There’s a lot of buzz around the benefits of a diverse workplace and most companies recognize the need for an inclusive environment.
Let’s examine five of the specific, quantifiable benefits of embracing diversity in the workplace.
1. Revenue: Increased Profits
Businesses care about the bottom line. And when you embrace diversity, you increase revenue.
Research from McKinsey & Company, a global management consulting firm, shows that racially and ethnically diverse companies are 35 percent more likely to outperform their industry medians. Additionally, gender-diverse companies are 15 percent more likely to outperform their industry medians.
Another study from the Journal of Economics and Management, Diversity, Social Goods Provision, and Performance in the Firm, concluded that moving to an office split evenly along gender lines could increase revenue by about 41 percent.
2. Innovation: Better Products
Another benefit to a diverse workforce is increased innovation, which leads to better products. Having people with different experiences and backgrounds brings new and many times better ideas to the table.
The Center for Talent Innovation, a global community of organizations committed to realizing diverse streams of talent around the world, explored what it takes to excel in the global marketplace. They identify two types of diversity:
- Inherent- which encompasses gender, race, age, religious background, socioeconomic background, sexual orientation, disability and nationality.
- Acquired- which encompasses cultural fluency, generational savvy, social media skills, cross-functional knowledge, global midst, military experience, gender smarts and language skills.
When companies have at least at least three kinds of inherit and acquired diversity, they have what’s called two-dimensional (2D) diversity. And the authors concluded, companies that have two-dimensional diversity are much more innovative than those that don’t:
“Employees at publicly traded companies with 2D diversity are 70% more likely than employees at non-diverse publicly traded companies to report that their firm captured a new market in the past 12 months, and 45% more likely to report that their firm improved market share in that same time-frame.”
3. Recruiting: More Talent
When you’re not focused on diversity, you might unintentionally restrict your talent pool. For example, only hiring younger workers means you’re not getting the experience of someone that’s been in the business a while.
Also, people might be intimidated to apply at your company if they don’t see anyone else that works there like them. A 2014 Glassdoor survey backs this up. Two-thirds of respondents said that when they’re evaluating companies and job offers, diversity is an important factor.
4. Retention: Engaged Employees
Training and onboarding new employees is expensive. Also, employees are one of your most valuable resources. You want to keep your employees and you want them engaged in their work. With diversity, you can retain and engage employees.
Deloitte University Press, a publisher aiming to advance the conversation on topics of interest for executives and government leaders, released a report that agrees:
One reason people leave organizations is that they feel they no longer belong. Or perhaps they feel they will belong and thrive in another organization that appreciates their unique value. A company that fails to create a diverse and inclusive workplace risks alienating or excluding key employees, who are then more likely to disengage or eventually leave the organization.
5. Customers: Improved Customer Attitudes
Employees value diversity, but so do your customers. According to the Center for Talent and Innovation, customers are more comfortable purchasing from companies with employees that understand and reflect their community.
Part of that is because a diverse workforce can better understand your customer base. For example, women can relate to some issues that affect only women Â‰Ã›Ã’ offering unique insights on how to solve a specific problem and create a better product.
A study from the University of Texas at Arlington trying to determine how shared ethnicity influences customer behavior concluded:
“Service-oriented businesses that want to succeed with minority customers should consider hiring frontline employees who represent those ethnic groups, particularly when the business caters to Hispanics or Asians.”
How to Attract and Maintain a Diverse Workforce
As you can see, workplace diversity offers numerous benefits to your bottom line, other employees throughout your company and to the customers you’re trying to reach. So if you’re not embracing diversity, you will get left behind.