The business case for diversity and inclusion in the workplace
The business case for diversity and inclusion in the workplace is as fiercely debated today as it has ever been. In the wake of #MeToo, Black Lives Matter, recent pushes for LGBT inclusivity, and the impact of COVID-19, businesses over the world are under pressure to keep up with the times and demonstrate their commitment to diversity and inclusion (D&I) in support of their business sustainability, growth and reputation.
Although many focus on moral arguments in favour of inclusion, more often than not the economic benefits of diversity are completely ignored – this ‘Awareness Gap’ can seriously harm your organisation.
In fact, the business case for diversity and inclusion in the workplace is stronger today than ever before.
According to Forbes magazine, unconscious bias in the workplace costs American businesses as much as $550 billion dollars every year – this means that those companies not already reaping the economic benefits of diversity are still suffering the costs of failing to diversify.
The Business case for diversity
Many businesses see the largest loss of this revenue in recruitment, as firms perceived to lack diversity or inclusion struggle to attract or retain skilled candidates from minority groups. In the UK alone, one government report noted that Britain loses £24 billion annually in failing to bring talented Black, Asian, or minority ethnic professionals into the workforce.
If your workplace suffers from a lack of diversity, you’re not just losing the best possible minority candidates – recent studies by Weber Shandwick show that most millennials report searching for jobs based on the diversity and inclusion of a business. In short, without a real focus on achieving diversity and inclusion, no company can expect to attract the best possible candidates.
But the case for D&I isn’t just about the negatives of missing out – companies which prize diversity aren’t just avoiding losses, but are reaping the benefits of the diverse, inclusive workforces of the 21st Century.
The economic benefits of diversity
There’s a reason that diverse businesses tend to survive and thrive for far longer than their less diverse competitors – or rather, several reasons!
Diverse teams, including cultural difference and varied religious, and even age-based perspectives, are far better at problem-solving than more homogenous groups. Homogenous groups may be susceptible to groupthink, while diverse teams can leverage a greater variety of perspectives and are likely to consider information more thoroughly and accurately. The Scientific American even claims that diversity makes teams smarter and more adaptable.
Diverse and inclusive offices aren’t just more creative, but happier too – and as a result, much more profitable. Research has shown that workplaces which prioritise D&I benefit from a more contented, more efficient staff, and tend to perform better in sales to an increasingly diversity-conscious public.
There are few reasons not to embrace the business case for diversity and inclusion in the workplace – and if you’ve already identified these problems in your organisation, it may well be time to address them. However, it’s also important to keep in mind the potential pitfalls involved in trying to build diversity and inclusivity in your company.
Barriers to equality and diversity in the workplace
Despite huge improvements in workplace diversity over the last decade, and the obvious business case for diversity and inclusion in the workplace, significant obstacles to full office inclusion remain.
For example, although the business case for gender diversity and inclusion in the workplace has become common knowledge in recent years, women still face huge barriers to workplace equality, especially in terms of maternity leave, or working flexibility for mothers.
For any company serious about benefitting from office diversity, it is vital to draw a distinction between creating diversity and building an inclusive organisational culture. As the Harvard Business Review notes, simply recruiting employees from diverse backgrounds is not the same as making them feel included – and thus organisations still end up missing out on the economic benefits of diversity. This underlines the importance of the ‘I’ in D&I – that minority groups cannot simply be hired into equality, but must be treated as diverse groups of individuals, each with their own opinions, needs, and goals.
To break down barriers to equality and diversity in the workplace, and to really benefit from an inclusive office, employers need to be prepared for real, structural, and intersectional change.
Numerous studies have shown that organisations which focus on achieving a diversity of management, cutting across traditional ‘glass ceilings’, whether gendered, racial, or sexual orientation-based, see much faster growth than those which don’t – and that the gap between the two is widening every day.
The gender diversity business case
Despite the record number of female CEOs on the Fortune 500 List, women continue to be underrepresented in senior management, with many boards only appointing single ‘token’ female members. It is probably no surprise that women are among those most likely to feel excluded from male-dominated office cultures, and are far more likely to leave for organisations with more equal gender balances.
