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Inclusion at the top

Magazine

Greater inclusion at the top strengthens company performance

Published 16 June 2022 in Magazine • 14 min read

Research shows that appointing women and people of color to senior positions leads to greater innovation, higher profits and better governance. 

For more than a decade, we have examined the impact of representation among senior leaders — on the board and in the C-suite — on organizational performance. How does appointing white women as well as men and women of color to senior leadership roles change how organizations do business?  

We define performance expansively to include a range of outcomes that stakeholders care about: innovation, product strength, community relations, equity and diversity records, environmental sustainability and governance. 

Our findings are clear: more inclusive organizations are more innovative, more profitable, more equitable, more sustainable, better governed and enjoy stronger relationships with their communities and suppliers 

By contrast, firms that fail to prioritize inclusion and equity pay a high cost. They suffer from lower job satisfaction and worker engagement, along with higher rates of absenteeism and turnover. Not surprisingly, these firms also face higher risks of discrimination and harassment lawsuits. 

Representation matters in other ways, too. Our work shows that women’s presence on boards of directors increases leadership opportunities for other women. When women serve on the board, other women are more likely to be appointed CEO and enjoy longer tenures compared with female CEOs in companies without representation on the board.  

Our work on the glass cliff – the tendency to appoint women and people of color to leadership positions in organizations in crisis or at risk to fail – yields further evidence that representation matters.  

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