EY's US chair breaks down the two-part leadership strategy to make a company more diverse while also boosting profits
- Kelly Grier, EY's US chair, sat down with Business Insider at Davos and shared the leadership approach she thinks all companies should embrace.
- The most profitable businesses of the future, she said, will be those that follow a two-pronged approach: hiring people from diverse backgrounds, and making those employees feel included within the company culture.
- Research supports her claim. Multiple studies show diverse teams are more profitable.
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DAVOS, Switzerland - The key to business success in the future isn't rocket science, but it does require a smart approach, specifically when it comes to hiring and retaining talent.
That's according to Kelly Grier, US chair of professional-services firm EY. Grier leads more than 72,000 people and oversees annual revenue of $15.6 billion.
At the World Economic Forum held this week in Davos, Switzerland, Grier sat down with Business Insider to talk about what's top of mind when thinking about the future of business. For her, a crucial issue is the changing nature of the world's workforce.
The executive explained that leaders today are faced with a key decision: prioritize diversity, inclusion, and a sense of belonging among your employees, or get left behind.
An outspoken advocate for diversity in the workplace, Grier co-leads EY's inclusion councils, which works to improve recruitment, retention and sponsorship for all employees.
"It's something I'm passionate about because I think it's critical to our success," Grier said.
There are two parts to her leadership approach, which she says must be used in tandem in order for maximum potential to be unlocked. Grier notes that these complementary factors have significantly helped EY's bottom line:
1. Successful companies recruit diverse talent.
"There's a tremendous amount of research that demonstrates businesses that really do celebrate diversity and inclusion perform better economically and financially in every respect," she said.
Indeed, the numbers are there. A 2018 McKinsey & Company study of 1,000 companies found that organizations in the top quartile for gender diversity on their leadership teams were 21% more likely to experience high profitability. Meanwhile, ethnic and cultural diversity resulted in a 33% increase in profitability performance.
What's more, gender-diverse teams are more likely to introduce new, innovative products into the market than homogeneous teams, a 2011 study of more than 4,200 companies in Spain found. The same was true for culturally diverse teams, according to a 2015 study published in Economic Geography.
Citing internal data, Grier said that EY's diverse teams with a strong sense of engagement and inclusion outperform teams who are less diverse and engaged.
"Revenue growth, the margin that they create - it's material," she said.
Among other things, diversity means differences in gender, racial and ethnic background, how people express themselves, and their education backgrounds, according to the executive.
"Increasingly, we're looking for people with very different backgrounds that may or may not have a four-year degree and may or may not want to be a partner in the firm," Grier said.
She mentioned, for example, looking for data science experts with a two-year degree.
2. Successful companies prioritize a sense of community.
Diversity, however, isn't simply a numbers game.
"What's quite interesting is that there's a focus on diversity, but diversity without inclusion is actually counterproductive," she said. "Being diverse but not included just makes you different."
Instead, leaders who make their diverse teams feel included will be the most successful. How can leaders make employees from different backgrounds feel more engaged? It starts with a core belief that affects company policies and programs, Grier said.
"We're really focused on every single part of the EY family, every individual who's a part of the EY family and creating that sense of belonging that you're here because you accorded with our values and we accord with yours," she said. "You extol those same values. And so, if you believe in those things with us, then you belong here and you're going to be able to be successful."
This hybrid approach helps a company's bottom line.
Beyond helping companies navigate increasingly changing business environments, diverse and engaged teams also help companies reach new audiences and offer new services.
Over the company's history, EY has grown from a tax and accounting firm to a company that offers a full suite of products: technology consulting, business consulting, deal consulting, M&A consulting. That expansion, in part, is due to its hiring and retention practices.
As businesses change, companies need employees who can understand those changes from different angles.
"You know, you need a different set of attributes, you need a different level of agility, you need different backgrounds," she said.
Driving transformation begins with recruiting and retaining a diverse group of workers. And you can only retain a diverse group of workers if you make them feel included, she said.
"You can't decouple, I think, the business imperative from the social imperative."