Corporate Communications

5 Reasons Diversity & Inclusion Is Important for Business

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Never before has D&I in the workplace had such a bright spotlight. Diverse businesses perform better and enjoy a host of other benefits—learn more.

Diversity and inclusion initiatives not only make companies better places to work, but also contribute to better business performance. Here we break down five reasons why D&I is essential to building a trusted brand and bolstering your corporate responsibility, reputation, recruitment, and reach. 

The most important reason first:

1. It’s the right thing to do 

The nation is becoming more diverse across many distinctions. Just to start: 

  • The share of the white population fell from 63.7% in 2010 to 57.8% in 2020, the lowest on record, according to the U.S.’s 2020 census
  • Groups formerly categorized as minorities may reach majority status by 2044, and according to Pew Research Center, the U.S. will have no single ethnic or racial majority by 2065.
  • 5.6% of U.S. adults identify as lesbian, gay, bisexual or transgender, up from 4.5% in 2017, according to a 2021 report from Gallup. Meanwhile, almost 17% of adults in Generation Z identify as LGBT.
  • Among the college-educated workforce, 50.2% are women, according to Pew Research. That's up 11% since 2000. 

Yes, those are encouraging numbers. But it ain’t all rosy. 

  • 45% of American workers experienced discrimination and/or harassment in the past year, Gallup reports.
  • Across all age groups, disabled people are less likely to be employed than people without disabilities, according to the U.S. Bureau of Labor Statistics
  • Globally, women are less likely to speak up and much less likely to feel comfortable sharing a different perspective at their company, Culture Amp found. Only two-thirds of women felt they could voice a contrary opinion without fear of negative consequences, while 8 in 10 men feel they can voice contrary views with no repercussions.

But really, reason #1 isn’t about numbers and data and census reports.

Statistics help us get a big picture. But caring about diversity and inclusion in the workplace can’t be quantified. It’s a core value from the top down, not a policy. It’s a culture, not a club. 

It’s the right thing to do as human beings. Everyone deserves a seat at the table.

We are looking to end workplace discrimination. That is the goal.

Still, there is a strong business case for D&I in the workplace. Let’s take a look.

2. Diverse businesses perform better

A vast body of research confirms that companies that value D&I in their workforce (and especially on their executive teams) financially outperform those that do not.

Renowned think tank McKinsey & Company has published three reports on the business case for diversity and inclusion—one in 2015, again in 2018, and the most recent one published in 2020. Their findings:

  • Companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile—up from 21% in 2017 and 15% in 2014.
  • The greater the female representation among executives, the higher the likelihood of outperformance. Companies with more than 30% women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all.
  • Companies in the top quartile for ethnic and cultural diversity outperformed those in the fourth quartile by 36% in profitability, up from 33% in 2017 and 35% in 2014.

What is the connection?

Employees from diverse backgrounds and life experiences contribute different ideas and perspectives.

This, in turn, leads to a more multifaceted problem-solving process and a more innovative environment. In fact, Deloitte reports that diversity in thinking:

  • Enhances innovation by about 20%
  • Enables groups to spot risks, reducing these by up to 30%

Our differences widen our perspectives and make us stronger, and this is felt at the bottom line.

3. D&I boosts employee hiring, retention and engagement

Let’s face it: This isn’t the easiest time to find and hire talent. And today’s jobseeker considers a company’s commitment to D&I when applying for and accepting jobs. According to a 2020 survey from Glassdoor:

  • 76% percent of job seekers said a diverse workforce was important when evaluating companies and job offers.
  • About 1 in 3 job seekers would not apply at a company with a lack of diversity among its workforce.

Simply put, companies that aren’t committed to diversity won’t appeal to a huge portion of today’s workforce. Companies can’t afford to cut themselves off from such a significant pool of talent.

How does D&I affect retention and engagement?

Diverse and inclusive organizations earn trust and commitment from their employees. Conversely, when people feel that their ideas and contributions aren’t truly valued or taken seriously by their organization, they leave.

According to Great Place to Work, a workplace culture consulting firm, when employees believe they are treated fairly regardless of race, gender, sexual orientation or age, they are:

  • 9.8 times more likely to look forward to going to work
  • 6.3 times more likely to have pride in their work
  • 5.4 times more likely to want to stay at their company for a long time

The global analytics firm Gallup came to the same conclusion. From their report

Employees in an inclusive environment are more engaged, demonstrate higher advocacy for their organizations, and have a greater intent to stay. That same study found with respect to race, in particular, engaged employees are much less likely to leave their organization regardless of race.

Supporting the unique attributes and contributions of people and groups is vital to a company’s ability to attract and retain employees, and it will only grow more important. 

4. Cross-generational mentoring gives companies a competitive advantage

For the first time in history, there are five generations in the workplace. They are:

  • Silent Generation—born 1928 to 1945
  • Baby Boomers—born 1946 to 1964
  • Generation X—born 1965 to 1980
  • Millennials—born 1981 to 1996
  • Generation Z—born after 1996

Diversity of age benefits companies much in the same way as reason #2; varying perspectives bring a broad range of knowledge and problem-solving capabilities to your team. That alone is good enough, but:

Don’t forget mentorship.

Having multiple generations in your company offers great mentorship opportunities—in both directions. Cross-generational mentoring is defined as pairing those from different generations with the goal of mutual learning and growth.

Younger people can learn from seasoned pros, high achievers can share their knowledge, junior employees can help mature workers understand a piece of technology or trend (me when Snapchat first came out: “It does what? The pictures disappear? Why?”). Everybody wins: new skills, more knowledge, team bonding and career satisfaction.

5. A diverse workforce helps you better understand your existing and potential customers

Regardless of industry, chances are good that your existing and prospective customers are a mix of races, faiths, sexual orientations, gender identities, and physical abilities, etc.

When your workforce is a mix of these things as well, you are better positioned to understand your target audience’s needs. Teams solve problems faster when they’re more cognitively diverse, reports Harvard Business Review

This, in turn, could open up new and previously unforeseen market opportunities, and even help your company innovate on a global scale. A global perspective could spark global growth. 

But perhaps even more importantly, you grow authentic relationships with diverse audiences within their communities. And authenticity is always good business.

Contact IDX 

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