The workplace is becoming increasingly diverse. More employees, job candidates and customers are expecting and demanding diversity, while a growing number of organizations are prioritizing inclusion initiatives. Employers have discovered that diversity is not only good for people and society, but it’s also good for business.
What is Diversity in the Workplace?
Workplace diversity refers to a workforce that comprises individuals of diverse backgrounds in terms of age, race, ethnicity, gender, sexual orientation, religion, culture, education, physical ability and other demographics.
Why Is Diversity Important?
Cultural shifts and globalization are turning diversity into a key factor in business success. Diverse people bring diverse experiences, work and leadership styles, perspectives and attitudes to the table. It makes organizations more creative, innovative, flexible and adaptable, helping them achieve better results.
Benefits of Diversity
Workplace diversity benefits employees, leadership and customers. Following are the top advantages gained by companies that commit to diversity.
1. Enhanced Creativity and Innovation
Innovation is necessary to survive and thrive in a globalized, hi-tech marketplace. Companies that fail to think creatively and innovate fail to move forward. A diverse team of employees offers different opinions and approaches to problems, increasing the odds of finding creative solutions to these problems.
Similar people are more likely to think alike and generate similar ideas. They tend to validate each other rather than think outside the box. A team of diverse individuals offers different perspectives, problem-solving skills and work styles. They’re more likely to come up with creative and innovative strategies and solutions that improve business outcomes.
2. Greater Employee Engagement and Productivity
Workplace diversity promotes employee engagement and productivity by helping employees feel accepted and included. As a result, they’re more comfortable and confident at work, which makes them more engaged and productive. They’re also more loyal to their employers, which lowers turnover rates.
3. Larger Talent Pool
At a time of crippling labor shortages across many industries, it behooves organizations to appeal to as many potential job candidates as possible. Diversity attracts and retains a wide range of candidates because today’s job seekers prefer inclusive work environments.
Diversity makes sense. For example, older workers bring experience, maturity and a strong work ethic, while younger workers contribute new ideas, skills and work styles. Furthermore, the current generations of workers, Gen Y (also known as millennials) and Gen Z, seek diverse, progressive work environments where they can grow personally and professionally.
4. Improved Decision-Making and Problem-Solving
A diverse team of people is prone to be more open to new ideas and, consequently, tends to be more accomplished at making decisions and solving problems. And what business doesn’t want that?
5. Healthier Corporate Culture
A diverse workplace helps employees feel more accepted and less nervous about facing unwelcoming biases at work. Like most humans, employees make presumptions about each other, often unconsciously. Exposure to diversity at work broadens their perspectives and keeps corporate culture growing in a healthier way.
6. Better Financial Performance
Workplace diversity is profitable. Numerous studies show that organizations that prioritize diversity do better financially than less diverse peers. By increasing capacity for innovation through a wider range of ideas and options, diversity leads to better financial performance.
A 2019 survey by the Boston Consulting Group showed that companies with above-average diversity produced a greater proportion, 45%, of revenue from innovation than companies with below average diversity (26%). This innovation-related advantage translated into better financial performance, BCG reported.
According to “Diversity Wins,” a 2019 report by global management consulting firm McKinsey & Company, organizations in the top quartile for gender diversity on executive teams are 25% more likely to have above-average profitability than companies in the fourth quartile—up from 21% in 2017 and 15% in 2014.
A 2021 Credit Suisse study of 30,000 senior executives at more than 3,000 companies throughout the world showed that companies in which women held 20% or more management roles generated 2.04% higher cash flow ROI and 2% higher EBITDA margins than companies with 15% or less women in management roles.
Refinitiv’s Diversity & Inclusion Index, which ranks over 11,000 companies globally to identify the top 100 most diverse and inclusive publicly traded companies (as measured by 24 separate metrics across four key pillars), shows a correlation between diversity and inclusion in the workforce and superior financial results.
7. Deeper Connection With Customers
As our society becomes more multicultural, a company with a diverse workforce is in a better position to identify and develop solutions that satisfy the needs and demands of consumers.
Diversity allows companies to reach, engage and convert a broader target market because employees of varying backgrounds, who speak different languages and have different preferences and purchasing habits, can connect with prospective and existing customers who are just as diverse.
8. Stronger Brand Reputation
Companies that embrace diversity are perceived by the general public to be more inclusive, ethical and socially responsible. A good reputation can build favor with current and potential customers. It’s a no-brainer: good brand reputation is more likely to bring in business than a bad one.
Given the many advantages of workplace diversity, the likelihood that it’s just a fad that will soon fade away is about zero. If you haven’t examined your company’s diversity, you should—immediately. Chances are your business could benefit greatly from a skillfully designed diversity program.
“Diversity may be the hardest thing for a society to live with and perhaps the most dangerous thing for a society to be without.” – William Sloane Coffin Jr., American clergyman and long-time civil rights advocate and international peace movement activist.