For the first time, the number of white people in the United States has dropped, according to 2020 census data. By contrast, the number of Latino or Hispanic, Asian, indigenous, and multiracial people has increased, and the number of Black people has held steady. In workplaces and college campuses throughout the nation, today’s business organizations and the Master of Business Administration (MBA) programs supplying them with vital talent are acting on this demographic shift.
3 Reasons Why Diversity Is Important in MBA Programs
What’s the overarching importance of diversity and diversity, equity, and inclusion (DEI) initiatives? Consider what those words imply about the human condition. Each of us is unique, yet each of us wants to feel part of a group.
As 15Five points out, diversity (exhibiting difference within a group) alone isn’t enough to serve human needs because our sense of belonging (inclusion) and sense of fair treatment (equity) are also important to our well-being. In addition, improving DEI in our communities, schools, and workplaces is increasingly recognized as the key to achieving social justice in our world.
L. Simone Washington, director of DEI at BSR, explains that business practices honoring DEI principles can improve society and heal inequities. “Companies are powerful stakeholders that have the ability to help shape a more inclusive world in which all people have fair access to opportunities and the ability to participate in activities to better their lives,” she says.
1. Diversity in MBA Programs Leverages DEI to Improve Business Outcomes
MBA graduates entering business today are the standard-bearers of diversity. MBA programs prepare graduates to lead organizations that seek to put diversity into action for employees and other stakeholders. MBA program graduates lead organizations that prioritize DEI in the following ways:
- Diversity: Organizations comprise and do business with people from different cultures, backgrounds, and ethnicities.
- Equity: Organizations offer each employee equal access to benefits and opportunities.
- Inclusion: Organizations foster recognition, empowerment, and a sense of belonging in each employee.
For MBA graduates in the field, the reasons why diversity is important are to center on connecting organizations with customers. Diverse businesses can attract DEI-conscious customers by:
- Appealing to a wider customer demographic
- Strategizing talent searches to reflect diversity
- Creating diverse, equitable, and inclusive workplaces
Attracting a wider market share, however, isn’t the only reason why diversity is important to MBAs and the organizations they serve. Increasingly, companies with a mission of social responsibility seek to be better world citizens. The groundswell of support for racial and social justice that swept the globe beginning in 2020 prompted CEOs to pledge to improve DEI, The Balance reports.
To grow their businesses and contribute to building a just and equitable society, organizations seek to hire employees who value the reasons why diversity is important and take a DEI approach.
Business schools educate the business leaders of tomorrow. It follows that MBA programs valuing the importance of diversity can shape a future that includes, respects, and serves all people, not merely the privileged few.
2. Diversity in MBA Programs Offers Students an Equitable Education That Fosters Academic Success
Universities and their MBA programs are responding to racial and ethnic demographic changes in the United States by building a diverse student body and by attending to its needs. These efforts can have many educational benefits.
Opponents of affirmative action in education—a practice that involves prioritizing the admission of people from underrepresented groups—have long contested the benefits of a diverse student body. Detractors suggest that no evidence exists that it has any positive results for students.
However, in 1978, in a landmark case, Regents of the University of California v. Bakke, Supreme Court Justice Lewis Powell supported diversity efforts in higher education. The Bakke decision validated the legality of affirmative action in college admissions, allowing a student’s race to be considered relevant.
Powell said he believed one of the reasons why diversity is important is because a diverse student body promoted an “atmosphere of speculation, experiment, and creation,” according to a recent Forbes article that mentions the historic case.
At the time, though, hard evidence to back up Powell’s opinion appeared to be scarce. Decades later, however, a 2021 study points to evidence that the benefits of diversity in higher education can be quantified. The study found that when student-run law reviews adopted policies to increase the diversity of their student editors, the result was more successful articles published (with success measured by a more than 20% increase in citations).
The deliberate shift toward fostering academic diversity on college campuses and in MBA programs demonstrates how academic institutions are fulfilling their mandate to make higher education equally available to all.
What might this mandate look like if achieved? A Brookings opinion piece put it this way: “Universities can turn one of our world’s most unconscionable injustices—unequal access to quality education—into one of the greatest hopes for our future. … They need to shift their mission from educating the few to educating all, leading the way in educating the most vulnerable people in their communities and around the world.”
In the Brookings piece, author Maysa Jalbout writes that the more education people achieve, the better off they’ll be financially and the more likely they’ll be to enjoy equal opportunity. She points to the ways that universities can deliver on the promise of equal access to education:
- Make education affordable to all who need financial help.
- Partner with schools to ensure all students are college-ready.
- Increase investment in education research and innovation.
