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The positive impact of diversity and inclusion in the business world is now accepted as an indisputable principle.

According to the report published by Deloitte, companies that put diversity and inclusion at the core of their business conduct have 2.3 times higher cash flow per employee ⁽¹⁾. Studies show that inclusive teams improve team performance by up to 30 percent ⁽²⁾ in highly diverse environments. At the same time, research shows that companies with diverse management teams experience a 19 percent increase in revenue compared to their less diverse counterparts ⁽³⁾.

Although diversity and inclusion (D&I) brings tangible benefits to the performance of companies, it is difficult to implement. The most important problem is that many companies already believe they promote a diverse and inclusive culture. However, only 40 percent ⁽⁴⁾ of employees agree that their manager encourages an inclusive environment

What is diversity and inclusion?

First, let's define diversity and inclusion ⁽⁵⁾

Diversity refers to differences in political beliefs, race, culture, religion, class and/or gender identity. Diversity in the workplace means your employees are made up of people who bring new perspectives and histories to the table.

Inclusion means that everyone feels included, valued, respected, treated fairly and included in your culture. Empowering all employees ⁽⁶⁾ and recognizing their special talents is part of creating an inclusive company.

Both aspects of diversity and inclusion are important – diversity without inclusion can result in a toxic culture ⁽⁷⁾ and inclusion without diversity can leave a company stagnant and uncreative. Companies are starting to focus more on diversity, but many ignore the overarching piece of the puzzle. If you don't make a concerted effort for both inclusion ⁽⁸⁾ and diversity, your workforce will feel out of place and unsupported.

The benefits of diversity and inclusion in the workplace

A diverse and inclusive environment creates a sense of belonging among employees. When employees feel more engaged at work, they tend to work harder and smarter to produce higher quality work. As a result, organizations that focus on diversity and inclusion see huge gains in business results, innovation and decision making.

Greater talent pool

If you're not changing the way your hiring process is structured, you'll always get the same kind of people. Check your recruitment searches by history, ethnicity, age, etc. Expanding your talent pool to include a wider variety of candidates ⁽⁹⁾ increases your chances of finding the best hire.

In addition to enhancing your existing business, 67 percent ⁽¹⁰⁾ of employees today consider diversity when looking for a job. According to one survey ⁽¹¹⁾, 72 percent of women, 89 percent of blacks, 80 percent of Asians and 70 percent of Latinos said that workforce diversity is important to them. Recruiting more diverse individuals is crucial to attracting more interested and qualified applicants.

Increased employee engagement and trust

When employees feel included, they become more work-oriented. Employees with high commitment do their best for the organization ⁽¹²⁾. This higher engagement has a ripple effect on profitability, team morale and retention. People working in inclusive workplaces also tend to have better physical and mental health ⁽¹³⁾. They take less time off for health problems. Research shows that 83 percent of millennials actively participate in their business when companies support diversity and inclusion initiatives ⁽¹⁴⁾.

Moreover, by creating an inclusive work environment, you can build more trust between employees and leadership ⁽¹⁵⁾; It should be noted that this is a huge problem in today's workforce. Only 1 in 5 ⁽¹⁶⁾ HR and engagement leaders admit that their employees have deep trust in their company leaders. Teaching your leaders to recognize the unique talents of team members and reward employees ⁽¹⁷⁾ for doing their best can solve this problem and create a more inclusive workplace. It's also important to remember that all employees need to get to know each other in order to create a truly inclusive culture.

Learn how to strengthen engagement and facilitate trust with your workforce.

New perspectives and innovation

Your company has a much better chance of coming up with new ideas with a more diverse group. Harvard Business Review found a statistically significant relationship between diversity and innovation outcomes ⁽¹⁸⁾. The most diverse initiatives in terms of migration, industry, career path, gender, education, age are also the most innovative when measured by income mixes. As each of the six dimensions of diversity is associated with innovation, industry, country of origin, and gender turn out to have even greater impacts on companies' revenues.

Different teams can better identify products and services ⁽¹⁹⁾ that fit the needs of customer profiles. In addition, many different employees may have faced significant challenges in their lives. These challenges force various employees to hone their expertise and develop excellent problem-solving skills.

Better decision-making

Diverse teams make better decisions. Cloverpop, an online decision-making platform, analyzed 600 business decisions made by 200 teams, revealing that different teams achieved a 60 percent improvement in decision making ⁽²⁰⁾. Specifically, gender-diverse teams outperform individual decision makers by 73 percent, while teams that differ in geography, gender, and age make better business decisions than individuals at 87 percent.

However, many companies exclude their employees from the decision-making process. The C-suite is responsible for making important business decisions; those who actively seek minority voices learn about the problems faced by various workers. As a result, leaders gain new perspectives and inspire their employees to make a difference.

Improved performance

Research showing how diversity and inclusion increases company profits says this result is a direct product of increased productivity and performance. Diversity is a competitive difference. McKinsey showed that for every 10 percent increase in gender diversity, EBIT increases by 3.5 percent ⁽²¹⁾. Companies with significantly greater racial and ethnic diversity are 35 percent ⁽²²⁾ more likely to outperform their competitors. Harvard Business Review also found that diversified companies are 70 percent more likely to conquer new markets ⁽²³⁾, resulting in higher performance.

Stronger business results and profits

Diversity and inclusion are clearly beneficial for employee mental health ⁽²⁴⁾, but they also have downside effects that are good for business. In fact, the Harvard Business Review found that more diverse companies reported 19 percent higher revenue ⁽²⁵⁾. The McKinsey report confirmed this finding, stating that for every 10 percent increase in the racial and ethnic diversity of a business's senior executive team, there is a 0.8 percent increase in earnings ⁽²⁶⁾.

Additionally, businesses in the top quartile for racial, ethnic, and gender diversity are 25 percent more likely to be more profitable for their industry than the national median ⁽²⁶⁾. This is especially true in times of crisis ⁽²⁷⁾. Great Place to Work evaluated hundreds of publicly traded companies before, during and after the recession. Diverse, inclusive companies saw gains of 14.4 percent ⁽¹⁹⁾, while the S&P 500 saw a 35.5 percent drop in stock performance.

Sources:

( 1) Why Diversity and Inclusion Has Become a Business Priority – JOSH BERSIN

( 2) How HCM Technologies Can Scale Inclusion in the Workplace (gartner.com)

( 3) How Diverse Leadership Teams Boost Innovation (bcg.com)

( 4) https://www.bcg.com/publications/2018/how-diverse-leadership-teams-boost-innovation

( 5) https://www.achievers.com/blog/the-quick-guide-to-diversity-and-inclusion-in-the-workplace/

( 6) Employee Empowerment: Definition, Benefits, and Factors - Achievers

( 7) 5 Signs of a Toxic Workplace and How to Fix It - Achievers

( 8) The Importance of Inclusion in the Workplace - Achievers

( 9) 7 Strategies to Hire Diversity of Thought In Your Organization (achievers.com)

( 10) Recruiting a Diverse Workforce | Glassdoor for Employers

( 11) Recruiting a Diverse Workforce | Glassdoor for Employers