DEI | Benefits of diversity in the workplace

Benefits of diversity in the workplace
Culture Amp

Workplace diversity is taking the HR world by storm. More than ever, employers are prioritising diversity, equity, and inclusion (DEI) initiatives and investing resources to ensure their teams are set up for success. Focusing on DEI is not only the smart thing to do for your business but also the right thing to do as a human and for humanity.

In this post, we’ll review the tangible and intangible benefits of workplace diversity, the challenges that come with it, and what you can do to get started on related initiatives today.

What do we mean by diversity in the workplace?

Diversity in the workplace refers to an organisation that intentionally employs a workforce comprised of individuals with a range of characteristics. These characteristics include:

  • Gender

  • Religion

  • Race and ethnicity

  • Age

  • Sexual orientation

  • Education level

  • Disability status

  • ... and many other attributes.

Diversity in the workplace leads to many benefits - both from an internal and external perspective. However, that doesn’t mean that implementing diversity initiatives at work isn’t without its unique challenges. We’ll review both sides of the equation in the sections below.

The benefits of diversity in the workplace

Here are just five of the benefits of embracing and prioritising diversity in the workplace:

1. New perspectives

When you hire people from diverse backgrounds, nationalities, and cultures, you bring a fresh array of perspectives. This can lead to benefits like better problem-solving and increased productivity. Think of it as a scavenger hunt: will you find more success by sending everyone on the team in the same direction? Or will you gather information more quickly by having a strategically split team?

Bringing new perspectives into the company can feel intimidating for some hiring managers. People may fear potential awkwardness or the introduction of unpopular opinions. But rest assured: research has shown that diverse teams see a 60% improvement in decision-making abilities.

2. Wider talent pool

Employees are no longer simply seeking a 9-to-5 job that pays well. They’re looking for space where they can grow, feel accepted, and be challenged. That’s why a company that embraces diversity will attract a broader range of candidates looking for a progressive workplace. Moreover, the millennial and Gen Z generations are the most diverse in history – only 56% of the 87 million millennials in the country are white, as compared to 72% of the 76 million members of the baby boomer generation. Similarly, a 2020 Glassdoor study found that 76% of employees and job seekers report that a diverse workforce is essential when evaluating companies and job offers. As a result, diverse companies are more likely to attract the best talent.

From the employer's perspective, a company that actively seeks diversity in candidates will have access to a broader talent pool. While you should always be selective about who you hire, being overly picky about traits that don’t matter will significantly decrease the number of people you can even consider. That’s why embracing diversity in background, thought, ethnicity, and other factors are crucial to find good hires.

3. More innovation

Workplace diversity leads to innovation. If you think about it, the correlation makes sense. If you have a homogenous group of people, it is likely that everything – from their thought patterns to life experiences to problem-solving skills – is also likely to be similar. And sameness doesn’t lead to creative solutions, which is a huge reason why we advocate strongly for embracing neurodiversity in the workplace. On the other hand, a heterogeneous group of employees will contribute unique perspectives that can lead to breakthroughs in thought.

It’s the same reason companies go offsite for important strategy meetings, or why a change in pace can help you solve that problem you’ve been stuck on for days. New circumstances and environments are known to spark fresh ideas. A recent study also found that companies that score well on indicators of diversity tend to be demonstrably more innovative.

4. Better employee performance

Diversity, equity, and inclusion go hand-in-hand. When you create a work environment where employees see a representation of various cultures, backgrounds, and ways of thinking, they’re more likely to feel comfortable being themselves. This, in turn, leads to happier, more productive employees.

On the other hand, research has found that a strong, homogeneous culture can stifle natural cognitive diversity due to the pressure to conform. Employees who don’t feel like they can be themselves at work are more likely to fear rejection and not produce their best work. An important note: to tap into this benefit, you need to ensure that no unconscious biases are seeping into your performance processes.

