In part one of our exploration of diversity and inclusion, we detailed seven methods your business can use to promote and increase your levels of diversity and inclusion. In this article, part 2, we’ll address why diversity is vital to the success of your business.
What is workplace diversity?
Workplace diversity means creating an inclusive environment which accepts everyone’s differences, embraces their strengths, and provides the opportunity for all staff to achieve their full potential.
There are two main types of diversity: inherent and acquired. Inherent diversity includes traits you’re born with, such as gender, ethnicity, and sexual orientation. Acquired diversity includes features you gain from experience, such as working in another country or selling to female customers. Companies that maintain both types of diversity, 2-D diversity, are more likely to experience the numerous benefits we’ll detail below.
Why Diversity and Inclusion in the Workplace Benefits Your Business
So, we know what workplace diversity is and what you can do to improve it. Now, we’ll cover why this initiative matters and how diversity and inclusion can bring serious, tangible benefits to your organization.
1. Better Decision-Making and Problem-Solving
A University of Michigan study found groups of diverse problem solvers can outperform groups of higher-ability problem solvers. Diverse groups have more varied backgrounds and skills than homogeneous groups. This diversity of background and skills aids in a team’s overall ability to problem-solve.
More diversity allows a team to draw upon a broader range of experiences when solving a problem. These diverse teams can generate solutions that wouldn’t be possible for higher performing, but more homogeneous groups. Additionally, team diversity leads to improved decision-making. Increased diversity allows a team to make a decision with a better-rounded point-of-view.
Diversity can also help improve decision-making by cutting down on groupthink. Groupthink occurs when a group makes a faulty decision because group pressures lead to a weakening of mental efficiency and moral judgment. This type of faulty decision-making is more likely to occur within a homogenous group.
Diversity gives a team a more comprehensive range of experiences and beliefs. As a result, team members are less likely to give into a popular opinion if their beliefs conflict with that idea. This conflict helps work groups avoid the likelihood of groupthink.
2. Increased Creativity and Innovation
Similar to the previous benefit, diversity increases creativity and innovation by boosting and varying the experiences and points-of-view in the group. A 2018 study in the Harvard Business Review found a diverse workplace can truly unleash their employee’s innovation potential. This finding reinforced a similar conclusion from a recent North Carolina State University study.
According to this study, a diverse workforce performs better at developing innovative products and services. The research found a causal link between diversity and innovation. A causal link means there’s a direct cause and effect relationship between diversity and innovation.
Innovation comes from freedom of thought and interaction with others per the study. So, group innovation and performance are highest when employees feel they can be themselves and when they have a diverse group of coworkers with whom to brainstorm.
3. Attract and Retain Top Talent
Most employees desire a workplace that values diversity and inclusion, according to a 2018 Randstad survey. Per the study, 78 percent of employees say a workplace where people are treated equally is important to them. Unfortunately, the survey also found more companies aren’t meeting expectations than are. Fifty-two and 56 percent of male and female workers, respectively, believe their employers could do more to promote equality and diversity.
So, investment in a diversity and inclusion program both demonstrates your commitment to these principles and separates your organization from other businesses. And because most companies are failing in the eyes of their employees, these programs give you a leg up when recruiting and retaining your best talent.
4. Decrease Absenteeism
Another reason promoting diversity and inclusion is so vital to a workplace is it can decrease employee absenteeism. A 2019 study by researchers at the University of Konstanz in Germany found workers who are dissimilar to the rest of their teams, are almost twice as likely to call out of work.
According to this study, dissimilar employees, particularly when female or old, are on average, more absent over time. The antidote to this problem is an increased emphasis on diversity and inclusion. This emphasis, per the researchers, should start at the beginning. A robust onboarding process that includes diversity and inclusion training can have a significant influence on employee retention.
5. Happier Employees
One more benefit of a diverse and inclusive workforce is happier employees. And happy employees are so vital to a thriving workplace because happiness and productivity are heavily linked. According to a 2019 survey by Wrike, 58 percent of U.S. workers would take a pay cut to accept a job that made them happier.
Similarly, the survey found 91 percent of happy employees said they’re “very productive” at work. And, these happy employees are 30 percent more likely to say their office diversity is “above average” than unhappy employees. Per the report, happy employees thrive in a diverse work environment. So, institute a diversity and inclusion program to make your employees happier and more productive.
6. Greater Productivity
One of the most important advantages a diverse workplace gives your organization is an increase in productivity. As previously mentioned, a diverse and inclusive workplace increases the chances your employees are happier, which simultaneously boosts the likelihood these employees are productive.
Gender diverse companies are 15 percent more likely to outperform those that aren’t. Similarly, ethnically diverse firms are 35 percent more likely to outperform those that aren’t. And, per the previously mentioned study from North Carolina State University, employee performance and engagement are highest when employees feel they can be themselves and have a diverse group of coworkers with whom they can brainstorm.
7. Higher Revenues
The final advantage of increased diversity and inclusion is higher revenues for your business. According to a study by the Harvard Business Review, employees with 2-D diversity are 45 percent more likely to report their firm’s market share grew over the previous year. Additionally, employees with 2-D diversity are 70 percent more likely to report their company captured a new market from a year earlier.
Because a focus on diversity and inclusion has such wide-ranging effects on everything from productivity to absenteeism, there’s a real chance a greater emphasis on these issues will result in a significant boost to your bottom line. Per a study by McKinsey & Company, between 2008 and 2010, the EBIT margins at the most diverse businesses, on average, were 14 percent higher than those of the least diverse companies.
Your company can use any of the seven methods described in our previous article, to boost its diversity and inclusion. But regardless of which method(s), you utilize, any added attention on your firm’s diversity and inclusion should bring about a host of benefits including the seven listed above.
So, include diversity and inclusion in all aspects of your organization and watch your employees, and business flourish.