The dangers of slow progress in legal diversity?
As we mentioned before, it’s not just that legal diversity is beneficial – a lack of diversity can actually be detrimental to society as a whole.
Social and individual human inequalities
Lack of diversity can cause significant bias in a firm’s operations as a whole. As the University of Pennsylvania puts it, “Diversity and inequality result from physical environments and human physiological features interacting with economic, political, cultural and social institutions and practices in complex ways, involving historical as well as contemporary forces.”
If your firm is composed largely of a single socioeconomic group, chances are high that there are inequalities that may not even be recognized due to a lack of diversity. Certain risks or inequities require a varied set of eyes and experiences to be properly discerned and addressed.
Business value creation remains untapped
This stands true for not just legal diversity, but any organization – there are numerous benefits to having diversity and inclusion initiatives in any organization. One of the major advantages is creativity and innovation – diversity breeds creativity. If your organization consists of people from largely similar backgrounds, odds are you’ll find similar approaches to any challenges that may arise.
According to the 2018 study Delivering through Diversity by McKinsey:
“The relationship between diversity and business performance persists. The statistically significant correlation between a more diverse leadership team and financial outperformance demonstrated three years ago continues to hold true on an updated, enlarged, and global data set.”
This reflects on different aspects of diversity too – a few more nuggets from the same study?
- Companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation.
- Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability.
Clearly, having diversity higher up the ladder has a huge impact on profitability and business value creation – and this is not a new realization.
In some regions, regulators are testing the waters when it comes to pushing for diversity in regulated sectors like financial services. U.K. regulators, for instance, are looking at the possibilities of eventually making diversity reporting mandatory. Someday, regularly reporting you have a diverse organization may be a matter of law, with attendant penalties for noncompliance.