5. Increased profits

Many studies show diverse teams simply perform better and, as a result, bring in more profits. A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean. Additionally, those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean. Another McKinsey study found that U.S. public companies with diverse executive boards have a 95% higher return on equity than those with homogeneous boards. Yet another study by the Boston Consulting Group found that increasing the diversity of leadership teams leads to improved financial performance. Clearly, diversity pays off.

The challenges of diversity in the workplace

However, building a diverse workplace certainly comes with its unique challenges. Here are five of the most common challenges employers face in their DEI journey.

1. Aligning diversity practices with unique organisational goals

Implementing diversity in the workplace is a huge commitment, and there’s no handbook you can just “borrow” from another organisation. Every company has a unique set of goals, and your diversity practices must align with them to be successful. This means considering the specific culture you have in place and figuring out where you want to go.

Don’t feel pressured to copy and paste the initiatives that organisations around you are pursuing. For instance, if you already have a racially diverse workforce, does it make sense to create an entire objective around improving those numbers simply because that’s what other companies focus on? Perhaps you should focus on intersectionality next so that your existing strengths can drive other aspects of diversity.

Solution: Consider conducting a diversity-focused survey to identify your organisation’s specific gaps so you know where to focus your resources. Otherwise, you may make false assumptions and spend your time on initiatives that ultimately don’t have a significant impact.

2. Moving from design to implementation

You can design the most thoughtful and detail-oriented diversity program. But if there’s nobody to carry them out, then it serves no purpose. That’s why you need to ensure you have the team, support, and resources to move your diversity initiatives from design to implementation. Secure leadership buy-in so you have support moving forward, and make sure your team is on board and ready to take action.

Solution: Having a dedicated resource, like a Head of Diversity and Inclusion, is a solid way to hold the business accountable for results. The latest statistics from Indeed show that diversity and inclusion jobs have increased 35% over the past two years. You can also consider a creative solution, like a rotation program, if that fits with the structure of your organisation.

3. Training management

Diversity doesn’t happen in silos – it requires the cooperation of everyone in the organisation to be successful. In particular, managers are hugely influential in how these initiatives are carried out. That’s why it’s crucial to invest in management training to help them understand the company’s diversity goals, why they’re essential, and what’s expected of them when interacting with employees. It only takes one person to commit microaggressions or display insensitive or non-inclusive behavior to taint the company’s culture and an employee’s experience.

Solution: There are many companies out there that can help you navigate diversity training. For instance, Forshay uses a combination of data, relationship building, and a network of diversity and inclusion experts to design custom solutions for your organisation. This can be a great resource if you need more support!

4. Overcoming bias

Humans are biased. The research of psychologist Daniel Kahneman has shown that the vast majority of human decisions are based on biases, beliefs, and intuition - not facts or logic.

That’s why, even with the best intentions, people tend to bring bias into their everyday interactions, including in the workplace.

Solution: Consider holding unconscious bias training – but only if you fully understand the benefits and common pitfalls. While it’s inevitable that some bias will creep into the workplace, it makes a huge difference to at least be aware of common biases and understand how to avoid or address them.

5. Internal resistance

Unfortunately, not everyone is on board with the idea of diversity in the workplace. Some people are just uncomfortable with the unfamiliar and will eventually adjust. But others may be actively opposed to intentionally building diversity in the workplace. No matter the reason for the internal resistance, it’s vital that you – as a leader at your organisation – make an effort to constantly educate your employees about the why behind your diversity efforts.

Solution: While there’s no tried-and-true solution to internal resistance, it’s important to remind yourself that effective DEI is about moving people toward understanding. This means focusing on people who don’t understand why it's important – not only those who do.

If you make it clear what your culture stands for, some employees may eventually realise that it’s not the right place for them and choose to leave. This isn't meant in the sense that they’re excluded, but rather that people recognise when they don’t share the same beliefs as the rest of the organisation.

How to get started with workplace diversity

Now that you understand the benefits and challenges that come with diversity in the workplace, how do you get started? Thankfully, there’s a growing number of resources out there to help you get started on the right path. We’ve developed a few of our own at Culture Amp that can serve as a helpful starting point. Check out some of our diversity-focused content below.

Find out more