7 Benefits That a Diverse Leadership Team Can Bring to Your Company

Jason Hanold
4 min readJul 3, 2023

More companies are becoming aware of the importance of having a diverse workforce, and are making great strides in connecting with, hiring, and retaining employees from a variety of backgrounds. However, it’s critical for companies to understand that diversity can’t stop at frontline workers. In order for organizations to be truly diverse and inclusive (and to reap the all-important associated benefits), leadership teams must be just as diverse as the people they oversee. When a company’s workforce diversity is reflected in the C-suite, the benefits are maximized for all stakeholders.

Some of the key advantages that organizations with diverse corporate leadership teams can enjoy include:

Better performance and outcomes

There’s no longer any doubt about the fact that more diverse companies perform better than their less diverse counterparts. Study after study has linked greater diversity, and specifically greater leadership diversity, to better financial and business performance. One of the most influential studies to illustrate this point is “Delivering Through Diversity”, a 2018 report from McKinsey & Company. Building on McKinsey’s own earlier research, the report draws on data from more than 1,000 companies in 12 countries. Perhaps the most important finding is that companies in the top quartile for executive team diversity (in terms of both gender and ethnic/cultural background) are significantly more likely to experience above-average profitability.

More opportunities for innovation

Companies are always looking for ways to innovate, whether it’s with the goal of improving their processes, creating and delivering better products and services to their customers, or building a reputation as industry leaders. The good news here is that companies with more diverse leadership teams have more opportunities to innovate. That’s because diverse teams have a broader range of experiences and a greater variety of perspectives: this creates a leadership environment in which the assumptions and snap judgements that so often cause companies to stagnate are constantly questioned, resulting in an organization that is far more open to new and innovative ideas.

Greater ability to attract and retain talent

In order for employees to feel like they have room to grow and flourish at their company, they need to see relatable people in leadership roles. When the diversity of a company’s workforce is reflected in the C-suite, it strongly encourages professional growth and development among employees, and serves as a major incentive to attract new, diverse talent to the organization. Furthermore, when employees from different backgrounds form mentor-mentee connections with managers and leaders from the same background, these can develop into deeper, more meaningful relationships that play an important role in increasing employee retention.

A sense of trust

It can be difficult and isolating to spend your working life among people who don’t look like you or who aren’t able to relate to your experiences, particularly when those people are your managers or leaders. One often overlooked, but important benefit of diversity in leadership is that it can serve as a catalyst to enable and empower employees. The sense of trust and psychological safety that develops when employees from different communities are supported by leaders who look just like them helps create a truly engaged working environment, which is something every company should strive for.

Stronger customer relationships

Relationships among employees, or between employees and leadership, aren’t the only ones that companies have to think about. The relationship that a company has with its customers is just as critical, and, happily, just as ready to benefit from a diverse leadership team. In the same way that employees want their managers to be able to relate to their backgrounds and experiences, customers also want the companies they do business with to be able to understand their needs and challenges. Therefore, today’s diverse customers are more likely to connect with diverse companies that can genuinely speak to, rather than gloss over, their differences.

Continuous learning and transformation

When a leadership team is relatively homogenous, it’s easy for the team, and consequently for the whole company, to become stuck in a rut. There is little openness to new ideas and little motivation to change and grow, since the status quo is often so comfortable. Diverse leadership teams, however, are in a process of continuous learning because existing ideas and ways of doing things are always being questioned and challenged. As a result, diverse leadership teams are constantly finding ways to develop and transform their practices, and are therefore more fresh, relevant, and in touch with the needs of their employees and customers.

A greater sense of fun

This might seem like a frivolous benefit, but it’s one that nevertheless should not be overlooked: diverse leadership teams are just more fun. When people are too alike, it can quickly become boring, which is not an adjective that any company wants to take on willingly. But when diversity is part of the leadership mix, it creates more engagement, more energy and, yes, more fun, and teams that are energized and having more fun tend — not surprisingly — to be more creative and effective.

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Jason Hanold

Executive Recruiter, clients NFL, Google, Patagonia, Under Armour, Gucci, Nike, Northwestern, eBay, UFC, Vail, REI, Electronic Arts, Live Nation, #HR #Recruiter