This is a glaring issue, especially as recent evidence show that companies with higher numbers of women in upper management show faster growth and higher average profits. This is partly due to the fact that women actually tend to perform better in certain financial and corporate situations than their male counterparts, as well as being better able to engage with a diverse clientele.
The business case for gender diversity in the workplace is a perfect example of the difference between diversity and inclusion – if women already in your organisation do not feel like an equal member of the team, then the most talented of them will be sure to find a better position elsewhere.
There are plenty of ways to improve gender inclusivity in your organisation, from introducing flexible working hours for parents, to encouraging women’s networking, all of which contributes to a more efficient, more profitable, and more equal organisation.
The business case for diversity and Black, Asian, or minority ethnic representation
Unfortunately, despite great leaps in Black, Asian, or minority ethnic representation over the last decade, ethnic minorities still tend to feel the most excluded in the workplace, and as a result, are more likely to leave for more inclusive organisations.
This is a considerable problem for any organisation attempting to build an inclusive culture, especially from a business point of view. Black, Asian, or minority corporate representation is a key indicator of long-term economic growth, with ethnically and culturally diverse organisations tending to outperform their competitors by an average of 35%. About 1 in 8 of the working age population in the UK are from ethnic minority backgrounds but only account for 10% of the workforce and 6% of top management positions. The Parker Review (2016) of the ethnicity of UK boards found that only 85 of the 1,050 director positions in the FTSE 100 are held by directors of colour.
Addressing this issue is not just about tackling discrimination; it is also about boosting business performance. It is estimated the economy stands to gain an additional £24 billion if there was full representation and progression across ethnicities in the workplace. In fact, organisations with more ethnic minorities in management not only perform better on average, but are likely to act as role models, improving company performance and encouraging Black, Asian and minority ethnic staff retention.
One of the key problems with many corporate approaches to diversity is that ethnic minorities are often overlooked in internal diversity surveys and initiatives, and that without specialist training, many organisations may even unintentionally alienate Black, Asian, or minority employees. These barriers to equality and diversity in the workplace, even if unseen or unintentional, are no less harmful to your organisation, especially if Black, Asian, or minority staff are treated as ‘just another’ extension of diversity.
LGBT diversity in the workplace
Although progress with inclusion has been made, most LGBT employees still feel that they are unsupported, or even discouraged by their organisation’s diversity programs.
Even more shockingly, surveys conducted by OutNow consulting found that most major UK companies are losing millions of dollars due to low staff retention rates among the LGBT community.
The business case for diversity and inclusion in the workplace is clear – not only do organisations with stronger LBGT representation and inclusion policies attract better staff, but most also see significantly higher profits. Members of the public are more likely to buy from openly LGBT-friendly companies.
Recent studies by PwC do confirm that more LGBT-supportive companies tend to be more creative and more staff-retentive than competitors – but only if LGBT employees are treated as an independent group, not simply as ‘just another’ example of diversity.
Improving LGBT inclusivity in your organisation by introducing trans-inclusive policies, or addressing the LGBT pay gap, doesn’t just make for a more tolerant office, but for a more profitable organisation that everyone feels comfortable being part of.
Learn How to celebrate Pride at work to build a year-round commitment to LGBT inclusion.
The business case for diversity and inclusion in the workplace – How EW Group can help
Although recent studies have shown that organisations with a diverse corporate leadership and a commitment to inclusive cultural policies overwhelmingly outperform their competitors, there is no ‘one-size-fits-all’ solution to integrating D&I. To make the most of diversity, every employee must be treated as an individual.
This need not be a challenge. EW Group’s personalised approach to D&I recognises that every organisation is unique, incorporating training programs customised for your organisation’s needs, whether at management level, or even for tailored D&I strategic policy advice.
Not sure where to start? EW Group even offers diversity audits, specifically designed to help your organisation identify potential barriers, measure your D&I successes, and ensure that you’re making progress towards being the best you can be. Learn more about the value of diversity data in our workplace guide.
The business case for diversity and inclusion in the workplace doesn’t just underline the great potential for improving growth in your organisation, but the real risk of being left behind by the cutting edge of business diversity.
With companies across the UK already investing in EW’s diversity and inclusion solutions, there’s no better time to start diversifying – because an organisation in which everyone feels like they belong, is an organisation everyone wants to be part of.