People often think that focus on creating a diverse workplace is simply about values and aspirations of a more equitable world. They seldom think about the proven benefits of a diverse workforce, and often there is a misunderstanding about what that even means.
The definition of a diverse workforce can vary. Still, it generally refers to an organization that includes people who identify in various ways based on culture, ethnicity, gender, religion, nationality, physical abilities, and age.
In fact, employing someone from Iowa can be a move toward a more diverse workplace if most of your employees are British.
Workplace diversity is about representing the broader world – your customers – plus, there are business advantages to having a diverse and inclusive workplace that goes beyond equity and inclusion.
A diverse workforce is not just a nice-to-have or an HR checkbox to tick.
Yes, businesses have to focus on the bottom line. No matter what other goals the company aspires to, if it doesn’t make a profit, it can’t pay employees or benefit the community in any way. But it’s too often overlooked that the business benefits of a diverse workforce can help a company reach revenue goals.
Companies with diverse workforces are more likely to achieve financial targets.
A McKinsey & Company report shows that the most diverse companies outperformed the least diverse workplaces by 36% profitability. The same report also shows that companies with 30% women executives were more likely to outperform companies where this percentage ranged from 10 to 30. These organizations were also more likely to outperform those with even fewer women executives or none at all.
Another McKinsey report looked explicitly at diversity on boards and found that companies with the most ethnically/culturally diverse boards worldwide are 43% more likely to experience higher profits.
The bottom line needs a diverse workforce to optimize financial performance.
A diverse work environment increases productivity.
In a study published in the Academy of Management Journal, the authors show that organizations with high levels of racial diversity in both upper and lower management realized superior productivity compared to organizations with low levels of racial diversity in both upper and lower management. They also found that companies with more racial diversity in senior management outperformed companies with diversity, mostly in lower management.
The productivity advantages of a diverse workforce stem from the varied skills, talents, and abilities which people bring. With a variety of ideas and perspectives to solve problems and keep things moving, your productivity increases.
Workplace diversity also offers a better understanding of your customers.
Unless your prospective customers are a very narrow segment of society – doubtful – you are likely targeting a diverse population. A diverse and inclusive workplace gives you broader cultural intelligence, resulting in a more comprehensive perspective on what your customers need – and how to reach them.
According to Laura Sand of Breathehr, having a more diverse workforce can allow you to market your business more effectively to prospective customers of different ethnic and racial backgrounds. Staff with similar experiences can help promote better understanding between your business and your varied customers – all the while increasing your market share.
Innovation is greater in a diverse working environment.
According to Rocío Lorenzo, a business advisor on transformation, businesses with greater diversity are more innovative. She also states that having just one female on the leadership team is not going to change things. To make a significant impact on innovation, you need to have at least 20% female representation on the senior team.
Companies need to set meaningful targets for diversity and align their KPIs so they can realize the greatest benefits of diversity. Having aspirations is one thing, but backing it up with expectations that impact performance goals can move the numbers for a business.
Some people reading this may still be doubtful about how a diverse workforce benefits an organization. The short answer is that a diverse workforce results in diverse thinking and diverse ideas. Different experiences give us the ability to look at problems or challenges in different ways. The more diversity of experience in the company mix, the more likely you’ll have someone who can find a solution to a problem, understand a customer’s needs, or imagine a new process that saves time and money.
A diverse workforce gives a company the power of diverse perspectives and knowledge.
We can’t ignore the advantages of a diverse workforce. Start celebrating the differences in the talent you’ve hired. But don’t just do a headcount to understand where your company stands on diversity. Make it a point to dig deeper and learn employee sentiment about how the organization is doing. Engagement Multiplier’s diversity, equity, and inclusion (DEI) on-demand survey helps businesses assess – and continually monitor – how employees perceive a company’s efforts to improve their DEI balance.
Take time now and systematically to share with your team the goal of being an inclusive and diverse organization with the best chance of reaching its full potential in the marketplace.