Diversity in leadership matters. It signals who belongs and shapes the aspirations of employees, as well as communities more broadly.
In recent years, the convergence of regulatory requirements, investor expectations and consumer demands has fuelled increased attention on representation on boards and in leadership roles in Canada. For example, a responsible investment survey by the Royal Bank of Canada found more than three-quarters of investors in Asia, Canada, Europe and the U.S. said gender diversity on corporate boards was important to their organization.
Read: Corporate DEI roles fraught with retention issues: experts
There’s also evidence to suggest organizations with more diversity in leadership or on their boards perform better than others. A 2019 survey of 1,000 large employers by McKinsey & Co. found companies in the top quartile for gender diversity on executive teams were 25 per cent more likely to have above-average profitability than companies in the fourth quartile — up from 21 per cent in 2017. When looking at ethnic and cultural diversity, the survey found top-quartile companies outperformed those in the fourth quartile by 36 per cent in profitability, up slightly from 33 per cent in 2017.
According to the Harvard Business Review, diverse companies are 70 per cent more likely to capture new markets than organizations that don’t actively recruit and support talent from under-represented groups. And a study by the Boston Consulting Group found companies that have more diverse management teams have 19 per cent higher revenues due to innovation.
Yet progress is glacial. For corporate boards in the private sector, only 25 per cent of membership are women and only 10 per cent are racialized people. Indigenous peoples and persons with disabilities are largely absent and LGBTQ2S+ employees in senior roles often don’t disclose their identity.
Read: Head to head: Are employers making progress in improving DEI efforts?
How do companies move toward a more inclusive workforce? One of the newest initiatives aimed at improving representation in leadership is the Government of Canada’s 50–30 Challenge. The program asks organizations to aspire to 50 per cent gender parity and 30 per cent representation of equity-deserving groups on boards or in senior management positions.
The program also provides resources — including a digital toolkit, industry connections and events — for organizations seeking to improve their diversity, equity and inclusion strategies. Knowledge and resources to improve DEI in the workplace have come a long way. Now it’s time for organizations to catch up.
Read: A third of U.S. workers believe their employer lacks sufficient commitment to DEI: survey