North Carolina is frequently cited as a great place to do business.
Last year, our state was recognized as the second best state for business nationally by Forbes Magazine, second in “business climate ranking” by Site Selection, and third in the “Best State for Business” rankings by Chief Executive Magazine.
North Carolina rates among the top five states nationally for the low cost of doing business and best labor climate. It also tops the charts in workforce development in the Atlantic Region.
What if we were also recognized as one of the most diverse and inclusive business communities in the country?
We certainly have the talent pipeline. North Carolina is home to 53 colleges and universities and more than 800,000 students attending our 58 community colleges across the state. As we noted in a recent column, we also have one of the highest concentrations of historically black colleges and universities in the country with eleven – including N.C. A&T, which graduates the highest number of African-American engineers nationally every year.
We also know that a diverse workforce boosts economic performance and contributes to a stronger corporate culture. In a research study cited by Harvard Business Review, 1,800 professionals were surveyed and 40 case studies were analyzed about the correlation between a diverse workforce and performance.
The study looked into companies that value two different diversity dimensions: inherent and acquired. Inherent diversity reflects our ethnicity, gender, and sexual orientation. Acquired diversity is a mindset shift gained through experience such as working in another country or in a different culture or crossing gender or racial boundaries intentionally and consistently. Companies whose leaders exhibited at least three inherent and three acquired diversity traits were considered in the study as having “two-dimensional diversity.”
According to the study, employees at 2-D diversity companies are 45 percent more likely to report that their firm’s market share grew over the previous year and 70 percent likelier to report that their company entered into a new market vs. employees from less diverse companies.
Of those surveyed, however, 78 percent said their companies lacked diversity. Without diverse leadership, research shows that women are 20 percent less likely than straight white men to win endorsement for their ideas. For people of color, this number jumps to 24 percent – limiting important perspectives within a business as well as opportunities to gain and retain business. A team with a member who shares a client’s ethnicity is reportedly 1.5 times more likely than another team to understand that client.
Diversity also contributes to profitability. A recent survey of 22,000 firms globally by the Peterson Institute for International Economics shows that going from no women in corporate leadership to a 30 percent female share is associated with a 15 percent increase in profitability. Yet of those firms surveyed, 60 percent had no female board members, over half had no women in top corporate jobs, and fewer than 5 percent had women CEOs – even though 40 percent of MBA grads are now women.
In North Carolina, there are now efforts underway to reverse these trends and change the complexion of our corporate workforce and governance structure. UNC’s Director Diversity Initiative is focused on encouraging boards of directors of public companies to increase their gender, racial, and ethnic diversity. Started by Henry Frye, our state’s first African-American Chief Justice, and Tom Ross, then the Executive Director of the Z. Smith Reynolds Foundation, DDI holds regular diversity programs and maintains a database of potential diverse directors.
Spirit of inclusion
Business leaders in the Triangle have formed the Triangle Diversity Business Council (that Christopher is part of) to help area companies become much more intentional about their diversity efforts. This includes a signed pledge in which companies agree to the “Rooney Rule” in which they commit to interviewing at least one highly qualified woman and candidate of color for every director and board level position and track and publish their diversity data (check out a great example at Durham-based Windsor Circle’s diversity page).
When the American Institute of Certified Public Accountants was looking for a new home a few years ago for its hundreds of employees, it chose the Triangle over many other metro communities. One reason it cited was the diverse workforce found in North Carolina and a spirit of inclusion found in our community.
With intentionality and leadership, North Carolina has a chance to top the lists for business diversity and inclusion. Let’s make stories like AICPA an exemplar of what we want to be known for.
Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin, a director at the nonprofit Center for Creative Leadership, blogs at www.messyquest.com. They can be reached at email@example.com and followed on Twitter through @cgergen.