What if there were a way to increase your company’s revenue by up to 1,500% while simultaneously boosting innovation, performance, and brand image? You might say it’s not possible, but it absolutely is! How? Not by creating diversity programs, but by making diversity, equity, and inclusion a core business competency. Think about your boardrooms and C-suites. Do the faces at the table look mostly the same? Are they primarily white? Primarily men? If, like many companies and organizations, your answer is yes, your company stands to benefit from greater diversity, equity, and inclusion in these five highly profitable ways.
1. Exceptional Talent
In our increasingly technological and globalized world, it is becoming less and less effective for Human Resource departments to recruit talent through age-old, biased methods of recruitment such as referrals or in-person networking events. In the current hiring climate, hiring based on personality is a much more effective way to ensure that your employees will be a good fit, both when they join your team and well into the future. Also, prioritizing diversity and inclusion in the hiring process will develop a more qualified talent pool and attract talent with a wider variety of skills. The Millennial Generation—and its successor, Generation Z—are the most diverse groups in the American workforce, with nearly half of them identifying as a race other than white.
In a 2020 Glassdoor study, 76% of job seekers found workplace diversity and inclusion to be an important factor in considering employment opportunities. Within the progressively more-competitive work environment, new skills and talents are essential to a company’s innovative success. Greater diversity in the recruitment process will result in the opportunity to truly hire the best of the best. And where top-tier talent goes, increasing profits follow.
Tip # 1:
Audit your hiring process to ensure that you are recruiting, interviewing, and hiring a diverse group of candidates.
2. Greater Innovation and Creativity
It’s no secret that a more innovative and creative approach to business directly correlates with increased revenue. A 2018 study conducted by the Harvard Business Review found that companies with higher-than-average levels of diversity in the workplace had 19% higher innovation revenues. The study concluded that having greater diversity in a company’s workforce, combined with an inclusive environment in which all employees can voice their ideas, resulted in more-targeted marketing campaigns and improved product designs for specific groups of people. It was determined that companies that maintained strong diversity and inclusion initiatives were 45% more likely to report that they had captured larger portions of the market and 70% more likely to have entered a new market in the last 12 months.
Tip # 2:
Utilize diverse employee groups and their experiences to generate ideas in new areas of product or service development.
A study conducted by Forbes using Cloverpop, a decision-making tracking software, followed over 600 business decisions by 200 different teams over the course of two years. This research determined that more-inclusive and diverse teams made better business decisions 87% of the time, leading to stronger performance and higher profits. Diverse teams outperform homogeneous ones exponentially, and according to the American Sociological Association, companies with the highest levels of racial diversity reported 15 times more sales revenue than companies with low levels of diversity and inclusion. The numbers make it clear: a more diverse and inclusive workplace environment is crucial to boosting a company’s overall performance.
Tip # 3:
Create pipelines for growth by developing talented, diverse individuals within your organization who are more likely to be committed to the organization and its success.
4. Employee Engagement
While 55% of American workers are employed at companies with some type of diversity initiative, 45% of workers report experiences of gender, racial, or ethnic discrimination and/or harassment in their workplace in the past 12 months (Gallup). However, these issues can improve through the utilization of diversity and inclusion initiatives, providing pathways to leadership positions for minority employees.
In a 2018 study of over 1,000 companies, it was determined that companies with more-diverse leadership were 43% more likely to exhibit higher profits (McKinsey). Higher representation of women in C-suite positions results in 34% greater returns to shareholders (Fast Company). Genuine diversity and inclusion efforts that result in a culture of belonging, where employees feel like they can bring their “authentic selves” to work, has been shown to lead to a higher level of employee engagement and lower turnover rates.
A 2019 study by BetterUp found that workplace belonging leads to an estimated 56% increase in job performance, a 50% decrease in turnover, and a 75% decrease in employee sick days. In the same study, it was found that even one incidence of exclusion can lead to a 25% decrease in an individual’s performance on a team project. Effective diversity and inclusion initiatives can be pivotal in improving employee engagement and satisfaction, and happier employees create a better product, a better company, and better profits.
Tip # 4:
Create a culture of belonging. Unite over a shared belief in the organization’s purpose, values, and goals while allowing employees the space to make an impact on the company culture rather than forcing them to fit it.
5. Brand Image
Successful diversity and inclusion efforts have a marked effect on consumers’ image of a company. Diversity and inclusion in a company and in marketing is becoming increasingly important to consumers. In a 2019 study of over 2,000 consumers by Adobe, it was determined that 66% of Black Americans and 53% of Latinx and Hispanic Americans felt that their ethnicity and culture were portrayed stereotypically in most advertisements. It was inferred that this is due to a lack of cultural sensitivity among the marketing teams of most companies, likely because many of these teams are lacking a diverse business culture. The same study also found that 61% of consumers find diversity in advertising important, and 38% of consumers were more likely to trust and engage with a brand that they felt championed diversity and inclusion.
Tip # 5:
Walk the talk! Review the data. Does your company reflect the customers it serves? If not, how can change be made? Build a plan.
Make no mistake: diversity, equity, and inclusion cannot be implemented overnight. But the research shows that the work required in creating an inclusive environment is well worth the effort. We are in an era where our society is reckoning with the effects of centuries of discrimination and exclusion. If your company has yet to create an inclusive work environment, you might be missing out on a myriad of benefits, both quantitative and qualitative. Diversity, equity, and inclusion is not a trend or a fad, it’s a cultural shift. It is vital that companies—worldwide—embrace these efforts, or risk decreasing their market relevance and profit margins.
Take the first step in being a leader, change agent and advocate for Diversity, Equity, and Inclusion by taking CMOE’s self-paced, digital course Diversity, Equity, & Inclusion Essentials or contact CMOE to learn more about our Confronting Racism in the Workplace workshop.
Hope Cheeks, MS
Laverne Hanes Collins, PhD, LPC