Diversity in the Workplace

When businesses talk about the importance of diversity in the workplace, it’s often with the purpose of creating a workforce that reflects the world around us rather than a homogenous team that thinks, acts and performs the same. Diversity includes ethnicity, race, gender, sexual orientation, disability, and socioeconomic background, among other differentiation points that inform an individual’s experience. Addressing these areas in the workplace impacts hiring and recruitment, workplace policies on parental leave, short and long term leave, cultural celebrations, and retention and promotion strategies.

While progress has been made in many areas of diversity in the workplace, employees continue to express that they think most companies struggle to create the ideal workplace that has a sense of belonging. In order for progress to be made, words and actions must match, with more than good intentions driving the change for diversity in the workplace.

Why Workplace Diversity Is Important

It is unlikely that an executive will argue against having a diverse workforce. The pace of business and its global reach ensures that ignoring the importance of diversity will negatively affect a company’s success.

The need for diversity lies in several areas: increased employee engagement and sense of belonging, the introduction of new ideas, and the ability to reach and understand new markets. In addition to impacting the team, having a diverse team also positively affects a company’s reputation as a positive, transformational place to work and an organization to partner with for business growth.

Diverse leadership matters as well. A Boston Consulting Group study found that increasing the diversity of leadership led to “more and better innovation and improved financial performance.” In numbers, that translated to 19 percent higher revenue over teams whose leadership lacked diversity. In a competitive global market, this is a margin that helps companies become leaders of their industry and retain the workforce that helps them achieve the title of “best in class.”

Benefits of Diversity in the Workplace

Whether dollars and cents or in less quantitative measurements like emotional well-being, the benefits of a diverse workforce form a long list of net positive results for companies.

Diversity and innovation go hand in hand. When employees of various ethnicities, socioeconomic levels and ages come together and their voices are valued equally, they bring experience and perspective that elevates creativity of ideas. Diverse workplaces provide innovative solutions and pitch products that solve problems for a multitude of potential customers, avoid blindspots, and give counsel that impacts a company’s bottom line.

As employees can attest, it’s not just enough to hire diverse candidates; you have to ensure that they thrive in the company and stay engaged. One of the benefits of a culturally diverse workforce is higher employee engagement, which leads to lower attrition and decreased costs for hiring vacated roles. When employees feel supported, they are less likely to depart for competitors or jump to entrepreneurship.

The business case for diversity in the workplace

Studies from academic institutions, industry associations, and thought leaders have demonstrated that the business case for diversity in the workplace is strong, leading to increased revenue and better performance over time.

For example:

• Diversity in a group increases both the exchange of different ideas and the constructive disruption that stems from divergent points of view (Better Decisions Through Diversity, Kellogg School of Management, 2010)
• Companies in the top quartile of gender and racial diversity are 21 percent and 44 percent, respectively, more likely to have financial returns above national industry medians (Why Diversity Matters, McKinsey & Company, 2018)
• Sales at businesses reporting the highest levels of racial diversity brought in nearly 15 times more sales revenue on average than those with the lowest levels of racial diversity (American Sociological Review, 2009)

Whether your business has a local, national, or international audience, the bottom line benefits from having an employee base that understands customers’ needs from multiple points of view. According to the Brooking Institute, Census estimates show that more than half of the American population will identify as a minority group by 2045, making the country “minority white.”

Myopia has killed innovation at many businesses - Blockbuster and Kodak sound familiar? - due to the lack of new ideas and failure to see the shifts happening in the company’s industry. If your company has goals for scaling growth and entering new markets, the strategy for diversifying your team needs to be happening well ahead of any launch.

One great case study about why diversity is good for business involves the multitalented, award-winning entertainer, Beyonce. As she sought a new partner for her successful clothing line Ivy Park, Beyonce met with several retailers and their teams about how the two could partner to reach her global audience. Rumors surfaced that one of the retailers, Reebok, ended up losing out of the opportunity to work with Ivy Park due to the lack of diversity in their pitch team. As an artist, Beyonce has created a brand that is centered on being a Black female from the south, all key factors to her success and ways she connects with her fans. The deal, which was easily worth millions in sales, was allegedly lost due to the lack of diversity of Reebok’s workforce.

Some industries have made diversity metrics a key factor in determining how they will award business to vendors, including construction and advertising. If a company cannot show their ability to partner or retain diverse team members, they are ineligible for multimillion dollar business opportunities. Failure to make diversity a priority can handicap a company’s profitability in different ways, all of them excellent examples for why diversity is good for business.

Why Diversity Programs Fail

The business world understands why diversity matters, and yet many companies continue to struggle with the creation, implementation, and measurement of diversity and inclusion strategies.

Leaders often use mandatory diversity training, a one-time event, as an entry point to the diversity conversation. Unfortunately, research has shown that training has a short-term effect and the focus on the negative results from lack of diversity (lawsuits, etc.) can turn employees away from the intended goal of creating more diversity within the team.

