The importance of diversity and inclusion in a company

Diversity and inclusion are critical components of any successful organization. Companies that embrace diversity and inclusion not only create a more positive work environment but also benefit from the unique perspectives and experiences of their diverse workforce. Unfortunately, many companies struggle to effectively implement diversity and inclusion initiatives, resulting in a lack of progress in this area. In this article, we'll explore why diversity and inclusion are essential for a company through statistics and why they are not always practiced.

Diversity is a large umbrella term, but under it, there are various forms which include age, gender, ethnicity, sexual orientation, disability, background, culture, and so on. However, to sum up the importance of this topic, we can look at a quote from The Wall Street Journal;

“Diverse and inclusive cultures and providing companies with a competitive edge over their peers”

Why diversity and inclusion are essential

There are a marriage of reasons why diversity and inclusion are important in all organizations, so let’s break this down.

• Promotion of Fairness and Equality in the workplace.

When companies create a diverse and inclusive culture, they demonstrate a commitment to treating all employees fairly and creating a level playing field. This not only benefits employees but also results in better business outcomes. Research has shown that companies with diverse teams perform better than those with less diverse teams. In fact, McKinsey & Company found that companies in the top quartile for gender and ethnic diversity were more likely to have financial returns above their national industry medians.

• Improved creativity and innovation.

When people with different backgrounds and experiences come together, they bring unique perspectives and insights that can lead to more creative solutions and better decision-making. This diversity of thought can lead to more innovation and better business outcomes.

• Increased employee engagement and retention.

When a company has a diverse and inclusive culture, employees will feel more valued and would be more willing to be involved in company activities. As a direct result of this, the employees are likely to be more engaged and committed to their work which leads to a lower turnover rate within the company.

• Enhanced reputation and brand image

With happier employees, higher job satisfaction, and more innovation going on in the company, the reputation and image of the company will be directly enhanced and affected in a positive light. With this, attraction and retention of a diverse customer base will also be established.

Why diversity and inclusion are not always practiced

Despite the clear benefits of diversity and inclusion, many companies struggle to implement these initiatives effectively. One reason for this is that some leaders may not understand the value of diversity and inclusion. They may view these initiatives as a "nice to have" rather than a "must-have”. This leads to a trickle effect throughout the company where employers do not appreciate the necessity of Diversity and Inclusion which leads to employees feeling unincluded in the company due to cliques that form.  

Additionally, some leaders may not know how to effectively implement these initiatives or may be resistant to change. This is a result of poor training or guidance on the subject itself.

Another reason why diversity and inclusion are not always practiced is that some companies have a culture that does not support these initiatives. In these companies, there may be unwritten rules or norms that prevent certain groups of people from advancing, such as unconscious biases, microaggressions, or systemic discrimination. Changing the culture of an organization can be a difficult and lengthy process, and requires buy-in and commitment from all levels of leadership.

Diving into the statistics on the importance of diversity and inclusion

Research has shown that diversity and inclusion are critical components of a successful organization.

A study by Glassdoor found that job seekers prioritize diversity and inclusion when looking for a job. In fact, 67% of job seekers said a diverse workforce was important to them when evaluating companies and job offers. This effectively means that employees are becoming more aware of the necessity and importance of diversity and inclusion in their organizations.

In addition, McKinsey & Company found that companies in the top quartile for gender diversity were 15% more likely to have financial returns above their national industry medians. One of the reasons this is true is because a stronger diversified company would have more access to a larger talent pool, which in turn means that they can hire more experienced and knowledgeable candidates. Moreover, companies in the top quartile for ethnic diversity were 35% more likely to have financial returns above their national industry medians.

A study by the Harvard Business Review found that teams with diverse members outperform those with more homogeneous teams. The study found that diverse teams were more innovative, made better decisions, and had better financial outcomes. This is because with more diverse minds thinking and collaborating in a single environment, they are more likely to recognise new and different market opportunities as well as be more confident in their ideas and overall, themselves. A Harvard Business Review from 2013 also found that when there is at least one employee who shares the same ethnic background with a client or customer, the team has over double the ability to understand the client’s needs compared to those teams who did not have an employee with said ethnicity.

Conclusion

In conclusion, diversity and inclusion are essential components of any successful organization. Companies that embrace diversity and inclusion not only create a more positive work environment but also benefit from the unique perspectives and experiences of their diverse workforce. While there are challenges to effectively implementing these initiatives, research has shown that the benefits are clear. As such, companies need to prioritise diversity and inclusion as a critical part of their processes.

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