Creating inclusive work environments means cultivating a space where employees feel comfortable to be themselves and do their best work. If you’re wondering why that matters, consider this: Employee turnover costs a lot of money—about one-third of each departing employee’s salary, to be precise. This means if an employee makes $45,000 annually, then it will likely cost about $15,000 to replace them. That makes it pretty clear that there’s a strong financial incentive to keep employees once you’ve got them—which therefore means there’s a strong financial incentive to make employees feel included.

Fortunately, research consistently shows that most of the causes of employee turnover are preventable. This is where inclusion comes in. In fact, RW3 CultureWizard’s Global Mindset Index Survey found that 78% of respondents from high-achieving companies report that Global Diversity & Inclusion Training helps with retention.

To take a closer look at how this works, I’d like to share two very different stories about how an inclusive environment (or lack thereof) can make or break an employee’s desire to stay in their current position.

How a Non-Inclusive Environment Causes Employees to Leave

This first account is an example of what can happen when a workplace is not inclusive.

A black female former colleague of mine was serving on the Presidential Committee of a university, where she held an executive position in the institution’s Diversity, Equity & Inclusion department. At a meeting to determine how to allocate funds in a way that would serve minority students, a senior team member made a discriminatory comment that insulted the black community and discouraged the team from using university funds to create supportive programs for black students.

Although my former colleague was offended by the comment and tried to express her disagreement, no one in the room of mostly non-black colleagues offered any support. Shortly after the meeting, she shared what happened with a more senior colleague, who said that this was a common issue, and she should just let it go.

Next, she went to her direct supervisor, who explained that there was not a clear recourse for these kinds of issues except to file a complaint with HR. So, she did. But her complaint quickly reached a dead-end because the university had no framework in place for handling these kinds of problems.

After being silenced and feeling isolated by these events, my former colleague felt forced to step down from the committee. She left her position shortly thereafter because the unfortunate combination of discriminatory behavior, lack of support from supervisors, and inaccessible administrative processes all created a non-inclusive environment. This caused her to feel undervalued and disrespected in her workplace. Ultimately, it meant that the university lost the contributions of a unique and distinguished employee.

How an Inclusive Environment Can Inspire Employees to Stay

With that story in mind, let’s shift gears. Here’s a different account of how an inclusive work environment can lead to a much more positive outcome:

A friend of mine works as an IT Consultant, and she began her gender transition about a year ago. While this process is different for every transgender person, my friend’s transition initially involved hormone therapy, using gender-neutral pronouns (they/them/theirs), and attending support programs. Over the course of the next several months, she began to come out to more friends and extended family, dress in openly feminine styles, and use feminine pronouns (she/her/hers).

Of course, at some point, her transition also had an impact on her work life. When she felt comfortable, she shared the news with her supervisor. The supervisor offered their congratulations and said they would be supportive in whatever capacity my friend needed—such as submitting paperwork to HR for a new ID card and organizing a meeting where my friend or her supervisor could make an open announcement.

This backing from her supervisor meant that when she did come out to the people on her team, it was in a low-stress environment, and everyone responded in a positive way. After all, diversity and inclusion require everyday action from the top.

In the weeks following the announcement, her team members have shown respect for her identity by continuing to include her in group settings and showing ongoing appreciation of her contributions. Of course, this helps her feel valued and included.

In our conversations since she came out to the team, my friend has reflected that the positive and inclusive work environment—as well as the support she received from her supervisor—really took the edge off a stressful situation. If her colleagues hadn’t behaved inclusively, it could have rapidly devolved because she wouldn’t have been able to openly express herself.

Best Practices to Improve Retention Through Inclusion

Now that we’ve taken a look at these two opposing outcomes, let’s consider some of the ways a company can create an inclusive work environment to help boost employee retention:

1. Cultivate peer support. My transgender friend’s level of engagement at work was strongly related to the attitudes of her colleagues. Their respect and support created an inclusive environment that made her feel comfortable contributing to the group and expressing herself authentically. By contrast, in the first scenario, none of my former colleague’s team members spoke up when their co-worker said something offensive. While it’s understandable—and even expected—that we’ll make mistakes despite our best intentions to embrace diversity, it’s also essential to call it out when a person or group is mistreated.

2. Train supervisors to understand and model inclusion. In both cases I’ve described, the supervisor played a key role in determining how the situation was handled and how it ultimately affected the employee. In the first situation, the supervisor simply deferred responsibility and didn’t offer to explore other options. The more inclusive approach, as exemplified by the second situation, is to have an open conversation about the needs and expectations of the employee.

3. Consider whether company policies serve diverse employees. Of course, the support of peers and supervisors is valuable in day-to-day life, but on a broader scale, organizations should consider whether their policies make an inclusive work environment possible. You might ask:

  • Does your organization have a zero-tolerance policy on harassment?
  • Are administrative processes clear and accessible, such as filing a complaint or requesting accommodations for disabilities?
  • Do recruitment efforts reflect inclusive values?

Given the financial implications of high employee turnover, it’s in a company’s best interest to adopt policies and behaviors that help develop and nurture an inclusive environment. Practiced successfully, inclusion increases people’s senses of motivation and engagement. In turn, this increases productivity, and ultimately allows organizations to capitalize on the creativity and innovation that diverse teams bring to the table.

Learn more about our new global inclusion course.