Diversity & Inclusion - Why it Matters for Your Business

October 14, 2022
Cynthia Beck

Diversity and Inclusion – Why It Matters and How It Affects Your Business

What is Diversity and Inclusion?

You may have come across the terms Diversity and Inclusion in a variety of advertisements, business reports, and codes of conduct. But what does it actually mean, and is it relevant to you?

Diversity and Inclusion policies support the business principles of variety and creativity. They most often present in the type of employees you hire and the culture you cultivate in the workplace.

Diversity in your workforce encompasses everything from race, ethnicity, gender, economic background, age, geographical location, disability, mental health, and more. Inclusion refers to the culture of receptiveness and collaboration you develop in the workplace. Although a company may present a diverse group of employees, it can still lack inclusive qualities, such as the opportunity for employees to share thoughts and concerns. The level of inclusion for diverse employees in making decisions and generating business ideas can greatly impact the outcomes of your business.

Although these components of hiring may seem out of your control, you may be surprised to find out how impactful Diversity and Inclusion policies can be on your business performance.

Why is Diversity and Inclusion Important?

Diversity and Inclusion policies can impact everything from efficacy and financial performance to overall employee satisfaction.

Several studies have shown a wide range of benefits that come from building a diverse organization. For example, one study by Gartner demonstrated that diverse organizations have a higher percentage of employee retention than the nondiverse.

Mckinsey & Company did a survey observing the correlation between diversity of executive teams and financial outperformance. They measured 1,000 large companies throughout 15 countries on qualities such as women and minority populations on executive teams. They found that “Companies with more than 30 percent 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.” Similar positive results were found for executive teams that included members from diverse backgrounds.

Additionally, having a varied workforce brings cognitive diversity, which can benefit your organization in several ways. Studies have shown that a collaborative group of individuals from unique backgrounds fosters greater innovation. A varied workforce can also help your business support different markets, especially those with different cultural or language barriers, allowing you to increase your revenue pool.

Businesses in the private sector that make an effort to accommodate employees and customers with disabilities may even be eligible for tax breaks. Research continues to support the fact that businesses who know how to implement Diversity and Inclusion policies fare better than the rest.

How Can I Apply These Principles to My Business?

Now that you know the importance of Diversity and Inclusion in the workplace, how do you apply these policies effectively? Of course, each business and workforce will come with its own strengths and weaknesses. There is no “one size fits all” policy that will work for every organization.

However, one Harvard Business Review article found several strategies that experts determined work the best and can be implemented by all types of businesses. They suggest five steps, and some are highlighted here:

1. “Collect, Count and Compare.” By collecting and analyzing the diversity data of your organization over time, you can compare your numbers to your competitors and see how well you fare in your market. Identifying gaps or weaknesses then encourages you to set achievable goals to bridge the gap and manage progress.

2. “Beware of the Small-N.” Experts also point out the “small numbers” or groups of people that are already severely underrepresented in the workplace, are subject to more biases and tokenism. To combat this, you can strive to increase the number of underrepresented populations in your workforce and give your current employees more visibility or opportunities to present information.

3. “Involve Managers from the Start.” When making changes and setting goals to increase Diversity and Inclusion, experts suggest involving managers from the beginning of the design process. Because they already know how the organization runs, this leads to smoother implementation and more sustainable outcomes.






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