The benefits of diversity in the workplace

Diversity in the workplace can be a hot-button topic, but it’s a necessary one.

If you’re involved in hiring, you already know that diversity in the workplace is important, but you may need help articulating why.

In this article, we’ll cover the proven benefits of workplace diversity, and give you compelling facts and statistics that will help you make the business case for diversity and inclusion initiatives—especially when it comes to hiring.

We’ll also give you some helpful tips for turning these diversity in the workplace facts into impactful actions.

What is diversity in the workplace?

Diversity in the workplace means that a company has employees that vary by many different characteristics.

Most often when people refer to workplace diversity, they’re referring to a workplace that’s balanced by race and gender. But diversity in the workplace can exist across many different variables, including age, religion, cultural background, language, physical ability, sexuality, location, and more.

A truly diverse workplace features a distribution of people that reflects greater society. This indicates that the company doesn’t present any barriers to entry for individuals of any particular background.

For example, a diverse company should have a relatively equal gender balance at both the staff and leadership level.

Any worthwhile definition of workplace diversity also includes the notion of inclusion. Whereas diversity is more of an objective measure of how different employees are from one another, inclusion is about whether employees truly feel like they are accepted, their voices matter, and that they belong.

So it’s not enough just to be diverse. A company must also be inclusive.

But what makes diversity and inclusion so important?

Why is diversity in the workplace important?

Many companies recognize the value of diversity in the workplace.

In fact, 87 percent of companies explicitly state that diversity is a major priority, goal, or value. In a survey by Forbes Insights, 65 percent of senior business leaders listed diversity recruitment as their top priority.

What’s the reason behind that? Here are 11 compelling reasons that explain why companies are making workplace diversity a priority and why you should too.

1. Diverse organizations are more innovative and creative

Workplace diversity sparks innovation and creativity.

Having a diverse staff with different backgrounds, skills, and experience levels means that people are more likely to have different and varied approaches to the same problems.

According to research by Harvard professor Roy Y.J. Chua, “The more your network includes individuals from different cultural backgrounds, the more you will be creatively stimulated by different ideas and perspectives. Importantly, these ideas do not necessarily come from the network members who are culturally different from you.”

Having a greater mix of inputs to a problem means a greater number of outputs. Therefore, diverse teams come up with novel solutions and ideas.

And industry leaders have taken notice. A study from Forbes found that 85 percent of business executives believe that “a diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation.”

This applies to a company’s management level too. A study from Boston Consulting Group found that companies with diverse management teams had 19 percent higher innovation-related revenue than companies who were below-average in leadership diversity.

However, there’s a catch.

One key study from Daan van Knippenberg and Michaéla C Schippers found that diversity doesn’t lead to innovation and creativity unless a workplace also provides psychological safety. In other words, people only contribute novel ideas if they feel comfortable and supported in speaking out.

For example, they found that countries or industries that don’t value women equally are less likely to see benefits from hiring more women compared to companies that truly treat every staff member as equal.

That’s where inclusion comes into play. A study from Josh Bersin found that inclusive companies are 1.7 times more likely to be innovation drivers in their industry.

2. Diverse organizations solve problems faster

Because diverse companies are more innovative and creative, they also solve problems faster.

Research featured in the Harvard Business Review found that teams with higher cognitive diversity in thinking styles are able to solve problems faster than people who think alike.

This research concluded that organizations who want to promote better problem solving should actively promote people’s individual differences and styles rather than training people to think a certain way.

3. Diverse organizations make better decisions and are more adaptable

Not only do diverse teams make decisions quicker, they also make better decisions.

A whitepaper from Cloverpop found a correlation between diversity and decision making. Their research proposed that diverse teams make better business decisions than non-diverse teams up to 87 percent of the time.

Better decision-making leads to adaptability. The above-mentioned Josh Bersin research also found that inclusive companies are 1.8 times more likely to be change-ready than their less diverse competitors.

Why is that?

