Countless studies have proved the merits of a diverse workforce, and there’s no denying that the United States is becoming increasingly diverse
A study found that publicly traded companies with diverse workforces were 45% more likely than those without, to have expanded market share in the past year, and 70% more likely to have captured a new market
In a Forbes study, 83% of large global enterprises agreed or strongly agreed that diversity is crucial to fostering innovation in the workplace
For years, workforce experts have been discussing the merits of a diverse workforce. These benefits include increased productivity, greater employee morale and loyalty, stronger employer brand, and greater innovation and creativity.
Overall, our nation and our workforce are both becoming more diverse. Not only are more ethnic groups and races entering the workforce, but there are more women in the labor force than ever, and lesbian, gay, bisexual, and transgender (LGBT) workers are making vital contributions to our economy. It makes sense that in this environment, businesses that embrace diversity have a more solid footing in the marketplace.
A diverse workforce is one that unites workers from different backgrounds and experiences to form a more creative, innovative, and productive workforce. Employers have learned that they can draw upon the diversity of the United States to strengthen their bottom line, and that diversity is a key ingredient towards building a strong and inclusive economy that is sustainable.
This article examines the top benefits of workplace diversity.
As more women, racial and ethnic minorities, and LGBT individuals enter the workforce, the country’s human capital grows substantially. For example, a McKinsey & Company study found that the increase in women’s overall share of labor in the United States, from holding 37 percent of all jobs to 47 percent over the past 40 years, has accounted for about a quarter of the current GDP.
Capturing a Greater Share of the Consumer Market
By bringing together individuals from different backgrounds and experiences, companies can market their products more effectively to consumers from different backgrounds. By diversifying the workplace, organizations can increase their market share. A study by the Center for Talent Innovation (CTI) found that publicly traded companies with diverse workforces were 45 percent more likely than those without, to have expanded market share in the past year, and 70 percent more likely to have captured a new market. A study by the University of Illinois’ Institute of Government and Public Affairs found that companies with a more diverse workforce consistently reported higher customer numbers than those organizations with less diversity among their staff.
According to a report by the Economist Intelligence Unit (EIU), the definition of workforce diversity no longer consists of simply avoiding race, ethnicity, and gender discrimination, but includes paying attention to values and motivations. The EIU report reveals that companies are rethinking the workplace to give workers the flexibility to work in a way that is most productive to them. As per Johanna Torsone, Chief HR Officer at Pitney Bowes, the question facing HR executives is “whether you can create an environment that lets very different people be who they truly are while maximizing their talent in order to support high performance.”
A diversified workforce has a strong impact on a company’s worker base. At the most basic level, having a selection of individuals from different backgrounds instills mutual respect and helps individuals come together to build an effective team. Conflict resolution in companies that encourage diversification is much more effective, and as a result, workers are more engaged, more productive, and deliver a higher quality of worker. According to a Harvard Business School study, multicultural networks tend to promote creativity and out-of-the-box problem solving.
A More Qualified Workforce
When companies recruit from a diverse set of potential workers, they are more likely to hire the best talent in the labor market. Inan increasingly competitive economy where the right talent is critical to boosting revenues, pooling from the largest and most diverse set of candidates is necessary to succeed. Additionally, research indicates that diversity can help to recruit top talent with a recent Glassdoor survey revealing that two-thirds of respondents said that diversity was important to them when evaluating companies and job offers.
Lower Turnover Costs
Businesses that fail to foster inclusive workplaces have higher turnover rates than businesses that value a diverse workforce. The failure to retain qualified workers results in avoidable turnover-related costs at the expense of a company’s profit. According to the Center for American Progress, it costs a company an average of between $5,000 and $10,000 to replace a departing hourly worker, and between $75,000 and $211,000 to replace an executive making a $100,000 salary. Having a diverse and discrimination-free workplace helps companies avoid these costs.
Greater Innovation and Creativity
Uniting workers from different backgrounds, with varying qualifications and experiences, is crucial to effective problem solving and decision-making. In a Forbes study, 83 percent of large global enterprises agreed or strongly agreed that diversity is crucial to fostering innovation in the workplace. According to EthnoConnect, a consulting company specializing in workforce diversity, workers from different backgrounds bring in a variety of solutions on how to achieve a common goal. As more diverse ideas are suggested, the chances of finding a workable answer are improved.
Census data indicates that by 2050 there will be no racial or ethnic majority in the Untied States, and between 2000 and 2050, new immigrants and their children will account for over 80 percent of the growth in the working-age population. If companies commit today to meeting the needs of these diverse communities as workers and consumers, the economy will grow and benefit.
Stronger Financial Performance
A recent Gallup study examined the workforce composition and financial performance of 800 business units from two companies to reveal that a diverse workforce results in stronger financial performance. Gender diverse business units in one company in the study showed a 14 percent increase in comparable revenue, and the more diverse business units in the second company had a 19 percent higher average quarterly net profit. The study also revealed that when a workforce is diverse and engaged, business units could have a 46 percent increase in revenue and 58 percent higher level of profit.
“The more your network includes individuals form different cultural backgrounds, the more you will be creatively stimulated by different ideas and perspectives.” ~Roy Y.J. Chua, Professor at Harvard Business School