4 Reasons Why Diversity and Inclusion in the Workplace are Important
Editor's note: This post was originally published in July 2022 and has been updated for comprehensiveness.
What is diversity and inclusion?
But, what exactly are diversity and inclusion? Although they are connected, these concepts are not the same. Diversity refers to having employees from various groups in terms of gender, ethnicity, religion, sexual orientation, age, socioeconomic status, and more. (Global Diversity Practice). Whereas, inclusion refers to valuing and integrating the perspectives of the different groups of employees (LumApps).
Why is it important to promote diversity and inclusion in the workplace?
According to a CNBC survey, almost 80% of employees indicated that they want to work for a company that supports diversity, equity and inclusion. Yet, the International Labor Organization reports that one in four people do not feel valued at work.
Of course, you want your employees to feel comfortable and appreciated. But having diversity and inclusion in the workplace also comes with more benefits ranging from greater innovation and better decision making, to increased profits.
Here are 4 reasons why you should promote diversity and inclusion in your workplace:
1. Innovation in the workplace
Having a diverse workplace means that there will be new perspectives. As employees come from various backgrounds and cultures and go through different experiences, they are also more likely to approach things differently and offer various points of view.
When people see the same thing differently, it can spark creativity and lead to new and fresh ideas. It also ensures that business decisions are adequately reviewed from different angles, which reduces groupthink.
In a study published in the Innovation: Management, Policy & Practice journal, it was found that companies that had more women were more likely to introduce new innovations into the market. Another study published in the journal of Economic Geography found that companies with culturally diverse management had a greater likelihood of developing new products compared to those with homogenous management.
Therefore, according to Harvard Business Review, having employees that do not think, look, or talk alike can help you avoid conformity.
However, you should also consider that different viewpoints within a team can lead to conflicts and misunderstandings (Forbes). That is why you need to ensure that you are equipped with the tools to manage diverse teams. For instance, by creating a workplace culture that emphasizes openness, tolerance, and inclusivity.
2. Better decision-making
Having a diverse workforce can also lead to better decision-making. Diverse teams have been shown to be smarter, more socially aware, and have the ability to process facts more carefully. This leads to better and more educated decisions for your business. A whitepaper study by Cloverpop found that:
- Gender-diverse teams made better business decisions than individual decision-makers 73% of the time
- Age, gender, and geography-diverse teams made better business decisions 87% of the time
- Inclusive teams made decisions 2x faster
- Diverse teams’ decisions and execution produced 60 percent better results, compared to non-diverse teams
3. Increased employee engagement and retention
Diversity and inclusion in the workplace allow employees to feel more happy, comfortable and engaged. If employees feel that they are in an environment where they are appreciated and welcomed, they will be more motivated to reach their full potential. Not only that, but they are also more likely to stay loyal to your company. According to Peoplekeep, an inclusive company can decrease employee turnover by up to 50%.
Furthermore, research by Gallup has shown that disengaged employees have 37% higher absenteeism rates, 18% lower productivity, and 15% lower profitability. This adds up to a total of 34% of a disengaged employee’s annual salary (Forbes). Whereas, employees that feel valued are more likely to be dedicated to their jobs, speak up in team discussions, and become good brand ambassadors for your company - which can attract higher-level candidates.
4. Increased profits and ROI
Apart from the obvious mental health benefits to employees, diversity and inclusion also positively impact business profits. As a matter of fact, according to Harvard Business Review, organizations that have more diversity report 19% higher revenue.
A McKinsey study found that companies in the top quartile for gender, ethnic and racial diversity are 25% more likely to be profitable than the national median for their specific industry. This is especially the case in situations of crisis. For example, Great Place to Work found that companies that were high on diversity and inclusion had a 14.4% gain in stock performance, compared to a 35.5% decline for S&P 500 companies (Forbes).
Set both your employees and your company up for success
So these are 4 reasons why diversity and inclusion are important in the workplace. Ensure that your workplace culture can effectively facilitate your diverse workforce. This will allow for an innovative exchange of ideas and more efficient decision-making. All this can then set both your employees and your company for success.
At Appical, we are proud of our diverse and inclusive environment. And this all starts in the preboarding phase.
[.callout-small]Need some help getting started? We provide 8 ways on how you can provide your new hires with an inclusive onboarding.[.callout-small]
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