Equal opportunity employment has made serious strides since the 1960s, when civil rights legislation first criminalized discrimination based on color, national origin, race, religion, or sex in the United States. But the road to equality in (and out) of the workplace is long, and it still faces hurdles globally.
Today, these efforts are often summed up as diversity, equity, and inclusion (DEI)—the idea of valuing individual differences among coworkers on equal terms as a recipe for business success. It’s not just about fairness, though. The benefits of DEI in the workplace provide a legitimate competitive advantage.
In its 2020 report Diversity Wins, McKinsey & Company analyzed 1,000 large companies in fifteen countries and found that the relationship between C-Suite diversity and financial outperformance grows stronger over time. The report also underscored DEI as a significant driver of business performance. Despite that, overall growth in DEI has been slow. Operational and fiscal challenges arising from the COVID-19 pandemic inevitably placed corporate DEI efforts on the backburner.
Although more gender-diverse companies (meaning those that employ women executives) had a higher likelihood of above-average profitability, more than a third of companies in McKinsey’s data set still employed zero women in executive positions. Ethnic minorities represented only 15% of executive teams from the United States and the United Kingdom. Most companies made little or no progress in DEI, and some had even retrogressed.
The problem? Workplace inclusion.
The Benefits of DEI in the Workplace
High levels of negative employee sentiment about equality and fairness of opportunity–two main indicators of inclusivity–showed that hiring diverse talent is not enough. An inclusive workplace experience characterized by accountable leadership, openness, and freedom from bias is what shapes whether people stay or leave.
Though interconnected, diversity and inclusion are distinct areas that need to be addressed on the DEI roadmap of every company.
Diversity in the workplace is represented by different people in an organization—worker demographics such as age, gender, race, sexual orientation, and professional background.
Inclusion, on the other hand, refers to efforts that make each employee feel valued, and that promote a company culture of equal access to opportunities and resources.
Workplaces that prioritize DEI are statistically proven to be more productive, too. Research shows that a diverse company has 2.3 times higher cash flow per employee, and that inclusive teams improve performance by up to 30%.
As the benefits of DEI in the workplace continues to be of increasing importance, organizations will be expected to implement more measurable initiatives for a lasting business impact. While these efforts may have slowed because of the pandemic, a recent global survey by Intel revealed that 63% of 3,136 business leaders interviewed across industries in seventeen countries found that the pandemic actually had a positive impact on DEI in their organization. The flexibility of a digital, remote work environment encouraged stronger feelings of employee inclusivity.
With so many reasons to begin constructing a strategic and well-targeted company-wide DEI strategy, here are more benefits of implementing equality, diversity, and inclusivity in your workplace today.
A company is only as good as its people. When your people come from different backgrounds, they naturally bring a wealth of diverse experiences, knowledge sets, and skills. That mix of perspectives enables companies to approach problems from multiple angles, flexibly adapt to changes, and resolve problems more quickly.
A study of 600 business decisions made by 200 companies conducted by business systems provider Cloverpop found that diverse and inclusive teams made better decisions than individuals 87% of the time.
Better Business Performance and Better Bottom Lines
According to the Harvard Business Review, diverse teams are better able to identify new products, processes, and services that meet changing customer needs. The most diverse organizations were found to be the most innovative, based on their revenue mix.
In fact, more diverse companies report 19% higher revenue than traditional ones. Businesses in the top quartile for ethnic, racial, and gender diversity also have a 25% greater likelihood of being more profitable. A Gartner study based on similar statistics predicts that 75% of companies with strong DEI in their management teams will surpass their financial goals.
Access to a Bigger Talent Pool and New Markets
Research shows that although unintentional, the employee hiring process is largely biased.
Whether or not it’s your intention, unconscious sexism, racism, or other prejudices can affect hiring. That’s why it’s important to focus on adjusting recruitment processes to consider DEI. Covering a larger and more demographically diverse workforce allows a company to discover the right talent that brings the most suitable skills and experience to the job.
Higher Employee Retention
People want to work in a company that reflects their own values. When employees feel included, they’re more inclined to go the extra mile for their company. Employee well-being creates a ripple effect on team morale and performance. People who work in inclusive environments also have better physical and mental health and need less time off.
DEI has been proven to build a safer and happier working environment. When employees trust that they will be treated fairly, they are 9.8 times more likely to look forward to work and 6.3 times more likely to take pride in their job. Diversity and inclusivity also help retain top talent already within your company, all while attracting more outside talent.
Stronger Brand Reputation
Embracing DEI also helps you appeal to a wider range of customers. Being known as a progressive company will help attract potential employees from diverse sectors of society.
DEI in the Workplace Matters Now More than Ever
Building a diverse and inclusive workplace reflects society’s own acceptance of and openness to individual differences. Fostering a company culture where every voice is heard and respected starts at the top—the executive team needs to lead by example and prioritize DEI.
Continuously listening to employee feedback and implementing measurable KPIs related to DEI can also help companies determine which strategies and ideas are working. This includes utilizing inclusive language in the workplace, setting up employee resource groups (such as LGBTQIA+ or religious groups), and creating safe spaces for breastfeeding mothers.
Continuous support engages and involves employees in an organization’s DEI goals. It’s also a collaborative way to build a strong company brand that will accommodate DEI in the workplace for years to come.