Building a diverse student body, choosing leaders who prioritize equity, and fostering greater inclusion of all students show that an academic institution stands at the forefront of DEI efforts in higher education.
3. Diversity in MBA Programs Prepares Graduates to Lead with Cultural Competence
Students in diverse MBA programs experience various cultural perspectives, and this multicultural educational experience fosters the open-mindedness and cultural competency they’ll need to lead in today’s business world. The importance of diversity in higher education in general and in MBA programs, in particular, includes the following advantages for aspiring business leaders:
Mutual Insight and Understanding
When an MBA program purposefully admits students to help create a diverse cohort of cultures, genders, and abilities, the result is greater insight and understanding among all students.
Perception of a Valued Voice
When an MBA program reflects the diversity, it shows all students, especially those from diverse backgrounds, that they have a valued voice and that others like them are represented in class rosters and in course curricula.
Readiness to Become Relevant Business Leaders
Diverse MBA programs equip graduates to become relevant, socially conscious, and culturally competent business leaders.
Diversity in business leadership, according to Entrepreneur, is paramount for an organization’s long-term success. For that reason, more businesses value inclusive leadership. Increasingly, organizations are prioritizing a DEI mindset in job searches and in professional development.
MBA Diversity Statistics
Even though MBA programs have made strides in increasing diversity among their students, they still have more work to do to achieve their diversity goals.
Consider the following MBA diversity statistics:
- As of 2019, gender diversity at business schools had increased, according to data from the nonprofit Forte Foundation. In 2011, only 32.3% of students in top MBA programs were women, while in 2019, 38.5% were women.
- As of April 2020, the percentage of minorities enrolled at a list of top 10 business schools ranged from 19.5% (55 students) to 34.1% (291 students), according to Poets&Quants.
- As of June 2020, Black students made up less than 10% of the national average enrollment in business schools, according to the Wall Street Journal.
Progress has been made. Consider, however, that people who identified as Latino or Hispanic, Black, indigenous, and Hawaiian or Pacific Islander made up more than 30% of the nation, according to the most recent census data. Business schools could do even better in reflecting that reality in their enrollment rosters.
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<p style="clear:both;margin-bottom:20px;"><a href="https://onlinemba.wsu.edu/blog/importance-of-diversity/" rel="noreferrer" target="_blank"><img src="https://s3.amazonaws.com/utep-uploads/wp-content/uploads/wsumba/2022/04/04083419/WSU-MBA-2021-Q4-Skyscraper_-How-MBA-Programs-Demonstrate-the-Importance-of-Diversity-v2_20220105-miniIg1-v4.jpg" alt="Five statistics showing that MBA programs need to be more diverse." style="max-width:100%;" /></a></p><p style="clear:both;margin-bottom:20px;"><a href="https://onlinemba.wsu.edu" rel="noreferrer" target="_blank">Washington State University </a></p>
U.S. MBA programs are more diverse, but data from the Association to Advance Collegiate Schools of Business (AACSB), the Forté Foundation, and the Wall Street Journal show they have more work to do. Black MBA students make up less than 10% of MBA program enrollments; women made up only 38.5% of students in top MBA programs in 2019; and women made up only 35.6% of faculty in business schools in 2021.
How to Promote Diversity and Inclusion in College MBA Programs
As a 2021 blog post in Higher Education Today points out, confronting inequity in higher education with focused DEI strategies is an ongoing initiative. The climate of social unrest during COVID-19 has prompted a call for academic institutions to step up efforts to serve groups who have been victims of systemic racism
Chief Diversity Officers
Many universities have hired their first chief diversity officers, sometimes known as campus diversity officers (CDOs), as part of these diversity initiatives. A college’s chief diversity officer
leads institutions to change in ways that celebrate and support diversity, ensuring diversity is central to academic growth and retention efforts.
Between 2015 and 2020, the practice of higher education institutions appointing chief diversity officers has significantly increased, according to Inside Higher Ed. Often, the catalyst is student dissatisfaction over racist incidents or the perception that campus is unwelcoming to minorities. Student or faculty activism for diversity can also spur calls for putting a chief diversity officer in place.
Financial Assistance for Applicants Who Need It Most
Recruiting diverse students involves ensuring enough financial assistance to students who may be socioeconomically challenged. Stella Ashaolu, CEO and founder of WeSolv, an employment agency for companies looking for diverse talent, emphasizes the need to help students who lack resources.
Ashaolu says that diversity recruiting and financial aid should go hand in hand. “There are a lot of constraints when you’re a first-generation college graduate and the well-being of your family is dependent on you. Having the privilege to take a year off or two years off to go to school isn’t something that everybody has. So, what kinds of resources or support can these universities provide for those types of students?”
