Organizations that don’t embrace diversity will likely pay for it later on.

Smart credit union leaders have long known that they need to reflect the diversity of their membership and communities in management and on the board. It makes intuitive sense that in an increasingly diverse society, management and governing bodies should reflect the population they serve. Numerous studies confirm that this insight is correct, yet it is wise to consider diversity in even larger, more strategic terms, because companies that rank above average for diversity have higher margins, greater returns from innovation, improved customer/member-centric service and market awareness than less diverse peers.

A recent Wall Street Journal study reinforced what many other studies have shown. The Journal’s researchers, in their first diversity rankings of S&P 500 companies, concluded that the 20 most diverse companies had better operating results and higher compound average annualized return on investment than the lowest scoring organizations. Moreover, their shares outperformed those of the least-diverse firms. The Journal observed that a well-rounded workforce helps companies create better products and be more innovative, leading to growth in sales and profit. Similarly, a Harvard Business Review study reported how EBIT margins were about 9% higher in companies with greater management diversity than for those that were below-average. HBR also reported that when at least one team member shares a client’s ethnicity, the entire team is better able to understand the client’s needs than in those teams where no member shares that trait. And other studies by economists, demographers and research firms showed socially diverse groups are more innovative than homogeneous groups.

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