Making the Business Case for Diversity
Some researchers point out that while improving diversity is the right thing to do from a moral or ethical perspective, it also is essential from a business perspective. Diversity in the public relations workplace can help stakeholders such as employees, shareholders, and customers.
But the bottom line is this: The more diverse a company is, the more money it is likely to earn.
A 2018 McKinsey&Company study involving over 1,000 companies in 12 countries found the following regarding profitability and economic profit margins:
- Companies ranking in the top quarter for gender diversity at the executive level were 21 percent more likely to outperform their peers on profitability, and 27 percent more likely to have excellent economic profit margins.
- Companies with the same ranking for having ethnically and culturally diverse executive teams were 33 percent more likely to lead their industry on profitability. The report further suggested that including other diverse people, such as people with international experience, individuals from different ages, and members of the LGBTQ+ community, could enhance the company’s bottom line.
Regarding LGBTQ+, research shows that companies are embracing diversity among that population. For the first time, 686 of the nation's leading companies and law firms earned a perfect score of 100 for their LGBTQ policies and practices, according to the Human Rights Campaign Foundation’s 2020 Corporate Equality Index (CEI), which measures inclusion in the workplace. Those organizations had an estimated $12 trillion in revenue, with 12.4 million workers in the United States and 11.9 million around the world, according to the CEI.
Multicultural buying power
Another way to make the business case for diversity is to research and understand the economic impact that people of color -- Hispanics, Blacks, Asians, and Native Americans -- make on society through their buying power. In the Multicultural Economy (2018), Jeffrey M. Humphreys of the Selig Center for Economic Growth defines buying power as after-tax personal income for all spending, excluding money borrowed or previously saved. The combined buying power of these racial and ethnic groups was projected to grow faster than the white market.
Humphreys suggested that “as the U.S. consumer market becomes more diverse, advertising, products, and media must be tailored to each market segment” (p. 4).
- Hispanic buying power is projected to be $1.9 trillion by 2023. Mexicans are the largest subgroup and represent over half of the buying power, followed by Puerto Ricans, Central Americans, South Americans, and Cubans.
- Black buying power is estimated to be $1.5 trillion by 2023. Part of that has to do with more Blacks becoming more educated, which could result in higher-paying occupations, according to Humphreys. Because they are much younger, Black consumers increasingly are seen as trendsetters for teens and young adults.
- Asian buying power is forecasted to be $1.3 trillion by 2023, Chinese (except Taiwanese) are the largest subgroup but are second to Asian Indians in buying power, followed by Filipino, Korean, and Vietnamese people. Chinese are the largest subgroup of Asians, who are younger and better educated than the average American.
- Native American buying power is predicted to be $136 billion by 2023.
In summary, Hispanics’ buying power will account for 11.2 percent of the U.S. total, while the combined buying power of Blacks, Asians, and Native Americans is expected to account for 17.5 percent.
Starbucks and Black Lives Matter
Angela Chitkara (2019) noted that millennials and Y and Z generations want to work for diverse, inclusive companies that make meaningful contributions to society. In the age of activism and cancel culture, where reputation is no longer a non-financial asset, a brand’s actions must align with its values, Chitkra explained.
Amid protests in summer 2020 demanding justice after the murders of George Floyd, Breanna Taylor, Ahmaud Arbery, and others, many brands began posting Black Lives Matter statements on social media and donating money to social justice organizations such as the National Association for the Advancement of Colored People (NAACP).
Starbucks is an example of a brand where its actions and values came into question during this period of unrest. The coffee chain tweeted, “Black lives matter. We are committed to being a part of change.” Shortly thereafter, Starbucks faced backlash because it would not allow employees to wear Black Lives Matter attire or accessories, fearing the political message could be misunderstood, the New York Times reported. Starbucks lists “acting with courage, challenging the status quo and finding new ways to grow our company and each other” as one of its four values.
Employees and customers quickly pointed out that Starbucks handed out LGBTQ pins and T-shirts during Pride Month. Then a #BoycottStarbucks hashtag emerged, MarketWatch reported. Starbucks soon backpedaled and partnered with its Black Partner Network and Black Starbucks leaders to make available a quarter of a million Starbucks-branded Black Lives Matter T-shirts.
It also donated $1 million in neighborhood grants to promote racial equity and inclusion. Other initiatives include a To Be Welcoming online curriculum that addresses bias.
“Starbucks stands in solidarity with our Black partners, community and customers, and understand the desire to express themselves. This is just one step in our journey to make our company and our communities more inclusive,” according to a company statement.
This was not the first time Starbucks has faced flak for race-related issues. In 2015, the coffee chain came under fire for asking its baristas to write “Race Together” on cups and engage in conversation with customers about race. The initiative arose after the murders of Michael Brown and Eric Garner and resulting unrest. The effort flopped because Starbucks didn’t spend enough time "discussing how it would look for a white billionaire to front a national dialogue on race," a Black woman who is a Starbucks board member told Fast Company.
Chitkara concluded that “the lack of strategic integration of Diversity and Inclusion efforts poses significant business and reputation risks to an organization, as social issues become a greater focus for investors, partners, customers and employees” (p. 40).
- Are brands such as Starbucks supporting Black Lives Matter because it aligns with its values or because it could help improve their profits? Explain.
- How well did Starbucks’ stated value align with its actions in 2015 and 2020?