According to the Harvard Business Review, having a more diverse team means having a wider range of skills and ideas, which makes a team more adaptable and amenable to change—leading to greater business success in the competitive global business environment.

4. Diverse teams are more productive and perform better

While working within a homogeneous team of similar people may seem easier on the surface, there’s a wealth of research that shows that diverse teams are actually more productive.

In fact, the Harvard Business Review posits that diverse teams are more productive because working on a diverse team is harder.

The theory is that like-minded people quickly settle for the status quo, which results in stagnation. In contrast, diversity stretches people beyond their limits and leads to an atmosphere of healthy competition. This drives every employee to be the best version of their authentic and productive self.

Research from Ottaviano and Peri concludes that “these findings are consistent with a dominant positive effect of diversity on productivity: a more multicultural urban environment makes US-born citizens more productive.”

Harvard Business Review research found evidence for the benefits of gender diversity in particular, concluding that gender diversity leads to more productive companies.

Another strong theory is that workplace diversity leads to productivity because it makes people more comfortable. Take sexuality for example.

A survey from the Williams Institute, The Business Impact of LGBT-Supportive Workplace Policies, found that LGBTQ employees will often hide their identities in non-inclusive workplaces. This leads to stress, anxiety, health issues, and strained relationships with co-workers.

Therefore, companies that create LGBTQ-friendly workplaces will not only reduce the stress and improve the health of their LGBTQ employees, they’ll also increase job satisfaction, improve co-worker relationships, and boost productivity. 

5. Diverse companies are seen as better employers

Working at an inclusive organization is a growing priority for job seekers.

According to a Glassdoor survey, 67 percent of job seekers said workplace diversity is an important factor in their job search.

A 2017 PWC survey found that 61 percent of women look at the gender diversity of a potential employer’s leadership group when they’re deciding where to work.

By having a diverse team, it shows job candidates that your company is open-minded, inclusive, and supportive.

6. Diverse companies have higher employee engagement

Employee engagement is a major goal of most HR teams. Employee engagement leads to reduced turnover, happier and more productive employees, higher customer retention, and higher profits.

Weber Shandwick research, for example, found that engaged employees are 24 percent more likely to boost sales.

In line with research that shows diverse companies are more productive, diverse companies are also more likely to have employees who feel more included and engaged.

Research from Deloitte found that employee engagement is a direct outcome of a company’s diversity and inclusion initiatives. According to the research, “When employees think their organization is highly committed to, and supportive of diversity, and they feel highly included, then they are 80% more likely to agree that they work in a high performing organization.”

Another Deloitte study about Millennials found that 83 percent of Millennials are actively engaged with a company when they feel their company fosters an inclusive culture. In contrast, only 60 percent of millennials feel engaged when their company does not promote inclusion.

7. Diverse workforces see reduced turnover

It’s simple: diversity and inclusion lead to engagement, and engaged employees stay longer.

When employees feel valued and respect, they are more likely to remain loyal—especially when that respect means respect from their peers.

However, the aforementioned Glassdoor survey found that 57 percent of people surveyed believe their current employer isn’t doing enough to increase diversity in its workforce—citing this as a potential reason to leave their job.

Diversity of gender, religion, and ethnicity have all been shown to improve retention.

And less turnover means less costs. In fact, many employers estimate that the total expenses incurred in hiring a new employee can be three to four times the salary of the position.

8. Diverse companies can better serve their diverse customer base

A team with a variety of backgrounds is more likely to understand or uncover the challenges that their diverse customers may have.

So by having a diverse team, your organization is better able to empathize with your diverse customers.

For example, Americans with disabilities have an estimated disposable income of $544 billion. In theory, organizations that hire people with disabilities are more likely to have greater insights into how to fulfill the needs of that customer base.

As another example, having a multilingual or international staff is an easy way to highlight potential barriers to globalization hidden within your products or services.

