If diversity, equity and inclusion aren’t on your agenda when setting your recruitment and workforce priorities, they should be.
More and more job seekers see diversity as attractive (or even essential) when looking for an employer. And numerous studies have shown that more diverse organisations even perform better financially.
If your company is in the early stages of its journey with diversity, equity and inclusion and belonging (DEI, or DEI&B) and you’re looking for arguments, inspiration and motivation to start working actively with it, this article will give you the resources you need. Let’s take a closer look at some of the proven benefits of workplace diversity, equity and inclusion.
workplace diversity leads to stronger financial performance
The benefits of diversity, equity and inclusion go beyond just the bottom line, but it’s a fact that having a more diverse group of employees leads to stronger business performance. That’s not so surprising when you consider that groups of people with different backgrounds, experiences and insights may be better at finding innovative solutions to challenges than a more homogenous group.
A number of institutions and consulting organisations have been investigating the business case for diversity for years, and the results speak for themselves. A 2021 study conducted by SQW and commissioned by the UK’s Financial Reporting Council found a positive relationship between the proportion of women on company boards and the company’s financial results.
The consulting firm McKinsey has conducted research in this area for a number of years, and in their most recent 2023 report, where they analysed thousands of companies worldwide, they found that companies in the top quarter for ethnic diversity were 39% more likely to outperform the competition than those in the bottom quarter.
a diverse and inclusive workforce attracts top candidates
Hiring top talent is a major challenge in almost all industries at the moment. Companies are facing tougher competition than ever to attract and hire staff with the skills and background they need.
If your organisation is also facing this problem, you really can’t afford to ignore diversity and inclusion. For example, if you haven’t made your office environment fully accessible to include colleagues with disabilities, you’ll exclude these individuals — and potentially miss out on an important pool of top talent in the process.
Additionally, multiple surveys show that it’s among the top qualities job seekers look for in an employer. Our own 2024 Workmonitor report, which surveyed 27,000 employees in 34 markets, found that 32% of UK workers wouldn’t accept a job if the company wasn’t making a proactive effort to improve its diversity and equity. Similar, 31% would decline if the company didn’t align with their environmental and social values – with this figure rising to 47% among respondents in Generation Z.
Don’t underestimate the impact that a feeling of belonging in the workplace can have. When potential candidates see people with similar backgrounds succeeding at your company, there’s a strong chance they’ll accept your job offer instead of a competitor’s.
succeeding with diversity, equity and inclusion gives you a competitive edge
Companies that invest in DEI experience a range of benefits – both financial and cultural. So, when more and more companies are starting to actively work on boosting their diversity, organisations that continue to ignore it risk getting left behind.
For a lot of companies, time is of the essence — more and more surveys and studies are showing that DEI is climbing up the agenda for companies of all sizes. According to McKinsey, companies globally will spend $15.4 billion on DEI by 2026, more than double the $7.5 billion spent in 2020.
Soon, it may be just as important to match your competitor’s DEI efforts as it is to match their level of pricing, innovation or customer service. All companies need to remain competitive to succeed, and with DEI, it’s time to get started now.
diversity and inclusion can help develop internal talent
At the same time that companies are facing hiring challenges, holding on to existing employees is also becoming more difficult.
Modern workers, especially those from younger age groups, are historically ‘disloyal’ to their employers — if they’re dissatisfied or get a better offer, they’re more likely to change jobs. A 2023 survey of workers by PwC, for example, found that 35% of Generation Z respondents planned on changing jobs in the next year, compared to 26% of the total survey group.
Your company stands to benefit from this trend, since it makes it easier to attract talent from competitors. But it also ruins your retention rates, creates costs via time-consuming onboarding processes, and makes it harder to develop internal talent. How can you nurture tomorrow’s leaders when they plan on leaving the company in a few years?
Focusing on making the workplace and overall company culture more inclusive and diverse could be the key. Employees want to feel represented, respected and included at their company, and as Randstad global CEO Sander Van’t Noordende said in this Harvard Business School podcast interview: “The one tip I would give to business leaders and HR leaders: Be very cognizant of what talent is looking for, because if you want the best people, you need to give them what they want. Not everything, always, all the time. But if your proposition for talent is not the right one, you’re going to be in trouble as an organisation.”
With a retained workforce, you’ll find it easier to develop and expand employees’ skills — thanks to your work with diversity and inclusion.
diverse and inclusive leadership is stronger leadership
Fostering diversity and an atmosphere of inclusion in your leadership team is also important for retention and talent development — it’s likely that team members are more likely to stay at your organisation if they see people with a similar background making important decisions at the top of the company. Leaders also play the biggest role in defining and embodying a company’s culture — so if they embrace inclusion, it’s more likely to trickle down to the rest of the organisation.
However, some studies have also shown evidence that leadership teams which are diverse — for example in their nationality, age, gender balance, career path or industry background — make better strategic decisions and investments.
One study, published in Harvard Business Review, analysed the performance of companies in the venture capital sector, the diversity of their leadership teams, and the outcomes of tens of thousands of their investments over a number of years. Among these companies, the researchers found that diversity “significantly improves financial performance” and increases the likelihood of profitable investments.
thinking about how you can boost diversity at your company?
The benefits of diversity, equity and inclusion for large organisations are clear. But visualising what it actually looks like in practice can be difficult. What does your organisation need to have to be considered ‘diverse’? What does equity look like in the workplace, in real life? What does an inclusive culture look like, compared to a non-inclusive one?
