While no one will argue against the importance of diversity in the workplace, it too often receives lip service from executives who do little to make it a permanent thread in the company’s fabric. Diversity is considered nice but not essential when there are bigger fish to fry, such as benchmark analysis and sales growth.
What if I told you diversity is more than just a nicety? For numbers-minded folks, research shows a diverse workforce influences profits dramatically. McKinsey research shows that companies in the top quarter for gender or racial and ethnic diversity are more likely to have higher financial returns. Some noteworthy stats:
- Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
- Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
- In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance. For every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
This really shouldn’t shock anyone. A diverse workforce brings together people from many different backgrounds, allowing them to collaborate and generate ideas more effectively. For international companies, diversity provides an indisputable business edge when working with different cultures across the globe. Even for businesses that only function within the U.S., diversity fuels innovation while reflecting the melting pot that is our nation.
Diversity is also incredibly important from a recruiting standpoint. Hiring a diverse workforce not only means access to bigger talent pools, but also the opportunity to define what the company stands for — which helps attract top talent. For example, millennials — who soon will make up the majority of the workforce — consider diversity an important value, but it must be authentic.
To go beyond the lip-service phase to authentically instill diversity into the workplace, you must be intentional. Keep in mind, diversity isn’t just race and gender — it’s also seeking employees with different backgrounds, ideas and ways of thinking. Here are a few things organizations can do to encourage diversity:
1. Companies must take a long-term strategic approach to embrace diversity. The best way to achieve this is to put someone in charge of these efforts and hold them accountable. Evaluate progresses at least once a year.
2. Beware of forcing diversity because it will backfire. Diversity isn’t a quota to be met — it’s something that must fit into every aspect of day-to-day operations.
3. Leaders must embrace diversity for it to become a permanent part of the company’s makeup. If it starts at the top, it will trickle down. Consider executive training programs if necessary.
4. For recruiting, utilize diverse sources to attract diverse talent. If one source is providing you with cookie-cutter candidates, experiment elsewhere to find untapped markets.
5. Demonstrate your commitment to diversity by joining organizations such as www.nshmba.org and www.nbmbaa.org. By actively participating in groups like these, you’ll gain knowledge while building your company’s reputation.