A Better, More Diverse Senior Executive Service in 2050

The case for diversityWhen the Senior Executive Service was created, the legislation said it was to be“responsive to the needs, policies, and goals of the nation.” We believe that inorder to do so, it must better represent the nation it serves. There are three primaryreasons why the SES must be more diverse:• Good business• Democracy• LeadershipLet’s examine each of these in turn.Good businessIn Federalist Paper No. 68, Alexander Hamilton argued that the “true test of agood government is its aptitude and tendency to produce a good administration.”11 A more diverse Senior Executive Service can produce this “good administration”through greater efficiencies, more innovation, and better effectiveness.A number of studies prove this to be the case. A 2008 study, for example, comparedthe financial performance of the DiversityInc’s Top 50 Companies for Diversity toa matched sample of competing firms (identified using the Compustat database). 12The results demonstrated that the median net profit margins of the Diversity 50firms were “higher in each year for the 6-year period immediately preceding theirrecognition by DiversityInc.” 13 Diversity 50 firms also on average did better thantheir less-diverse counterparts in median net profit margins, by 2.7 percent per year.In addition, the Diversity 50 firms also have a higher median return on equitythan their matching counterparts every year, with an average advantage between2.5 percent and 6 percent. 14 Diversity, according to the study, improves organizationalcompetitiveness by improving decision making, connection withcustomers, and innovation.14 Center for American Progress | A Better, More Diverse Senior Executive Service in 2050