Building a diverse workforce goes beyond sharing the rainbow on social media during Pride month. It is also beyond sending your female employees a card on Women’s Day. When implemented properly, diversity can lead to stronger, more cohesive, and better-performing teams.
Moreover, striving for workplace diversity is not just an empty slogan anymore. According to a 2015 McKinsey report, it’s also a good business decision. Companies with an ethnically and racially diverse management are 35% more likely to achieve financial returns above their industry mean. Not only this, a Credit Suisse research found that companies with at least one woman on the board yield a higher net income growth and return on equity.
Let’s dig into why having diverse teams is important for your business:
Diversity Leads To More Innovation
Businesses have to constantly evolve in terms of the products/services they offer. It is only then that they stand out in a competitive landscape. One of the best ways to ensure constant innovation is to hire more women and culturally diverse employees. In a University of Castilla–La Mancha (Spain) study, researchers determined that companies have a better shot at introducing radical new innovations (over a two-year period) when they have more women on their team.
On a similar note, a London Annual Business Survey found that “businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogenous leadership.”
Hiring different walks of life, who don’t necessarily look, think and talk like you allows you to circumvent the pitfalls of conformity. This ultimately encourages innovative thinking. In short, enriching your team with people of different genders, ethnicities, and sexual orientation is crucial for increasing the overall intellectual potential of your company.
Diverse workplaces teach team members how to keep their biases in check and question their prejudices. Additionally, it’s a business imperative to introduce inclusive practices at your organization, so that everyone feels like their voice matters. In the end, you’ll have a smarter, more innovative team on your side. Hence, this will ensure that your company successfully meets whatever targets/goals you have in mind.
Diverse Teams Have Higher Retention Rate
Retaining employees who are self-driven, and consistently deliver beyond expectations is essential. Only then you can maintain your company’s overall productivity, performance, and morale. Having a high employee turn over is an expensive problem to have. Especially, when hiring the right talent is already a challenge for most companies.
That being said, millennials make for half of the current workforce in the U.S. Considering that they’re also the most diverse generation in history. Nearly 44 % of them are minorities and 47 % of them actively seek out workplaces with inclusion programs. So, it’s in your best interest to come across as ‘a progressive company that promotes diversity’.
When you place value on workplace diversity along with other perks and privileges, then, your employees are more likely to bring their 100% to the table every day. Employees must know that their contribution to company growth is more important than their race, gender or sexuality. This allows you to build a team that’s not only proactive, and fulfilled, but also dependable and loyal.
Diversity Allows Faster Decision-making
Diversity changes the way an entire team processes the information needed to make compelling, actionable decisions. In fact, scientists have predicted that “diverse teams may outperform homogenous ones”.
For a Northwestern University study, researchers split their sorority (or fraternity) members into four-member groups. And asked them to go through interviews that were conducted by a detective who was investigating a murder at the time. Three people in every group, also known as the oldtimers, were from the same sorority. However, the fourth one, the so-called newcomer, could either be a member of the same or a different sorority. The three oldtimers had to assemble first to decide on the most likely murder suspect. The newcomer (with their own thoughts, opinions, and concerns) proceeded to join the deliberation after five minutes.
In the end, the groups with newcomers, from outside of the group’s sorority, felt less confident regarding the accuracy of their joint decisions. But they were in a better position to pinpoint the suspect correctly. However, the groups with newcomers from inside the group’s sorority were not.
In short, while inviting an outsider’s perspective may seem counterintuitive, the payoff in the long-run can be huge.
Diverse Teams Get Better Returns
So, companies which value diversity are better at talent acquisition, customer orientation, decision-making, and employee satisfaction. All of this results in a virtuous cycle of increasing returns.
A BCG study actually confirmed that diverse teams are capable of boosting revenues by 19. This means, there’s definitely a massive metaphorical carrot dangling from a stick for companies that invest in building inclusive teams.
So, diversity in the workplace not only reduces employee turnover and fosters different points of view, but it also is directly responsible for an improved profit margin.
Now we’ve established how beneficial diversity is for your team. Here’s how you can hire a diverse team:
How To Hire For Diversity?
- Chalk out a company-wide commitment plan that has buy-in across the board to make diverse hires a priority.
- Implement a gender-blind application system, or have recruiters take names off resumes entirely while shortlisting.
- Use your company’s Business Resource Groups (BRGs). Preferably ones with ties to student groups, or universities. These serve as an exceptional pipeline for readily available talent. This can help you expand your network even further and get hands-on in the community.
- Assess the employee benefits you offer and tweak them in order to cater to everyone in some small way. For example, introduce a paid paternal leave, extend your health insurance to the partners’ of LGBTQ employees, or update your holiday calendar to include time-off for prominent festivals and religious holidays.
While the most important part of the journey is arriving at your destination, you must learn to walk before you run. When it comes to diversifying a team, you don’t have to go all out. Focus on taking small, but concrete steps to change things.