Diversity in recent years has garnered a lot of attention, specifically in business and within companies. Many have taken up initiatives to promote these ideas, but many people have different definitions of diversity and inclusion. Diversity is the full range of ways a person can identify including, but not limited to, race, gender, cultural background, educational background, personality and religion. Inclusion is when every single person in the community is valued, heard, respected, empowered and feels a true sense of belonging. Diversity alone doesn’t move your entire business forward—inclusion is an integral part. Even if the room is vastly diverse, if those unique perspectives aren’t being heard and people do not feel a sense of belonging, the impact is lost.
6 Reasons Why Diversity and Inclusion Is So Important
Diversity and inclusion have become more than just something HR can check off a list; they’ve grown into a cultural phenomenon that—when executed correctly—have a direct effect on the bottom line. These days, it’s more crucial than ever to ensure that the workplace is properly utilizing and embracing diversity and inclusion.
Whether your employees are part of the LGBTQ+ community, belong to minority groups based on gender or ethnicity, or come from a variety of different educational or cultural backgrounds, it is just as important for them to be included and supported in the day-to-day workplace for their personal successes, as well as those of the company. But why, exactly, is a strong diversity and inclusion program something to welcome and emphasize?
Diversity and inclusion give your company a better competitive edge
Companies that embrace diversity gain a higher market share and a competitive edge in entering new markets, according to a study by the Center for Talent Innovation (CTI). Inclusive behaviors in the workforce can unlock the innovative potential of a diverse workforce, enabling companies to not only increase their share of existing markets, but also open brand-new ones.
Diversity often means higher financial performance
In addition to gaining a larger market share and competitive edge, diversity often means higher financial performance, in part due to the diversity of thought within the organization. In the 18th annual global CEO survey by PwC, 85% of the surveyed CEOs whose companies have a formal diversity and inclusiveness strategy said it improved their bottom line. In addition, two reports from McKinsey noted that a 10% increase in racial and ethnic diversity on the senior executive team resulted in a 0.8% rise in earnings in the U.S., while a 10% increase in gender diversity resulted in a 3.5% rise in earnings in the U.K. Their research showed that companies that are more gender diverse are 21% more likely to outperform others; those which are ethnically diverse are 33% more likely to outperform others.
Diversity and inclusion often signal adaptability
A greater variety of backgrounds, talents and experiences enable businesses to have higher flexibility in adapting to dynamic markets. Diversity enables unique thinking and improved decision-making through a deeper and more comprehensive worldview. Adaptability means faster and more effective planning, development and execution of business strategies.
Diversity promotes creativity and innovation
While homogenous groups may be susceptible to groupthink, diverse teams can leverage a greater variety of perspectives and are likely to consider information more thoroughly and accurately. Teams are as much as 158% more likely to understand target consumers when they have at least one member who represents their target’s gender, race, age, sexual orientation or culture. Diversity is a key ingredient for better decision-making among teams due to different viewpoints or thinking styles, which helps solve problems faster. In a study on the decision-making behaviors of board directors, “deep-level diversity,” differences in background, personality and values, contributed to a higher degree of creativity.
Diversity and inclusion lower employee turnover
The recruiting, hiring and onboarding process for a company takes a significant amount of funds, so when employee turnover is high, it can really have a negative impact on company profit. By emphasizing diversity and inclusion, employees feel respected, heard and valued. Employees who feel their voices are heard at work are nearly five times (4.6x) more likely to feel empowered to perform their best work. Employees who say they are able to be their authentic selves at work are nearly three times (2.8x) more likely to say they are proud to work for their company—and more than four times (4.4x) more likely to say they are empowered to perform their best work.
Diversity can close the talent gap for businesses and has benefits for society as a whole
Today, one of the biggest concerns for CEOs worldwide is not having the right people to run and grow their businesses. So, they’re starting to look to diversity as a way to address this issue. In addition, 86% of millennial females and 74% of millennial males consider company policies on diversity, equality and inclusion during their job hunt, which is especially important because millennials are now the largest generation in the U.S. workforce. Regarding society as a whole, the nonprofit organization Catalyst found that increasing the level of female employment could help raise GDP by 5% in the U.S., 11% in Italy and 27% in India, even before you start to quantify the positive social impacts that would also arise from this increase.
The importance of diversity and inclusion within the workplace is not something that can be understated. Diversity in surface-level features, as well as “deep-level” diversity, greatly impact businesses every day. To ensure that your business stays competitive, consider diversifying your human capital. Visit https://coreaxis.com/about-us/the-coreaxis-team/ to read about our diverse team!