Today, nearly 98% of US companies have some kind of formal diversity program. Many companies are adopting diversity and inclusion programs in response to social, investor, or regulatory pressures. However, an increasing body of research shows that simply having a diversity program, especially if it is in response to pressure or criticism, is not very effective in creating a truly inclusive workplace. These companies may be missing out on all the truly powerful benefits of a diverse workforce.
What is Diversity?
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.
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.
What Business Leaders Really Need to Know About Diversity and Inclusion
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”.
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 D&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. Contact us for a demo to learn more.