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Diversity & inclusionApril 4, 2022

Benefits of diversity in the workplace

DEI

What are the benefits of diversity in the workplace? And what are common challenges organizations face when promoting DEI (Diversity, Equity, and Inclusion)? This article explores the impact of a diverse workforce, and the advantages of building diverse and inclusive teams.

Table of Contents

  1. What is diversity and inclusion in the workplace?

  2. Examples of diversity

  3. Why is diversity in the workplace important?

  4. The benefits of diverse teams

    1. Inclusive and diverse workplaces breed innovation

    2. Diverse teams build better solutions

    3. Diverse companies can access a larger talent pool

    4. Diverse organizations are more profitable

  5. Common challenges to diversity in the workplace

  6. How to promote diversity in the workplace

  7. Measuring DEI (diversity, equity, and inclusion) with employee surveys

What is diversity and inclusion in the workplace?

A diverse workplace is an organization where the workforce has a wide range of different characteristics. These characteristics include things like race, gender, age, religion, ethnicity, sexual orientation, sexual identity, cultural background, and education. 

Diversity is a multi-faceted concept, and when setting a strategy for diversity, it's essential to break down what specific diversity, equity, and inclusion gaps you have in your organization. Measuring the unique demographics of your workforce is one way of tracking DEI growth and success, but it does not give you the full picture. Measuring how your employees perceive the situation is equally important.

An inclusive workplace is one that is not only diverse but where everyone regardless of characteristics feels included and feels a sense of belonging. While diversity is a term that describes the demographics of your workforce, inclusion is a term related to how your workforce feels. It's a term describing the employee experience, rather than who your employees are.

Diversity & inclusion graphic

Examples of diversity

  • Cultural diversity

  • Ethnic diversity

  • Racial diversity

  • Religious diversity

  • Age diversity

  • Gender diversity

  • Sexual orientation diversity

  • Physical ability diversity

  • Neurodiversity

Why is diversity in the workplace important?

According to Gartner, DEI is one of the top 5 most important priorities for HR leaders in 2022. So why is that? What is the impact of diversity in the workplace, and why is promoting diversity, equity, and inclusion so important?

A growing body of research indicates that inclusion, equity, and diversity are important keys to building successful, thriving workplaces where people are happier, healthier, and perform better. Organizations that embrace diversity in the workplace experience a wide range of benefits, and in this article we'll have a closer look at what those benefits are.

Benefits of diverse teams

Diversity brings many benefits, both for the individuals and for the organization.

  • Increased innovation and improved problem-solving

  • Better decisions and fewer "blind spots"

  • Access to a larger talent pool

  • Increased profitability

Inclusive and diverse workplaces breed innovation

Problem-solving, innovation, and creativity are stimulated by differences. An open-minded and inclusive work environment is important Studies show that while homogenous teams often feel like they're doing a great job, they're outperformed by teams that are more diverse. When multiple perspectives meet, new ideas and solutions are born.

In their article "Why Diverse Teams Outperform Homogeneous Teams", scientists Dr. David Rock , Paulette Gerkovich, Ph.D. explain this in-depth: "Part of the reason this happens is due to what scientists call cognitive elaboration—the process of sharing, challenging, and expanding our thinking. In essence, diverse teams compel each other to think more deeply about their reasoning and interrogate the facts more objectively."

Inclusive teams build better solutions

Ethnically diverse teams with multiple cultural backgrounds represented will naturally suffer from fewer blind spots. While a less homogenous group will sometimes feel like decision-making is more challenging, research shows that diversity means the decisions being made have higher quality.

In the Harvard Business Review article "Why Diverse Teams Are Smarter", the authors David Rock and Heidi Grant explain why "People from diverse backgrounds might actually alter the behavior of a group’s social majority in ways that lead to improved and more accurate group thinking." Quoting multiple studies, they conclude that "greater diversity may also change the way that entire teams digest information needed to make the best decisions."

Diverse companies can access a larger talent pool

Another advantage of building an inclusive and diverse workplace is that it gives the organization access to a much larger talent pool. While homogenous workplaces often struggle to attract groups that are not represented in their organizations, diverse companies attract a larger group of job seekers.

And it's not only minorities that are more attracted to diverse work environments. In a 2020 Glassdoor study, 76% of employees and job seekers state that a diverse workplace is an important factor when they evaluate companies and job offers. This means diverse organizations can both choose from a wider talent pool and are more likely to attract top talent.

Diverse organizations are more profitable

Diversity pays off. There are many studies that show how diverse teams perform better in a way that significantly impacts the bottom line. 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.

Common challenges to diversity in the workplace

While there is a growing consensus around the positive impact of diversity in the workplace, there are some common challenges that organizations face when promoting DEI:

  • Unconscious bias

  • Discrimination

  • Inequitable inclusion

  • Communication challenges

  • Cultural misunderstandings

  • Slow change

Many of the challenges boil down to a lack of awareness and knowledge. This is why DEI training is an essential piece of the DEI puzzle, both for managers and team members. Measuring diversity and inclusion with regular employee surveys is also essential. Both to pinpoint what areas need extra attention, and track the progress and results of different DEI initiatives.

How to attract diverse talent

Your company's reputation will impact your ability to hire diverse talent. Ensuring you build a diverse and inclusive work culture needs to be a focus from the very beginning. It's a classic startup mistake to hire a too homogenous group at the beginning, which then makes it increasingly difficult to attract talent with a diversity of skills, backgrounds, and competencies.

Measuring DEI (diversity, equity, and inclusion) with employee surveys

Ensuring that your current employees have a good employee experience, regardless of who they are, is the most important first step to building a strong employer brand. Measuring diversity and inclusion regularly allows you to continuously improve the employee experience. But it also gives you numbers that you can benchmark and share with potential hires, to show that your DEI strategies and policies are continuously followed up on – and not just empty words.

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