Learn why companies with diverse leadership are performing better than their less diverse counterparts.
Diversity, equity, and inclusion in the workplace have become increasingly important as societal issues, including racial and cultural bias and racism, have been thrust into the forefront of the media. Insert a global pandemic into the mix, and diversity, equity, and inclusion matter now more than ever. The spotlight has been placed on leadership teams around the world proving to be one of the greatest tests of their ability, efficiency, and transparency. Not only must leaders act in the manner that best accommodates their employees and customers in a health crisis, they must strategize how to circumvent operational disruption. With a shifting in priorities, it is crucial that diversity, equity, and inclusion do not take a back seat as these components are actually factors in how leaders respond to these unprecedented circumstances.
Diversity, Equity, & Inclusion
While each of the terms have their own respective definitions, together they represent a concept focused on fairness in the workplace, in education, and in the market.
The term Diversity encompasses the ways in which people or groups differ from one another, the differences that make them unique. Diversity is not limited to race, culture, and ethnicity. It also includes the items you may be used to seeing when asked to complete demographic information. These demographic items include age, gender, national origin, sexual orientation, disability, socioeconomic status, religion, marital status, and often times, education level. Diversity can also describe differing worldview, thoughts, ideas, perspectives, and values.
Equity refers to the fairness in treatment, access, opportunity, and advancement for everyone despite all of the differences that make the population diverse. In addition, equity involves the identification and elimination of existing barriers that have prevented access or opportunity to certain groups of people. In order to improve equity, institutional systems must become just and fair with respect to processes and procedures, as well as in the accessibility of resources. Addressing equity means addressing root and systemic causes for disparities within our society.
Lastly, the term inclusion refers to the act of creating environments where all individuals and groups are welcomed, respected, supported, and valued. Inclusive spaces encourage full participation of all. An inclusive and welcoming environment embraces the differences of individuals and groups while showing respect in, not only words, but most importantly actions.
Simply promoting diversity does not yield a culture of inclusion. It’s important to note that while an inclusive group is by definition diverse, a diverse group isn’t always inclusive. Increasingly, recognition of unconscious or ‘implicit bias’ helps organizations to be deliberate about addressing issues of inclusivity.
Investment in diversity, equity, and inclusion can be significant when done the right way. However, the return on investment will be well worth it as organizations benefit in a multitude of ways, from a more engaged workforce to a positively impacted bottom-line. The following list shows 8 evidence based ways that diverse companies are winning in the market place.
- 36% More Likely to be Profitable
Companies with diverse leadership teams respective of experience, age, industry background, and gender have proven to show increased profitability. However, cultural and ethnical diversity in leadership teams has been proven to hav the most significant impact on profitability. These companies are 36 percent more likely to be profitable than their less diverse counterparts. This can be due to innovation as there are differing viewpoints, backgrounds, and ideas at the table.
2. 28% More profitable with gender diverse leadership.
Higher representation of women in C-suite level positions results in 34 precent greater returns to shareholders. Increasing the percentage of women on a leadership team strengthens skills diversity amongst the organization to improve management performance. Women in upper management positions may also motivate women throughout an organization’s workforce, creating a pipeline of talented women leaders.
3. Innovation through diverse ideas
Companies that have diverse leadership are able to unlock innovation for market growth in a way that less diverse leadership can’t. A diverse leadership team encourages an environment where forward thought, and “out of the box” ideas can be brought to the table to create compelling and innovative initiatives. Leaders who bring diverse voices to the table are nearly twice as likely as their counterparts to yield value-driving insights.
4. Outperform less gender diverse companies by 58%
Gender diverse organizations help attract and retain quality talent. Organizations with above-average gender diversity and levels of employee engagement outperform companies with below-average diversity and engagement by 46 to 58 percent.
5. Engaged employees
Diversity, equity, and inclusion are closely linked to employee engagement. Studies have provided evidence that diversity, equity, and inclusion are critical components in employee retention, productivity, and performance. When employees feel included and valued, they are more likely become more engaged in the work they do and better perform while championing the organization. This, in turn, leads to better business outcomes for the organization.
6. Attracting top talent
Millennial and Generation Z are most diverse generational cohorts entering the workforce. Sixty-seven percent of job seekers value diversity, equity, and inclusion when seeking employment. Prospective candidates are seeking companies that foster diverse and inclusive workplaces, and are more likely to stay when they feel appreciated. The advantages of workplace diversity that includes a more positive culture, increased profitability, and an atmosphere of inclusivity, are a snapshot of the many benefits a diverse organization, that help to attract and retain employees.
7. 50% of job seekers wish their organization would increase diversity
As previously mentioned, Millennials make up the largest portion of the workforce. By the year 2025, Millennials will make up 75 percent of the workforce. A study has found that half of all employees feel that their organizations should do more to increase diversity and inclusion. Fifty-four percent say they will leave an organization for lack of commitment to diversity and inclusion.
8. 45% report more market share
Organizations with 2D or two-dimensional diversity are 45 percent more likely to report that they increased their market share and 70 percent of organizations with 2D diversity are more likely to have entered into a new market within the past year.
Diversity, equity, and inclusion have not always been a top priority in organizations in the past. However, in learning from past mistakes, the tides have been turning and a shift in focus has been placed on creating inclusive work environments for diverse teams. It has been evidenced that the organizations that have diverse leadership teams and focus on a culture of diversity, equity, and inclusion are actually winning. These organizations are leading in profitability, innovation, and employee recruitment and retention. In order to foster an environment of inclusivity and build diverse teams, the action must be genuine and intentional with careful cultivation. The investment will lead to more fulfilled, more engaged employees who feel valued and better perform at work, increasing productivity, increasing client satisfaction, and ultimately increasing profitability. Organizations that are in the top quartile for 2D or two dimensional diversity including both gender and ethnic diversity are 12 percent more likely to outperform their less diverse counterparts, proving any investment in diversity, equity, and inclusion will be returned through better business outcomes.