Rachel’s Tavern- Shakesville Comment on Whiteness and Racial Awareness
- Arrested for BAHWB (Being at Home While Black)
- John Hope Franklin Has Died
- Bottles, Breasts, and Mothering “Choices”
- NAACP Class Action Lawsuit on Subprime Loans
- We Have a Future Blogger
- I’m Afraid President Obama, Himself, is a Bit of Coward on the Race Issue
- Highly Skilled US Immigrants are Emigrating: What’s the deal?
- Troll Comments Galore
- Mark’s Spinach Face
Jan
19
New Study Suggests Diversity Makes Companies Better
Filed Under Black/African American Issues, Class Classism and Economic Inequality, Race and Racism, Uncategorized by Rachel
Here’s an excerpt from a Washington Post article discussing how a diverse workforce affects a companies success.? It outlines a study by sociologist Cedric Herring. You can read the entire article here.
Herring has just completed his study. He found that companies that are more diverse have more customers, a larger share of their markets and greater profitability. In fact, when Herring puts his numbers on a graph, he finds a linear relationship between diversity and business success, meaning that as diversity increases, those business indicators increase in step.
“Those companies that have very low levels of racial and ethnic minorities have the lowest profits and the lowest market share and the lowest number of customers,” he said. “Those that have medium levels do better, and those that have the highest levels do the best.”
Herring got his results by obtaining data about diversity levels and business performance from about 250 companies. He verified the information with independent statistics from Dun & Bradstreet Corp. and documents filed with the federal government. The 250 companies are representative of all U.S. businesses with more than 10 employees — from the restaurant down the street that employs a dozen people to multinational corporations with thousands of workers. Herring found the same relationship between diversity and business success whether a company was large or small.
While Herring’s study points to the benefits of diversity, it does not directly address the contentious question of how it should be achieved.
As a good scientist, he is cautious about the result and says it does not prove that companies do better because they are diverse. What the study shows is a correlation between diversity and business success. While diversity could be the cause of better business outcomes, it is also possible, for example, that companies that are successful to begin with do a better job of attracting and retaining minorities.
Comments
10 Responses to “New Study Suggests Diversity Makes Companies Better”
Leave a Reply
I wonder how the study works for companies with a majority of minority staff. I work in a company of about 35 and there are 8 white folks working here. Out of the 27 remaining minority staff members only 2 are not black. We’re a non-profit so obviously our profit margins aren’t really a concern but I am just curious.
The direction of causality is important here. Large companies that do well to begin with may “diversify” to ensure that they do not get labeled as racist as a prudent PR investment. Racism at Texaco and Denny’s was pretty costly for those companies. Plus larger companies, correct me if I am wrong, are held to more stringent A.A. guidelines.
He should take the data on diversity that he has collected and see if in the next few years if it predicts performance holding past performance constant.
Reasons could be more diverse employees = more diverse and larger customer base. If racially oppressed then larger share of employees who look like you may indicate less racial oppression and attract more clientele?
Interesting study. Good that people are doing such studies.
woops…
“Herring has just completed his study. He found that companies that are more diverse have more customers, a larger share of their markets and greater profitability.”
i like how the author also mentions the soc. psych study at the end which helps us understand the potential mechanisms better
volscho–lol; i had the same reaction (WTF?) before I got to the end. Rachel, you should change your post title, ’cause the title simply ain’t true.
I wonder if Herring looked at whether non-white businesses of a single ethnicity are more successful at reaching beyond their group than white businesses are.
Just a quick observation based on my experience of two local shops – one is a news agents I occasionally get my lottery from and I don’t think I’ve ever since one non-white face in there – and that’s after 10 years of patronage. Across the road is a grocery run by a Pakistani family. This store attracts a very mixed crowd – white Stokies, Poles, Asians … pick a nationality and chances are they’re represented in the checkout queue.
[...] New Study Suggests Diversity Makes Companies Better – Rachels Tavern Those companies that have very low levels of racial and ethnic minorities have the lowest profits and the lowest market share and the lowest number of customers, he said. Those that have medium levels do better, and those that have the highest le (tags: diversity workplace business) Share and Enjoy:These icons link to social bookmarking sites where readers can share and discover new web pages. [...]
Volscho
Great point!
If a company recieves a lawsuit due to their lac of minorities,
the kind which the Revrend Jessy Jackson is great at bringing,
that company’s profits are in danger. Diversity seems to
be a cause at that point.
Natalie
I would guess that if a company pays minorities less that might
help their profits. Your question brought this thought to mind.
I also wonder would using illeagal aliens also count as diversity.
I hired a guy to trim my palm trees who somhow was able to
charge nearly half of what the other tree services did. I was
happy with his work but I wonder if I just contributed to
crime in America.
Mike,
His name is “Jesse” and individuals who are affected by discrimination bring about more suits. Also, focusing on race in terms of diversity is misleading. Diversity also means white women, who have been the primary beneficiary of Affirmative Action.
The cliched stereotype of blaming Jesse Jackson for a discrimination lawsuit is merit less.
Brad I like Jesse and I support Diversity lawsuits
which have merit. Jessy Jackson has helped open alot
of doors for equal rights and he is a hero to me
even though I spelled his name wrong.
Anytime somone wins a diversity lawsuit which has
good merits it is a cause for celebration!!!
However sometimes such suits cause injustice.
“However sometimes such suits cause injustice.”
Oh, how so?