The impact of diversity, equity, and inclusion (DEI) in the workplace
May 30, 2024
(Part two of a three-part series. Here is part one and part three.)
Focusing on workplace diversity and inclusion isn’t just the right thing to do — although it is the right thing to do. Focusing on workplace diversity and inclusion also comes with a lot of big business, and employee, benefits. In fact, those companies that do a great job of having a diverse workforce and fostering inclusivity, reap some real rewards and bottom-line outcomes.
When we interact with people who are just like us in terms of their backgrounds, experiences, and how they think, the ideas we come up with are not likely to be very diverse. That’s where the value of diversity in the workplace can really come into play. And not just diversity in terms of race, ethnicity, gender, etc., but cognitive diversity — or diversity of thought.
Building a diverse workforce and providing opportunities for employees with varying backgrounds and perspectives drives enhanced innovation and problem-solving. That’s not just a theory, but a fact that has been proven through research. For instance, Cloverpop found that inclusive teams make better business decisions up to 87% of the time — and can deliver those decisions twice as fast and with half the number of meetings. Harvard Business Review has also reported that teams with more diversity can solve problems by as much as three times faster than homogeneous teams.
With the fast pace of change happening in today’s business landscape, organizations need to be able to pivot on the fly and gather resources with expertise to address what needs to be done. A diverse bench can provide that agility and adaptability. This adaptability stems from a broader range of experiences and knowledge to draw from. For example, Microsoft, under the leadership of CEO Satya Nadella, has fostered a culture that thrives on continuous learning and adaptation.
McKinsey’s report “Diversity wins: How inclusion matters” stresses the importance of inclusion as a critical component of any economic strategy focused on resilience and recovery. The report highlights how diversity and inclusion directly correlates to the strength of business performance.
A diverse team can help companies connect with markets they may not have had a presence in before. People want to do business with organizations that are a reflection of themselves — this opens the doors to increased market share. Nielsen recognizes this and purposefully builds diverse research panels to ensure that insights come from a variety of different perspectives.
Reflecting a broad audience enhances the accuracy and relevance of their data across different demographic groups. It’s really common sense. If your company wants to expand its market into a new geography, gleaning insights from people who reflect that geography can help. But it’s also good business practice as McKinsey’s research suggest — diverse teams can target and service diverse customer markets that command an increasing share of consumer wealth.
Having a greater reach through your diverse teams means you have more market insights and can use those to support your customers. Diverse teams can bring a wide range of perspectives that can be leveraged to better, and more fully, understand customer needs and market trends. This can establish companies as leaders in their field. “Diverse and inclusive teams are the engines of innovation,” according to Great Place to Work. That innovation establishes these companies as thought leaders in their fields.
Companies that live and breathe DEI are destination companies — for both employees and customers. They’re seen as more attractive places to work so top talent wants to work for them. They’re seen as solid and attractive brands by consumers, so customers want to buy from them.
Today’s employees place a high value on diversity when choosing a place to work. In fact, according to Glassdoor, 76% of employees and job seekers say that “a diverse workforce is an important factor when evaluating companies and job offers.”
And, as McKinsey’s research demonstrates, companies with top-quartile gender diversity on their executive teams were 39% more likely to outperform on profitability; companies with high ethnic diversity also saw that same 39% boost.
A diverse team can identify potential gaps or roadblocks that might be overlooked in a more homogenous environment. That’s because the power of their expertise is much broader and richer than teams with individuals who are too alike. The different perspectives and experiences that diverse teams bring to the workplace can be used to shed light on potential threats or issues that need to be addressed, improving overall risk management and decision-making.
Social responsibility and ethnical business practices are top of mind for business leaders these days — and for their employees and customers! Diversity and inclusion align well with social responsibility and ethical business practices. These efforts are recognized. For example, Sodexo has joined the list of the World Most Ethical Companies as recognized by Ethisphere, recognized for its exemplary ethical business practices and commitment to setting a benchmark for corporate citizenship and integrity. That’s a high honor and not easily earned!
A healthy bottom line is something that every organization strives for, but that many struggle to attain. There’s plenty of evidence, though, to indicate that diverse and inclusive organizations have healthier bottom lines. For example, McKinsey reports that companies with a diverse and inclusive workforces are 35% more likely to outperform their competitors. And BCG shows diverse leadership teams deliver 19% higher revenue. These results are likely the result of the combined power of all of the benefits that diversity and inclusion bring to bear. More and better ideas. Greater collaboration and innovation. Varied perspectives for better problem-solving. And more.
If your company wants to reap these rewards, take a look at your workforce. Does it reflect a broad diversity of backgrounds and thought? And are you actively taking steps to ensure you can leverage that diversity through inclusion?