In the hiring process, companies will provide mandatory tests to assess candidates’ skills. The potential issues with these tests, according to HR Source, are two-fold: the possibility of legal recourse if the tests are found to screen out a number of candidates belonging to a protected class or if the tests are not related to job function or predictive of success in the role.

As a way to open up the conversation on diversity issues, companies implement systems to report incidents and share grievances. The failure of this process arises when what should be anonymous feedback becomes a chance for individuals or the company at large to retaliate against whistleblowers. Retaliation leads to suppression of grievances by those who are discouraged at the prospect of reporting, in turn lowering the number of complaints and painting an outwardly positive picture of lack of diversity issues. Without protection for those filing grievances, the tool becomes a failure for those who it seeks to protect.

Diversity in the workplace as a competitive advantage

The advantages of a diverse workplace are plenty, with effects on profitability and recruitment of the best talent.

Diverse companies are seen as the employer of choice for top-tier candidates, with 67 percent of job seekers citing a diverse workforce as important when considering job offers. This matters in an economy where individual contributors have the upper hand in selecting where they work due to low unemployment. Combine this factor with the data on the number of diverse workers attaining higher education (according to the National Center for Education Statistics, Black women earned the greatest share among bachelor’s degrees by female students) and you have the recipe for a fight for talent.

According to Gallup (as cited by Workforce Diversity Network), companies that are effective at creating diversity and inclusion have 22 percent less turnover within their workforce. Less turnover has a clear monetary impact; in the tech industry, one employee lost due to diversity and inclusion-related issues costs the company $144,000 in lost productivity, recruitment costs and other associated replacement costs.

There is also an advantage to having a diverse workforce on customer-facing relations. The buying power of diverse groups continues to increase; Nielsen stated that Black buying power will reach $1.5 trillion by 2021 and noted that, at 28 million, Latinas represented 17 percent of total U.S. female population. Diversity within an organization tends to lead to inclusive outward messaging and imagery, which resonates with customers and leads to sales and shares.

Top diversity issues in the workplace

Diversity and inclusion advocates must know the challenges that exist in creating a progressive workplace culture. With a clear roadmap, leaders can help navigate diversity issues with an eye for long-term cultural change.

Changing the status quo, from a fairly homogeneous workplace to prioritizing diversity, can create tension. Leaders must acknowledge the potential for conflict while also encouraging growth, minimizing negative interactions, and providing diversity training with a go-forward plan. Communication should be open and flow in all directions as policies and procedures are updated and recruitment becomes a team-wide function, not solely in the HR department.

Accommodations for disabilities is a diversity and inclusion need that is often not acknowledged, leaving employees with disabilities, especially non-visible ones, feeling ignored or in fear of requesting arrangements and revealing their status.

Interoffice banter based on age, both as a younger or older worker, can feel like lighthearted jokes but have real-world consequences. By 2025, Millennials will total 75 percent of the global workforce, and with Generation Z entering the professional field, there are now five generations working alongside one another (Traditionalists, Boomer, Generation X, Millennials and Gen Z). Companies that create an environment that is inclusive of the needs of traditional workers and makes use of technological advances that tend to be easily mastered by younger generations will help bridge the multiple generations.

How to Promote Cultural Diversity in the Workplace

Faced with the data points and anecdotal support for diversity, industry leaders may ask their human resource team how to encourage diversity within a company. While there is no one size fits all solution, strategies to promote diversity in the workplace do have some commonalities.

Start with data

In order to do better, leaders have to know how to measure their starting point and their intended goal. Survey the workplace, anonymously, to determine how employees index as it relates to racial and ethnic identity, religion, gender, disability, education and other factors. This will allow everyone to have a clear picture about current realities while setting attainable goals for improvement in hiring and promoting.

Create a coalition

Diversity is not simply a function of human resources, nor only the purview of existing diverse employees. Department leaders and those from entry-level to middle management have a place at the table when a company launches a D&I strategy, as it will impact hiring, how employees are celebrated and nominated for leadership, and the external communication to potential employees, customers and investors. Be clear that the diversity is a company imperative and that belief is embodied in the words and actions of company leadership, as well as in the policies, procedures, training/professional development, and mentorship available to all employees.

Celebrate and affirm

Build the culture that authentically honors the diversity that exists both in your office and in the world. Identify not only the larger cultural moments - heritage months, equal pay days, etc. - but the daily ways in which a company’s employees can be positively recognized for their unique differences. Invite the team to plan and execute the celebrations. More often than not, women tend to be responsible for these kinds of social gatherings, so be sure there is gender parity in who is responsible for planning the parties.

Evaluate and promote

Avoid the mistake many companies make of operating in a vacuum by ensuring that employee surveys assess success and points of improvement via a method that doesn’t allow for retaliation for or judgment of feedback. Additionally, promote both inside and outside the company the work being done to ensure diversity and inclusion and highlight what has worked to improve company culture.