrounds, educations and experiences broaden perspectives and improve the group’s critical thinking
  • Innovation – diverse thinking processes facts more carefully while developing and considering a broader array of opportunities
  • Broader appeal – diversity more quickly reaches key customer markets, including minority and underserved buyers, to increase sales

Beginning in 2010, the world’s top management consulting and data analytics research organizations explored the “Business Case” for diversity across many industries and markets.  Their results contain many similarities and draw essentially the same conclusions.

The Gallup organization, working primarily in retail and hospitality service industries, linked diverse work environments to increased employee engagement.  They identified “employee engagement” as a critical factor for driving business metrics upward through improving productivity, quality, employee commitment, retention and profitability.  Gallup proved diversity grew sales revenue and net profit.

Scientific American’s research concluded that organizations with inclusive cultures enjoyed:

  • Greater innovation
  • Greater creativity
  • Improved bottom line profits with higher job satisfaction, lowered employee turn-over rates, easier recruiting, and a higher reputation for “good places to work.”

The “Women in the Workplace – 2018” report by McKinsey & Company compares annual results since 2015 and reports higher returns on equity, higher operating profit and higher stock prices year-over-year after organizations adopted and actively supported inclusive/diverse cultures.

Outside specific business and organizational culture research, demographic and economic shifts across the US population are propelling major changes in traditional business practices.

  • Women represent slightly over one-half of the workforce population (50.8%). They are a growing percentage of all business’ customers, clients and partners.
  • Women influence 85+% of all retail purchasing decisions
  • Women impact the B2B market by representing 43% of Purchasing Managers
  • Women create Women Owned Businesses

Companies with most women execs earned 34% higher returns

Mind Your Culture found that companies employing the highest percentage of women in executive positions earned a 34% higher return to shareholders than did companies who had few to no women in the same roles.  Companies with the most women in Director-level roles performed better than those with the fewest women and achieved 16% higher return on sales plus at least a 26% higher return on invested capital.

The data is sufficiently positive to encourage recruiters to take action.   Three years ago, Cornerstone’s Alejandra Aranda persuaded all eight of her competitors in Chile to sign a Code of Good Practice on Gender Diversity for the World Economic Forum.

Western markets tend to be where the diversity action is taking place.  According to the MCSI World Index, the majority of companies with at least 3 female directors are in developed markets.  In the US market, these companies achieved median returns on equity that were 11% higher and earnings per share of 45% more than companies with no women.

Elsewhere, a steep path gets steeper.   Globally, over one-fifth of the 2,694 MCSI Index companies still had all male boards in 2018.  MCSI (Morgan Stanley Capital International) projects it will be 2029 before a 30% female representation is attained among corporate directors universally.

These and similar reports also warn of increasingly slow rates of progress in business culture transitions – moving from aggressive, competitive and power-driven organizations to the more “constructive behaviors” type where high potential employees say they are more likely to choose to work and want to stay.

Embedded in many diverse business culture studies is a challenging, pre-existing condition – the elephant in the room.  This is the lack of qualified and accomplished women currently visible in top leadership posts, critical to building successful, inclusive cultures and greater businesses.

Successful, diverse business cultures must be inclusive at the highest levels of strategy and decision-making. 

A newly released global CXO Survey report by the Cornerstone International Group indicates that a developed sense of Corporate Social Responsibility (CSR) is of growing importance in the transformation of a business culture.  The new generation of talent is only willing to work where their social expectations are being met

This no doubt helps to account for a situation where gender diversity on Boards and in the “C-Suite” achieves the highest reported levels of business financial success, yet it is also among the slowest improving rates appearing in published results measurement.

How do you decide if such change right for your business? To know if, when or how a business should become more culturally inclusive, the top leadership team must carefully review present performance inside their unique organization and consider their resources, both financial and human.  They must evaluate the challenges and potential rewards, sometimes against other, possible easier and less dramatic paths of change.

