Do diversity and inclusion make good commercial sense?
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What is the business case for ensuring that organisations are diverse and inclusive?
Accutrainee is not a law firm - It’s a Solicitors Regulation Authority-authorised training establishment enabling graduates to pursue an alternative route to legal qualification. Accutrainee hires graduates from a range of diverse gender, ethnic, cultural and educational backgrounds and places them on secondments six to twenty four months with a range of clients in the private sectors.
Institutions from all sectors, whether they are corporates, law firms or financial institutions, to name a few, have developed diversity and inclusion policies in response to market demands. This benefits their own best practice and it makes good commercial sense given their clients’ expectations.
While lawyers and clients intuitively know that diversity and inclusion (D&I) matters, there is research supporting many key commercial benefits. This is not an exhaustive research piece but highlights some of the results from research supported by anecdotal comments from our clients.
There are a number of private and government research papers on this topic. One of the most comprehensive reports was provided by McKinsey & Co in 2017 – ‘Delivering through diversity’ expands on its 2015 research ‘Why diversity matters’ and is “based on a data set of over 1,000 companies covering 12 countries using two measures of financial performance: profitability and value creation.” There are some encouraging statistics which support the value D&I can add to an organisation. For example, “firms in the top quartile for gender diversity are 21% more likely to enjoy profitability than companies in the bottom quartile.”
The 2015 and 2017 McKinsey Reports provide detailed statistics of the correlation between diversity and inclusion and financial performance.
However, in a snapshot, this is what the research, media and companies are reporting:
Embracing D&I attracts talent
A diverse and inclusive workplace gives a company a competitive advantage. Companies recognising D&I as a priority are finding that in their hiring processes, such a priority is a favourable attraction for talented graduates, particularly in terms of their flexible working policies, parental leave policies and commitment to providing an inclusive work environment.
D&I improves client understanding
If a company is pitching a deal and there is a diverse cultural viewpoint on the transactional team similar to the cultural background of the client’s deal team, then such a diverse view provides a valued part of the decision making and execution process. Many law firms have also recognised this, for example, Clifford Chance: “As a leading law firm….it is essential to our commercial strategy that we foster an inclusive culture so that we provide our clients with the best advice.”
D&I promotes creativity and innovation
Companies have found that if a client is looking for a creative solution, having members of the team with varying gender, ethnic and cultural backgrounds can lead to more creative solutions. Research supports that this is particularly relevant in the technology sector. From Accutrainee’s own experiences, we have seen time and time again the value our clients place on the ability to develop teams from diverse backgrounds and the advantages that are gained from having teams who are more likely to approach problems in entirely different ways, leading to more innovative solutions. This diversity can be achieved through recruiting from different pools of candidates who have been shortlisted using different processes and interviewers.
Embracing D&I enhances the firm’s image, brand and reputation
Companies who are leaders in the D&I space have benefitted from an enhanced reputation extending “beyond their employees to their customers, supply chain, local communities and a wider society,” according to McKinsey & Co. D&I, as part of a company’s wider corporate and social responsibility agenda, is often one of the many key requirements in completing a tender for major outsourcing contracts. Clients want to see this as it makes commercial sense. If a company cannot demonstrate its commitment to D&I, this can, in certain circumstances, be a deal breaker.
Companies and their clients and sectors are recognising and embracing the commercial benefits of D&I. As graduates, and as the lawyers and employers of the future – the research into the correlation between D&I and financial and commercial success continues to improve and will hopefully be observed.