D&I and Your Bottom Line

September 19, 2019
6 min
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The Fortune 500 companies that publicly value Diversity and Inclusion (D&I) have higher average revenue and profit, a finding that is consistent with theoretical and empirical research.

A Quick Analysis of the Fortune 500

Does valuing diversity and inclusion matter to company performance?  In order to answer this question, we need to determine if valuing diversity and/or inclusion is systematically (and statistically significantly) related to company performance. Among the fortune 500 companies, 396 list their company’s core values on their public facing webpages. Of these companies, 41 list either diversity or inclusion among their values and another 31 list them both as priorities. This means nearly 20% of the Fortune 500 companies (with known values) make D&I a priority.  

With two readily available indicators of company success, I put together a simple regression analysis to isolate the effect of publicly asserting D&I as values may have on company performance.  The regression controls for company size (measured by number of employees) because we know larger companies may benefit from economies of scale in production resulting in higher profits.  Figure 1 summarizes the results.

Figure 1.  D&I and Fortune 500 Success

D&I and Your Bottom Line

In Figure 1, the columns represent the dimension of success measured and the rows indicate the D&I value(s) of the company.  The table shows that publicly valuing diversity is on average associated with $2.3 billion more profit and on average $11.3 billion higher revenue than those companies leaving diversity off their list of values.  Figure 1 shows similar results for publicly valuing inclusion, and valuing both D&I is associated with the largest positive differences in profit and revenue.

Admittedly, these results are preliminary and simple. Further investigation should control for the company’s industry, c-suite and board composition, product type, age of company, etc.  Additionally, a more comprehensive analysis would take into consideration changes in profit and revenue over time as the company’s values vary.  Even though this analysis of today’s Fortune 500 companies is simple, it is in line with what theory tells us and with what other empirical researchers find.

Pathways of Corporate Benefit

There are two main ways in which companies could benefit from prioritizing D&I: it could improve their public image or enhance employee engagement.  

Figure 2.  Benefits of Prioritizing D&I

When prioritizing D&I, a company’s image improves and they are better able to attract talent from the pool of potential employees (Jonsen, Point & Kelan, 2016; Jonsen et.al., 2019), which is becoming increasingly important as the Baby Boomers continue to retire. This enhanced public image also leads to higher levels of customer satisfaction and higher referral rates (DeLeon, 2017), both expanding market share.  

Efficiency wage theory also tells us when employees feel good about the company for which they work, the company will get a higher return from their labor. It also predicts companies may even be able to pay employees less. Both effects result in higher company profit. Employee engagement will rise with more inclusion as workers will feel psychologically safe within the companies walls (see a more detailed description of the drivers of engagement here). Finally, the enhanced sense of fairness that accompanies inclusion will lead to more employee satisfaction, higher levels of wellbeing and increased connectedness to the organization resulting in lower turnover rates (Mor Barak & Levin, 2002; Findler, Wind & Mor Barak, 2007; Hwang & Hopkins, 2015). Less churn will decrease operating costs and have a positive effect on company success.

Listing D&I as company values without pursuing actual change in the direction of enhancing these values may allow companies to enhance their public image for a time. But without engaging in meaningful change on these fronts the benefits from enhances public image will be short-lived and there will be no benefits from employee engagement.  

Evidence D&I Enhance Company Success

Several studies have empirically linked diversity and inclusion to company success. Data indicates that inclusive organizations are twice as likely to meet financial targets, three times as likely to be considered high-performing, six times more likely to be innovative and eight times as likely to achieve better business outcomes (Bourke & Dillon, 2018). One research team demonstrated companies in the top quartile for racial/ethnic and gender diversity are 35% and 15% more likely to have financial returns above their industry medians, respectively (Hunt, Layton and Prince, 2015).  

A 2009 empirical study testing the value-in-diversity thesis, compared to the perspective that diversity is inconsequential or perhaps even conflict inspiring, found both racial and gender diversity are significantly associated with increased sales revenue, more customers and greater relative profits (Herring, 2009). Racial diversity is also associated with greater market share. This finding is echoed in research interviewing CEOs from around the world whose sentiment was diversity creates an environment conducive to deep inquiry and large breakthroughs (Groysberg & Connolly, 2013).


Evidence strongly suggests that making D&I a priority will pay off. It will enhance public image so a company can attract better talent, increase market share and raise customer satisfaction. Furthermore, it will boost employee engagement, decreasing employee turnover and increasing profits and revenue.  


Bourke, J. and Dillon, B. (2018). The Diversity and Inclusion Revolution: Eight Powerful Truths. Deloitte Review, Issue 22.

DeLeon, T. (2017). How to Create a Diversity and Inclusion Program from Ground Zero. AMA Quarterly3(4), 32–33. 

Findler, L., Wind, L. H., & Mor Barak, M. E. (2007). The Challenge of Workforce Management in a Global Society: Modeling the Relationship Between Diversity, Inclusion, Organizational Culture, and Employee Well-Being, Job Satisfaction and Organizational Commitment. Administration in Social Work31(3), 63–94

Groysberg, B. & Connolly, K. (2013). Great Leaders Who Make the Mix Work. Harvard Business Review.

Herring, C. (2009). Does Diversity Pay?: Race, Gender, and the Business Case for Diversity. American Sociological Review74(2), 208–224. 

Hunt, V., D. Layton and S.Prince (2015).  Why Diversity Matters. McKinsey&Co.

Hwang, J., & Hopkins, K. M. (2015). A structural equation model of the effects of diversity characteristics and inclusion on organizational outcomes in the child welfare workforce. Children & Youth Services Review50, 44–52

Jonsen, K., Point, S., & Kelan, E. K. (2016). Diversity Branding: A Five-Country Comparison Of Corporate Websites. Academy of Management Annual Meeting Proceedings2016(1), 1. 

Jonsen, K., Point, S., Kelan, E. K., & Grieble, A. (2019). Diversity and inclusion branding: A five-country comparison of corporate websites. The International Journal of Human Resource Management. 

Mor Barak, M., & Levin, A. (2002). Outside of the corporate mainstream and excluded from the work community: A study of diversity, job satisfaction and well-being. Community, Work & Family5(2), 133–157. 

John Paul

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