3 Benefits Of Nurturing A Diverse Workforce

In a time of corporate social responsibility (CSR) programs and social justice movements, more organizations realize that workplace diversity is a key driver of employee engagement and satisfaction. But much needs to be done to make workplaces more diverse and inclusive.

According to research by Mercer, 64% of entry-level employees are white. The situation is much the same among top executive ranks — 85% are held by white people. Additionally, the wage gap between black and white workers are now worse than they were in 2000, according to the Economic Policy Institute.

What is workplace diversity?

Workplace diversity means accepting and valuing the contributions and skills of employees of all backgrounds. It can also be defined as having a workforce that reflects the same diversity we see in greater society.

In more practical terms, workplace diversity means hiring and nurturing employees representing different ethnic backgrounds, cultures, genders and sexual orientations, age groups and socioeconomic strata.

Anti-discrimination laws provide stringent rules protecting job seekers and employees from being discriminated against.

For example, Title VII of the Civil Rights Act of 1964 in the US protects workers and job candidates from discrimination on the basis of race, color, religion, sex and national origin. Meanwhile, the UK’s Equality Act 2010 states that employers cannot discriminate against employees and candidates based age, disability, gender reassignment, marriage status, pregnancy, race, religion, sex and sexual orientation.

Despite these protections, many employers fail to meet employees’ expectations for diversity and inclusion. This is largely because no law requires employers to have a diverse workforce, and as a result you have sectors like construction, where only 4% of workers come from minority backgrounds and only 16% are women.

But employers don’t necessarily need a law compelling them to have more diverse teams. Companies ahead of the curve when it comes to workplace diversity are already seeing top-line and bottom-line growth. Here’s a closer look at the core benefits of diversity in the workplace.

1. Enhanced Employer Value Proposition

An Employer Value Proposition (EVP) is a statement or brand that defines how an employer wants to be seen by employees and candidates. In other words, it’s the summation of an employer’s image and reputation.

Workplace diversity is one of the key factors that shape an organization’s EVP. In 2017, PwC reported that an organization’s diverse and inclusive workforce affects how it's viewed by employees and other key stakeholders, like customers and other businesses.

Meanwhile, a 2020 survey of 500 hiring managers by The Manifest found that 70% of job seekers prefer to work for employers committed to promoting diversity and equality. These findings align with a September 2020 survey from Glassdoor, which shows that three in four employees and job seekers viewed diversity as important when evaluating employers and job offers.

In other words, organizations that want to attract and retain top talent should consider having workplace diversity policies in place.

2. Innovation and financial growth

A diverse workforce is also more likely to bring diverse ideas to the table — ideas that prevent echo chambers and lead to true innovation. As Deloitte explains, “Diversity of thinking is the new frontier.”

Their research shows that diversity of thinking is a powerful driver of creativity, enhancing innovation by 20% and enabling organizations to spot risks and reduce their potential impact by 30%. Diverse organizations are also twice as likely to exceed their financial targets and eight times more likely to exceed expectations for business outcomes.

Of course, this begs the question: What’s the link between diversity and innovation?

Apart from providing different perspectives, diverse workplaces are also better equipped to understand the needs of diverse customers. This is something companies have known for decades. For example, women are more likely to understand the needs of other women, and people of similar cultural backgrounds are more likely to have an easier time building rapport with each other.

3. Access to a wider talent pool

Companies in sectors vulnerable to escalating disruption now realize the importance of having people with the right skills. However, this isn’t just about technical skills.

“Soft skills” like communication, collaboration, empathy and creativity are just as vital to an organization’s success. For example, EY looks for qualities such as “strong communicator,” “team player” and “curious” in candidates.

However, PwC notes that these soft skills are among the hardest to recruit for and compound existing talent supply and retention challenges.

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Nurturing a diverse and inclusive workplace can help employers bridge these skills gaps. By broadening the pool of potential candidates, companies can attract more job applicants and encourage employees to promote their employer’s EVP with people whose values and views of diversity align with their own.

The challenge of creating a diverse workplace

One of the frequent criticisms of organizations that claim to have a diverse workforce is that many are simply co-opting a movement to add a veneer of social responsibility to their brand. These beliefs are especially prevalent among younger workers, with two-thirds believing that business leaders are only paying lip service to the issue of diversity and inclusion.

The takeaway here is simple: organizations cannot afford to view diversity and inclusion as a “nice to have”, nor can they approach it half-heartedly. To show their commitment to creating and maintaining a diverse workplace, employers should create formal policies that embed diversity in their hiring, onboarding, training and employee advancement practices.