Companies with more diverse management teams consistently reported stronger financial performance over nearly a decade, according to a new As You Sow analysis of government workforce data and corporate financial results.
The report examined Equal Employment Opportunity (EEO-1) filings and financial data from 1,482 publicly traded U.S. companies between 2016 and 2024. It found that higher representation of Black, Indigenous and other people of color (BIPOC) in management was associated with stronger revenue growth, return on invested capital, after-tax income, free cash flow and long-term share price performance.
The researchers note the findings show an association, not proof that management diversity directly causes stronger financial results.
Management diversity gap remains
Despite gains in workforce diversity, the report found representation in management has not kept pace. BIPOC employees accounted for 39.9% of the workforce in 2024, up from 30% in 2016. However, management representation rose from 19.5% to 28.8% during the same period, leaving an approximately 11-percentage-point gap between workforce and leadership representation.
The largest disparities were found among Black and Hispanic employees, with the consumer discretionary sector showing one of the widest management gaps.
Female leadership trends varied by industry
Female representation in management increased across most industries, rising from 32.4% in 2016 to 36.6% in 2024.
The financial sector was a notable exception. Both female workforce participation and female management representation declined during the study period, meaning the narrowing management gap reflected fewer women in the workforce overall rather than greater advancement into leadership.
DEI debate shifts toward business performance
The report comes as many companies reconsider diversity, equity and inclusion initiatives amid legal and political scrutiny.
Researchers argue the findings suggest management diversity should be evaluated as a business metric rather than solely a social initiative. They also say investors would benefit from additional transparency around hiring, promotion and retention data, noting that workforce representation alone does not reveal whether companies are successfully advancing diverse employees into leadership positions.
