Idea in Brief

The Context

Business leaders often make a business case for diversity, claiming that hiring more women or people of color results in better financial performance.

The Problem

There’s no empirical evidence that simply diversifying the workforce, absent fundamental changes to the organizational culture, makes a company more profitable.

A Better Approach

Companies can benefit from diversity if leaders create a psychologically safe workplace, combat systems of discrimination and subordination, embrace the styles of employees from different identity groups, and make cultural differences a resource for learning and improving organizational effectiveness.

“The business case has been made to demonstrate the value a diverse board brings to the company and its constituents.”

A version of this article appeared in the November–December 2020 issue of Harvard Business Review.