Intuitively, we all know that diversity is important. When your employees come from a wide range of backgrounds, this fosters learning, innovation, and creativity. The businesses embracing diversity are able to offer the best possible solutions as new ideas and processes are introduced by team members.
Here’s how diversity improves business outcomes:
Glassdoor found that 67% of people look at how diverse a workplace is when they’re deciding where they’d like to work. If you’re hoping to attract the best possible talent, incorporating diversity into your workplace is a key step.
Did you know that companies that are inclusive are 1.7 times more likely to be leaders in innovation in their market? When multiple worldviews and perspective are working together, they’ll often come up with unexpected, creative solutions- meaning increased innovation.
A 2017 study found that there is a direct link between diversity and better decision-making. And decisions made by diverse teams lead to better business performance.
The study analyzed 200 teams across a range of companies, looking at 600 of their business decisions. Researchers found that diverse teams of at least three people made better, faster decisions than individual workers.
Teams that were diverse geographically, while including members of varying ages and genders were the most successful in their decision making, and their decisions were better than individual decisions 87% of the time.
Diverse teams can solve problems faster than people who are cognitively similar. This makes sense since employees who come from different backgrounds have different views and experiences which they bring to the table.
Unfortunately, human beings naturally gravitate toward people who think similarly to them. This means that if organizations are not careful, they can end up with like-minded teams which are not cognitively diverse. This is called functional bias, and it’s bad news for businesses since teams facing new or complex situations will be limited in how they can see problems differently or create new solutions.
Businesses can overcome this problem by recruiting for cognitive diversity and creating teams which include members with a variety of demographics.
Deloitte studied 1,550 employees in three Australian businesses. The research found a strong link between employee engagement and workplace diversity, which makes sense. After all, employees who feel included are much more likely to be engaged in the workplace.
This is a big one for most businesses, and research has found that diversity has a massive impact on the bottom line. In 2015, McKinsey’s Why Diversity Matters study analyzed more than 1,000 companies from 12 countries. The report found that the businesses that had the most ethnic diversity in executive roles were 33% more likely to have above-average profitability than the companies that were the least ethnically diverse.
A 2018 study by the Boston Consulting Group analyzed 1700 companies across 8 countries, all of varying sizes and in different industries. They found that companies with diverse management teams had 19% higher revenue due to increased innovation.
Businesses focusing on diversity benefit from more innovation, better decision making, and increased profits. If these benefits sound great to you, get in touch to learn how we can help today.