Many organizations already recognize the positive impacts of cultivating a diverse workforce (such as greater innovation and productivity), and many of them are taking deliberate steps to increase diversity. A lot of organizations also know that inclusion is an essential part of capitalizing on their investment in diversity.
Here’s the catch: The stakes are getting higher. It’s becoming even more valuable for companies to invest in equitable environments, as the financial and creative benefits of diversity and inclusion grow more important. For example, compare these McKinsey reports. The first is from 2015, and it found that companies in the top quartile for gender diversity on executive teams were 15% more likely to have above-average profitability than teams in the fourth quartile. In 2018, the study revealed an increase to 21%. And, we’ve found that multicultural workforces foster the indispensable combination of diverse talents, skills, and ideas to catalyze creativity and innovation.
Diversity of Thought Makes a Company Fruitful
The two previously-mentioned McKinsey reports underline the financial implications of successfully improving workplace diversity. The presence of diverse identities in the workplace manifests in different perspectives that can contribute to innovation, cross-cultural sensitivity and creative problem-solving. This is called “diversity of thought,” and (as McKinsey suggests) it creates a measurable advantage for organizations—an advantage whose value seems to be increasing over time.
So, fostering diversity on work teams appears to have a growing financial incentive, and a desire to make the most of that incentive is certainly a large part of why companies are getting on board with inclusion policies. But “diversity of thought” isn’t enough. To fully reap the benefits of diverse work teams, organizations also need to motivate and engage employees by practicing inclusion. Employees are, after all, the underlying force of the whole operation.
Ignoring Diversity & Inclusion Can Repel Top Talent—And Consumers
This gives us another variable in the equation: people. Employees’ (and consumers’) values and sources of motivation are changing, and people are becoming increasingly invested in the inclusivity and social equity of the corporations they work for and/or purchase from. Just take a look at this New York Times article about the walkout of 1,500 Google employees over how the company handled sexual harassment issues. Or this piece from Business Insider covering protests against Amazon for allowing the sale of anti-Semitic and white supremacist products.
These are, of course, dramatic examples that were widely publicized at least in part because the companies involved have such high profiles. But they also gained a lot of traction and emboldened people to take action because diversity, equity, and inclusion are tightly linked to many peoples’ sense of personal and professional fulfillment.
This shift in modern culture may be largely due to the massive influx of younger generations into global marketplaces. Millennials in particular tend to place a high value on feeling a sense of purpose in their work and are therefore invested in doing work that aligns with their values. Diversity and inclusion is one of those values, and it strongly affects the way many people choose their job. This article from GlassDoor states that 67% of job seekers feel that a diverse workforce is an important factor in their decision to accept a job offer.
And yet, as GlassDoor also points out, 57% of current employees feel that their company should be doing more to foster diversity and inclusion. That might be why this Gallup report found that 55% of Millennial employees are not engaged in their work, and 16% are actively disengaged. This is not a good sign given that Millennials are predictedto comprise three-fourths of the workforce in the next 10 to 15 years.
Bottom Line: D&I is Good for Business
This brings me back to my earlier statement that it’s increasingly important for companies to implement policies that promote diversity and inclusivity. When these policies are effectively implemented, employees tend to feel a greater sense of belonging that increases engagement, innovation, and therefore productivity. This means that companies can increase profits and sales while saving on the cost of onboarding new employees because their turnaround rates will be lower.
Essentially, diversity and inclusion is good for business.
But, it’s also important to remember the “human” component that is shaping the financial incentive. Diversity and inclusion is good for business in part because employees view it as an important part of their work experience. As the benefits of these policies become common knowledge, and as younger generations continue to bring their needs and expectations to work with them, the value of hopping on the bandwagon will only increase.