As of 2023, approximately 69% of executives have identified diversity, equity, and inclusion (DEI) as critical issues for their organizations. Despite this, only 35% of HR leaders ranked DEI among their top five priorities, highlighting a potential gap between acknowledgment and action. Moreover, research shows that simply having a DEI program is not enough. Many companies are adopting diversity and inclusion programs in response to social, investor, or regulatory pressures.
While diverse teams are 87% better at decision-making and diverse companies are 70% more likely to capture new markets, the effectiveness of these programs is often undermined when they are implemented merely in response to external pressures rather than as a genuine organizational priority.
What is diversity in the workplace?
Diversity is creating a workforce that demographically resembles and represents the society at large. A diverse workforce includes people of different genders, ethnicities and backgrounds, ages, sexual orientations, religious beliefs, and other factors, at all levels of the company.
Read more about strategies building a more diverse workplace.
Benefits of diversity in the workplace
Many of the benefits of diversity in the workplace can be somewhat intangible. In many cases, we are talking about culture, values, perceptions, and emotions, which can be difficult to measure. Recent years of research and data collection have, however, uncovered measurable benefits of diversity in the workplace. Here are the biggest benefits of workplace diversity:
Better reputation and public relations
Communication about diversity and inclusion is an increasingly important factor in public relations and public perception. Diversity and inclusion policies and initiatives are significant factors in a corporate reputation and have the power to positively influence public perception.
Increased employee loyalty and retention
Employee turnover is costly, time-consuming, and significantly reduces productivity. One way to reduce turnover and increase employee loyalty is to create a more diverse, inclusive culture in the workplace. Studies show that diverse organizations have measurably higher retention rates among all employees, not simply among diverse hires.
Improved employee morale and productivity
It stands to reason that employees who are more loyal and have lower intention to leave are happier and more productive at work. In fact, that notion is borne out of research. Companies with more racial diversity enjoy an average of $729 in increased productivity per employee per year.
Improved shareholder relations
More and more shareholders are demanding diversity data as part of company reporting, and workplace diversity has been shown to improve shareholder value. For larger companies where shareholder and stakeholder perspectives are important, diversity is crucial.
Greater creativity and innovation.
A growing body of research shows that cultural diversity drives innovation, particularly in STEM fields. In industries where creativity and innovation are essential for survival, diversity drives success.
Increased customer loyalty
While many advertising, stock photo agencies, and content companies have taken note that customers prefer inclusive advertising, the underlying assumption is that inclusive ads authentically reflect an inclusive brand with a diverse workforce. When customers perceive a company to be committed to diversity and inclusion, it can increase loyalty and increase second-purchase intention by up to 67%.
Greater profits
All these benefits of diversity in the workplace, from reduced turnover and increased productivity to improved customer loyalty and brand reputation, simply must add up to increased profits. Simply put, companies with a more diverse workforce are 35% more likely to have greater financial returns than industry averages.
The impact of not taking action
Changing corporate culture can be slow and challenging. For business leaders, boards, and stakeholders who are reluctant to commit to diversity and inclusion, these benefits may not be enough to drive decision-making.
What business leaders really need to understand is that there are actually measurable drawbacks to maintaining a homogenous workplace in today’s environment. In fact, companies in the bottom quartile for gender and ethnic diversity are 29% less likely to achieve above-average profitability. To quote findings from McKinsey & Company, “not only are they not leading, they are lagging”. McKinsey’s ongoing research from 2021 through 2023 further solidifies the business case for diversity, showing that companies committed to diverse leadership continue to see enhanced growth, better talent retention, and improved decision-making capabilities.
The simple truth is that having a diverse workplace provides many rewards and benefits. And today, not having a diverse and inclusive workforce may be a significant drawback.
How can Diversio help?
Diversio’s comprehensive DE&I solutions help companies create a more diverse and inclusive workplace. Our unique, AI-powered analytics creates measurable data that can be tracked over time, while our expert training and certification programs help build the communication tools and resources that companies need to become more inclusive. Diversio helps companies of all sizes drive meaningful change.