Actions to Promote DEI in Colleges and Universities
Other ways that higher education is ramping up its focus on DEI include the following:
- On-campus and online training. This training for staff, faculty, and students teaches how to interact in ways that support mutual respect and equal opportunity.
- Community outreach. This involves interacting with diverse people in the local community through collaborative work and volunteering that relates to student coursework.
- Supporting a sense of community. To achieve this, schools can ensure marketing materials reflect diversity, including online events and virtual forums to support diversity in MBA programs.
- Financial aid and internships for ethnic minority students. This includes explaining financial aid application processes to first-generation college students and ensuring resources are available and promoted to the students they’re designed to help.
- Mentoring to increase retention of faculty from diverse groups. This can target new or less experienced faculty members, encouraging those from diverse groups to remain on staff.
- Recruiting minority business leaders as visiting faculty. This is part of community outreach efforts; businesspeople from diverse groups can give guest lectures or serve as adjunct instructors.
Diversity in Business Organizations
Today’s MBA graduates enter a field that prioritizes DEI, so an MBA program’s diversity, or lack of it, directly impacts the future of business. Today’s businesses organizations honor DEI and seek job candidates from MBA programs that mirror their own dedication.
The following trends are emerging in organizations’ approach to diversity in business:
- In today’s organizations, effective leadership is inclusive leadership, according to Entrepreneur. Organizations are also motivated to show their commitment to diversity to a changing demographic that expects accountability.
- A recent report comments that many companies that strive to make diversity a top priority are challenged because “it’s hard to get right.”
- The same report states: “Along with growing acceptance of the business case for [DEI], progress has been helped along by regulatory pressure, media scrutiny, and an upswelling of social-justice demands.”
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<p style="clear:both;margin-bottom:20px;"><a href="https://onlinemba.wsu.edu/blog/importance-of-diversity/" rel="noreferrer" target="_blank"><img src="https://s3.amazonaws.com/utep-uploads/wp-content/uploads/wsumba/2022/04/04083809/WSU-MBA-2021-Q4-Skyscraper_-How-MBA-Programs-Demonstrate-the-Importance-of-Diversity-v2_20220105-miniIg2-v4.jpg" alt="Six ways diversity benefits businesses." style="max-width:100%;" /></a></p><p style="clear:both;margin-bottom:20px;"><a href="https://onlinemba.wsu.edu" rel="noreferrer" target="_blank">Washington State University </a></p>
When businesses prioritize diversity, they can compete in the global marketplace; improve client relationships; increase employee satisfaction; boost productivity, innovation, and creativity; attract talent from diverse backgrounds; and broaden their client base, according to Forbes.
Benefits of Diversity in Business
What are the benefits of diversity in business? How does diversity correlate with business success?
Diverse Businesses Are More Profitable
For starters, dollars and cents don’t lie. Diverse businesses are more profitable, according to McKinsey & Company. The report “Diversity wins: How inclusion matters” explains that companies with executive boards in the top quartile for gender diversity are 25% more likely to outperform their competitors financially.
Diverse Business Attract and Retain Employees
In addition to business growth, companies that prioritize diversity attract and retain employees, according to a 2021 CNBC survey, which reported that nearly 80% of workers want to be affiliated with an organization that values DEI.
Why is diversity a draw for employees and a boon for companies? U.S. Bank’s Greg Cunningham told CNBC: “It’s not just the Black community or the Asian community or women. This time it feels like we’re all in solidarity with each other. I think we’re at this inflection point where employees and leaders realize that the only way to grow and move forward is to bring more people into the tent. We all win when we all win.”
SurveyMonkey researcher Laura Wronski explains further: “Workers who are satisfied with their company’s efforts on [DEI] issues are actually happier with their jobs. They are more likely than others to say that they have good opportunities to advance their careers, and they are more likely to feel like they are paid well for the work they do.”
The many additional advantages of diversity in business include the following, according to Forbes:
- Diverse organizations compete successfully in the global marketplace.
- Diversity improves client and employee satisfaction.
- Diverse organizations enjoy a broader talent pool and customer base.
- Diversity boosts employee productivity.
- Diversity spurs innovation and creativity.
- Diverse organizations attract a wider pool of talent.
Diversity in MBA Programs Helps Shape a More Inclusive World
Together, MBA programs and socially conscious organizations are working to create an impact on the business landscape that goes far beyond financial rewards. In a world where differences threaten to divide us, MBA programs can demonstrate how much they value diversity, reimagining how to do business for the equal benefit of each individual, whatever their differences may be.