Finally, when it comes to recruiting candidates who will contribute diversity and welcome inclusiveness, you must first have built the appropriate environment.  Failing this, you run the risk of winning the enthusiasm of brilliant, talented candidates only to see them cross the street when your culture falls short.

Creating the results we are referencing here demands that everyone on the executive team understands, believes and become passionate about cultural inclusion.   They must embrace synergy between leadership, customers and employees and take responsibility to become accountable for implementations at every level.

Julio Portalatin, a Board Member with DXC Technology, is on record as saying:

“Make it a priority because it helps the business, not because it’s morally the right thing to do. Have a clear sense of the business case for diverse ideas, thoughts, and opinions brought about by different representation. Hire recruiters who have a track record of attracting very qualified and competent directors, who are also diverse in many ways.” 

Members of Cornerstone International Group include recognized leaders in the development of the diverse and inclusive workplace.  If you want to know more about the rewards and pitfalls of pursuing diversity in executive recruiting, get in touch.  That’s what we’re here for.

Filed Under: Cornerstone Blog

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Recent Posts

  • Leadership Academy: In Your Corner- Emotional Intelligence: An Important Leadership Skill for 2023 and Beyond
  • The Cornerstone Eagle – December 2022 – Pause, Reflect, Learn and Take Action.
  • Making Certain Your Organization is Resilient  
  • Leadership Academy: In Your Corner- GRIT
  • Leadership Academy: In Your Corner- Uncertainty: The Times They Are A-Changin’

Recent Comments

    Archives

    • January 2023
    • December 2022
    • November 2022
    • August 2022
    • July 2022
    • June 2022
    • March 2022
    • February 2022
    • January 2022
    • December 2021
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • February 2018
    • February 2017
    • January 2017
    • July 2016
    • April 2016
    • March 2016
    • February 2016
    • October 2015
    • April 2015
    • March 2015
    • October 2014
    • June 2014
    • April 2014
    • March 2014
    • February 2014
    • December 2013
    • August 2013
    • May 2013
    • April 2013
    • October 2012
    • September 2012
    • August 2012
    • May 2012
    • March 2012
    • January 2012
    • December 2011
    • November 2011
    • October 2011
    • September 2011
    • July 2011
    • May 2011
    • March 2011
    • January 2011
    • December 2010
    • August 2010
    • June 2010
    • May 2010
    • April 2010
    • March 2010
    • February 2010
    • January 2010
    • December 2009
    • November 2009
    • October 2009
    • September 2009
    • August 2009
    • July 2009
    • June 2009
    • May 2009
    • April 2009
    • March 2009
    • February 2009
    • January 2009
    • December 2008
    • November 2008
    • October 2008
    • September 2008
    • August 2008
    • July 2008
    • June 2008
    • April 2008
    • March 2008
    • February 2008
    • January 2008
    • December 2007
    • September 2007
    • August 2007
    • June 2007
    • April 2007
    • December 2006
    • November 2006
    • September 2006
    • August 2006
    • July 2006
    • June 2006
    • March 2006
    • February 2006
    • January 2006
    • November 2005
    • October 2005
    • September 2005
    • August 2005
    • July 2005
    • June 2005
    • May 2005
    • April 2005
    • March 2005
    • February 2005
    • January 2005
    • December 2004
    • November 2004
    • October 2004
    • September 2004
    • August 2004
    • July 2004
    • June 2004
    • May 2004
    • April 2004
    • March 2004
    • February 2004
    • January 2004
    • December 2003
    • November 2003
    • October 2003
    • September 2003
    • August 2003
    • July 2003
    • June 2003
    • May 2003
    • April 2003
    • March 2003
    • February 2003
    • January 2003
    • December 2002
    • November 2002

    Categories

    • Cornerstone Blog
    • Uncategorized

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    Copyright © 2023 · JP Cornerstone · Sitemap

    Website Development by LimeCuda