Ep.9 – Racial Diversity in Sales
Episode 9 - Racial diversity in sales
In this episode, I wanted to talk about an important issue – racial diversity in sales teams. The more diverse your sales teams are, the more likely they are able to align with your customers – as customers themselves have increasingly diverse workforces, sales teams also need to reflect that same diversity to ensure we’re better understanding our customers’ challenges, their business aspirations, their needs and objectives, and how they operate. Sales is notoriously a male dominated environment – with not a huge amount of racial and ethnic diversity. I tried finding some specific statistics around diversity in sales specifically, but the data points just aren’t there for everything we wanted to look at. There is data for gender diversity in sales – which we’ll cover in another episode, but in this episode I wanted to focus on what we found regarding racial diversity stats in business.
And the statistics we did find paint an interesting picture – and certainly show that whichever way you look at it, diversity is not just the ‘right’ thing to do, it’s also good for business.
So here are a few interesting stats we found around racial diversity statistics in business.
✔️ In research from McKinsey, companies in the top quartile for racial and ethnic diversity were 35% more likely to achieve financial returns above their national industry average (McKinsey)
That’s a big uplift – and shows that diversity just makes sense for business – it brings in new influences, new perspectives and new thoughts on how to drive the business forward. It stops us working in an echo chamber where the same people, with the same background and same outlook, share the same views.
✔️ The UK does slightly better when it comes to racial diversity at a senior leadership level compared to the US. 78% of UK companies have senior-leadership teams that don’t reflect the demographic makeup of the country’s labour force and population, compared to 97% for the United States. (McKinsey) So, whilst the UK is ahead of the US in that regard, the racial make up of the majority of companies’ senior leadership teams do not accurately reflect the demographic makeup of the country’s population. In short, many senior leadership roles in companies are not being filled by leaders from a range of different ethnicities.
Drilling down on the UK specifically, more than half of the largest UK companies do not have a director from a Black, Asian or Minority Ethnic background on their board. Just 9.7 per cent of directors in the FTSE 100 were people of colour, compared to an even lower 5 per cent of FTSE 250 firms.
Clearly more needs to be done from the top down to ensure that there is more racial diversity on company boards, resulting in more diversity across senior leadership roles, and throughout different management layers.
✔️ In the US, there is a linear relationship between racial diversity, & better financial performance: for every 10% increase in racial & ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8%. (McKinsey) So, that shows a clear relationship between increasing diversity and improved financial performance.
✔️ Companies reporting the highest levels of racial diversity brought in nearly 15 times more sales revenue on average than those with the lowest levels of racial diversity. (Science Daily)
That’s a startling statistic – 15 times more sales revenue than companies with the lowest levels of racial diversity. We cannot ignore numbers like that – because the correlation is so strong that clearly racial diversity within companies – at all levels, delivers financial benefits – in addition to all the important wider benefits that having a diverse workload offers.
So – I’m not here to say what companies should be doing to improve their racial diversity – there are people much more qualified than I am who can advise on that. I just wanted to take this opportunity to highlight the disparity between the majority of companies’ racial diversity – and the clear business benefits that enterprises can achieve by broadening their hiring criteria.
That’s all for this week – I look forward to speaking to you again soon!
Links to the statistics mentioned in this week’s podcast are below:
FT: https://www.ftadviser.com/your-industry/2020/02/05/uk-companies-have-poor-record-on-ethnic-diversity/ Science Daily: https://www.sciencedaily.com/releases/2009/03/090331091252.htm McKinsey: https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters
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