Benefits of diversity & inclusion for companies
Our societies are diverse.
Unfortunately, not all workplaces reflect this diversity, and even fewer manage to create a truly inclusive environment for the employees.
Diversity in companies is an easily measured fact: how diverse are employees in terms of gender, background, education, age, ability, sexual orientation, culture, and religion? If you want to increase diversity in a company – and as this article will argue, there are many reasons to do so – all you have to do is hire.
Inclusion is less obvious and requires more active participation of companies. If you want to learn more about how to become more inclusive, find out about our story-based inclusion program here.
There are many benefits to having diverse and inclusive companies. It is not only the right thing to do, but also benefits business in a multitude of ways.
A study by Deloitte (2013) shows that companies that have a diversity policy and in which employees feel included, perform better than other companies:
- They are more innovative
- Employees are more engaged
- Diverse teams collaborate better
- Employees that feel included have lower rates of absenteeism
These findings are backed by other studies.
A research by Boston Consulting Group (2017) studied which diversity drives innovation. In their study, they show that teams that have more diversity in terms of country of origin, industry background, gender, and career path, are more innovative. The same study shows that diversity in academic background does not result in more innovation, and a diversity in age actually has a negative effect on innovation in a company.
Another study by Forbes (2017) indicates that diverse teams make better, faster, and more successful decisions. In this study, it shows that teams that are diverse in terms of age, gender, and geographic background, make better decisions 87% of the time, they make decisions twice as fast, with half the meetings. When a decision is made and executed by a diverse team, it delivers 60% better results. A key finding shows that decision making improves, when diversity increases.
A cherry on top: diverse companies are more profitable, according to a 2009 study by the American Sociological Association. Their research found that companies that are more diverse in terms of race and gender have more sales revenue and higher customer numbers. As racial and gender diversity levels increase, profit relative to competitors also increases. These findings are backed by studies by McKinsey in 2015 and 2018, in which a correlation was found between profitability and diversity in terms of gender, ethnic, and cultural background. Diverse teams are more likely to outperform their peers on profitability.
And so, as Linda Fisk concludes:
“It’s increasingly clear that a commitment to equity is not just the right thing to do, but it is also smart leadership and good business.”
- Deloitte & Victorian Equal Opportunity & Human Rights Commission. (2013, May). Waiter, is that inclusion in my soup? A new recipe to improve business performance. https://www2.deloitte.com/content/dam/Deloitte/au/Documents/human-capital/deloitte-au-hc-diversity-inclusion-soup-0513.pdf
- Fisk, L. (2021, January 4). Embracing Diversity And Inclusion As A Sustainable, Competitive Advantage. Forbes. Retrieved February 11, 2022, from https://www.forbes.com/sites/forbesbusinesscouncil/2021/01/04/embracing-diversity-and-inclusion-as-a-sustainable-competitive-advantage/?sh=4800d5482642
- Hunt, V., Layton, D., & Prince, S. (2015, February). Diversity Matters. McKinsey & Company. https://www.mckinsey.com/insights/organization/~/media/2497d4ae4b534ee89d929cc6e3aea485.ashx
- Hunt, V., Prince, S., Dixon-Fyle, S., & Yee, L. (2018, January). Delivering through Diversity. McKinsey & Company. https://www.mckinsey.com/~/media/mckinsey/business%20functions/organization/our%20insights/delivering%20through%20diversity/delivering-through-diversity_full-report.ashx
- Larson, E. (2017, September 21). New Research: Diversity + Inclusion = Better Decision Making At Work. Forbes. Retrieved February 15, 2022, from https://www.forbes.com/sites/eriklarson/2017/09/21/new-research-diversity-inclusion-better-decision-making-at-work/?sh=4600e664cbfa
- Lorenzo, R., Voigt, N., Schetelig, K., Zawadzki, A., Welpe, I., & Brosi, P. (2017, April 26). The Mix That Matters. Innovation Through Diversity. BCG. Retrieved February 11, 2022, from https://www.bcg.com/publications/2017/people-organization-leadership-talent-innovation-through-diversity-mix-that-matters
- American Sociological Association. (2009, April 3). Diversity Linked To Increased Sales Revenue And Profits, More Customers. ScienceDaily. Retrieved February 16, 2022 from www.sciencedaily.com/releases/2009/03/090331091252.htm