9. Diverse companies have better reputations

Companies that make diversity and inclusion as part of their mission are seen as desirable, socially responsible organizations—leading to a better reputation with customers and investors.

Research from Ezra W. Zuckerman on market valuation found that investors value when companies follow “best practices,” one of which is promoting diversity in the workplace. This research found that companies that break these accepted norms are penalized in their valuations.

Research dating all the way back to 1996 found that companies often see a jump in stock prices after they earn diversity-related awards.

10. Diverse workforces and leadership teams earn more profit

All of the above factors lead to more profitable businesses.

McKinsey & Company surveyed 180 companies across France, Germany, the United Kingdom, and the United States, and found that companies with more women and foreign nationals on their executive teams also performed better financially.

Additional McKinsey research found that gender and racially diverse companies are 35 percent more likely to outperform their competitors.

In 2013, the Center for Talent Innovation found that 48 percent of US companies with a high level of diversity at the senior leadership level improved their year-over-year market share. In contrast, only 33 percent of low-diversity management groups saw year-over market share growth.

Profit can also come in the form of cost savings. A study by Out Now Consulting argues that the United States economy could save upwards of $9 billion annually if organizations were better at creating more welcoming environments for LGBTQ staff.

11. Diverse companies make the world a better place

Simply put, fostering a culture of diversity and inclusion sets an example for the world to follow. It’s not just good for business; it’s the right thing to do.

How to create diversity in the workplace

We’ve established the many benefits of diversity in the workplace.

But having a truly inclusive workplace isn’t possible unless you implement a diversity and inclusion program with buy-in from top-to-bottom in your organization. 

So how can you go about promoting diversity in your workplace?

Here are some quick tips:

1. Create inclusive company policies: For example, allow for flexible work schedules so that people of all family situations and abilities can be as productive as possible.

2. Celebrate individual differences: A company can’t be truly inclusive unless it values the differences between its employees. Consider running an internal blog that showcases the diversity on your team, celebrating non-local international holidays as a group, or opening up a company chat channel where people celebrate their coworkers.

3. Proactively hire for diversity: If you’re not receiving a diverse pool of candidates, don’t sit back and wait. Implement a diversity recruiting strategy. Partner with minority institutions like women’s groups or universities to proactively seek out more diverse applicants. You can also consider creating  internships for targeted minority groups.

4. Audit your job posts for inclusive language: For example, accessibleemployers.ca suggests describing only the skills that are needed for the job (e.g. the ability to provide your own transportation) rather than using language that creates barriers (e.g. driver’s license required).

You may also want to add a statement in your job posts about your company’s commitment to diversity and inclusion. For example, Vancity Credit Union uses the following statement:

We value diversity in the workplace because it allows us to better understand and meet the needs of our members and the communities we serve. It helps us foster greater creativity, breadth of experience, and personal growth among our staff, and it’s essential to our success as an organization.

We want to ensure every job applicant is treated fairly and with respect regarding race, national or ethnic origin, colour, religion, age, gender, sexual orientation, marital status, family status, disability or conviction for an offence for which a pardon has been granted or in respect of which a record suspension has been ordered.

If you are a job seeker with a disability and would like someone to contact you about individualized application support, email us at peoplesupportcentre@vancity.com or call us at 604.829.5500.  

5. Hire objectively, without bias: You can hire the best candidates without bias by screening candidates for the right skill sets. For example, rather than simply scanning candidate resumes for past experience, you can build pre-employment assessments that test candidates on their cognitive abilities, skills, and language abilities. 

For more tips on minimizing hiring bias, check out our article on how to minimize unconscious bias and hiring discrimination.

TestGorilla can help reduce bias in your hiring

TestGorilla provides you with tools to screen your candidates so that you can make more objective hiring decisions—helping to eliminate any bias about a candidate’s gender, race, or cultural background. This can give you a head start if you’re trying to do a better job of recruiting for diversity.

To start using TestGorilla’s candidate assessment tools, start your free trial today.