Diversity in the workplace means hiring — and nurturing— many different kinds of people and perspectives. Inclusion means making sure the environment does not inherently exclude anyone, structurally or culturally.
With a diverse staff, companies enjoy increased creativity, enhanced performance, deeper customer satisfaction, and larger profits, according to a number of sources.
Companies that value gender diversity are apt to see 15% more in financial returns than their homogeneous peers, according to research group McKinsey. The same study found that ethnically-diverse companies perform even higher, with 35% financial returns compared to industry medians. A March 2016 report from Cisco Systems cited a study of diversity in 506 U.S.-based businesses. The results? Each 1% increase in the rate of gender diversity created a 3% increase in sales, up to the rate in the representative population.
Swayed by the positive results of workplace diversity studies, and also recognizing the underlying diversity of healthy organizations and ecosystems, companies have begun to invest in practices that will not only attract but nurture candidates outside of the white male stereotype. Intel pledged millions of dollars for a new diversity initiative designed to change the makeup of their workforce within the next five years. As one of the first companies to make a sincere commitment to increasing diversity, Intel has certainly helped to set an industry standard, one that does not simply reflect a trend but identifies necessary change.
If you need numbers to be convinced, there are plenty of statistics to back up the case for workplace diversity. Let’s look at a few of the most important bottom-line benefits:
First, I’d like to direct you to The Center for American Progress’ findings on ten positive economic correlations that occur when diversity is privileged in business. It’s a tremendous resource that uses a number of resources to determine why, exactly, diversity in business is beneficial.
Many of the Center’s conclusions were ones that are echoed in numerous places, using an array of framework. Whether the results come from studies in organizational science or psychology, they all say the same thing: diversity matters in today’s workplace.
Here are four reasons that make the case for diversity:
Increased innovation and creativity are welcome results with diverse personnel. According to research conducted by the Harvard Business Review, companies that respect diverse voices and give them the equal space to speak experience a nearly doubled amount of valuable insights. And, these employees feel more comfortable in an inclusive environment, too, where they are 3.5 times more liable to share their original insights. By valuing a multitude of perspectives, companies open themselves up to new and viable business ideas.
In Strategic Management Journal, a group of researchers published their findings that innovation positively correlated with both gender and ethnic diversity at a number of Fortune 500 corporate boards. Time and again a diverse workforce, from top to bottom, proves to reap the rewards of increased imagination.
Today, companies worry about finding the best and brightest candidates. Well, it’s as easy as looking at a diverse lineup of applicants, studies show. First off, it’s easy to find numbers that show the United States continues to diversify. According to the U.S. Bureau of Labor Statistics, the number of people of color (grouped as Black, Hispanic or Latino and Asian,) who are employed in the US workforce has increased, and will continue to do so.
Recruiting, hiring and retaining from a large, representative pool of candidates is crucial in the current competitive market. For companies to stay relevant, establishing hiring practices that attract many types of candidates is a must.
As stated earlier, the global management consulting firm, McKinsey, found that gender and ethnically diverse companies make it 15-35% more likely to outperform their less diverse peers.
One of the few empirical studies on workplace diversity found that there was a positive correlation between a diverse staff and profits. Studying hundreds of companies, sociologist Cedric Henning concluded that diversity resulted in positive business outcomes. He went further to specify that those companies with the highest levels of ethnic diversity enjoyed 15 times more sales revenue than those companies that had a low percentage of diverse personnel.
Today’s customers are increasingly heterogeneous, with a ranging set of needs. If a workforce understands the diverse client group, these clients will be more likely to connect and continue to return. Many CEO’s recognize the importance of keeping in line with their customers by hiring a diverse group of employees, as told to the Harvard Business Review. With a broad set of experiences, a company can better serve their customers.
All of the discussed results of a diverse workforce lead to a crucial pillar of company success: improved company performance. The Catalyst Information Center has compiled dozens of studies, which show that a commitment to diversity in gender, ethnic and sexual orientation results in increased revenue, a greater share of the market and an enhanced reputation.
If growth, creativity, productivity and performance are important to businesses, company leaders need to make diversity and inclusion a priority.
In our connected, global world, the companies that invest in diversity can not only expect higher returns and be able to truly reflect — and serve— our nation’s demographics.
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