Today, organizational diversity is a necessary mentality rather than a strategic imperative.
Census data reveals that by 2050 there will be no racial and ethnic majorities in the U.S. Immigrants and their children will make up 83% of the new working-age population between 2020 and 2050.
While cultural diversity remains a hot-button issue, there are numerous advantages with representing a variety of groups in your business. By integrating alternative perspectives, organizations gain additional insight into how to solve problems, innovate and meet market needs. Ultimately, these benefits impact your regulatory compliance, workplace culture and your bottom-line.
Today, we examine how businesses embracing inclusion strengthen themselves from within while gaining new footholds in the market. Here are 5 key benefits diversity brings to your business….
#1 Improved Workplace Creativity and Innovation
Uniting workers with differing experiences, backgrounds and capabilities is essential to effective problem-solving in the workplace. It’s obvious that two heads are better than one, and Harvard Business School research confirms multicultural groups promote creativity. A shared goal is essential to allying disparate histories and overcoming diversity issues in favor of communal commitments.
Beyond elevating the quality of everyday resolutions, leveraging a panoply of contributions furthers innovation. Eighty-five percent of large international businesses boosted their innovative thinking by fostering workplace inclusivity, according to a study by Forbes. For businesses keen to accelerate the innovation process, a diverse product development team better understands varied markets and surfaces unique ideas. For businesses looking for a competitive advantage, diversity is pure gasoline.
#2 Minimal Turnover Costs
A mixed workforce helps your business avoid the high costs of employee turnover. Recent research shows non-inclusive workplaces suffer higher turnover rates because they maintain a hostile environment. Retaining employees, and the multivariate benefits therein, are highly correlated with fostering a mindset of acceptance.
The Society for Human Resource Management finds that employers spend between six to nine months of an employee’s salary in finding and training a replacement. For example, losing a $60,000 per year salaried employee will cost anywhere from $30,000 to $45,000 in addition to that new employee’s salary. An open, discrimination-free workplace will minimize these avoidable costs.
#3 Extended Market Reach
Organizations with a diverse makeup enjoy a tremendous advantage in understanding and reaching evolving markets. Businesses today are customer-centric, utilizing transparency as a means of communicating brand values and attracting customers. Inclusive brands are both welcomed by potential customers and better at building varied relationships that further earnings.
A native understanding of the assorted needs and wants in the marketplace will empower marketing and sales. Simply, a multitude of perspectives at hand allows you to better identify with diverse market segments and surpass homogenous companies.
“Leaders of retail and consumer goods businesses, in particular, will need to take steps to understand and create affinity with an increasingly multicultural and multifaceted consumer base.” – Alison Kenney Paul, Thom McElroy and Tonie Leatherberry, Deloitte Review
Understanding cultural trends can transform into footholds in profitable, unforeseen markets. For example, imagine your business understood the significance of women entering the marketplace in the 1960s following the feminist movement. By hiring women as equals and utilizing their perspective, which a select few companies did to great success, you’d have opened your horizons to a massively untapped demographic.
A recent study by McKinsey & Company found that women’s overall share of U.S. labor increased from 37% to 47% in the last 40 years. This change now accounts for nearly a quarter of the current GDP – massive buying power.
Consider the ongoing boom in the Chinese middle class, a group that emphasizes education as a means to achievement. Between 1990 and 2010, the educated Chinese middle-class market grew from 610,00 in 1990 to 5 million. Hiring inclusively allows you to understand evolving markets and tap into their future buying potential. Rest assured that diverse companies keep an ear to the ground better than the rest.
#4 Less Legal Liability
In 2016, The Equal Employment Opportunity Commission secured more than $482 million for victims of discrimination in all U.S. workplaces. A total of 97,443 charges were filed. Obviously, your organization doesn’t want to be another grim statistic.
Demonstrating your company’s understanding and respect of multiple cultures will insulate you from these costs. It will also minimize backlash associated with losing market credit and turnover costs. When it comes to ethics and compliance, a diverse workforce is a huge boon.
#5 Better Leadership
Diversity results in both better leadership and more effective teamwork. Research by McKinsey found that companies with diverse executive boards enjoy higher earnings and equity returns. A far-seeing group will better assess risks and maximize opportunities across a range of markets.
Within the organizational hierarchy, leaders are responsible for vision and communicating their vision. Those able to communicate with diverse groups will be most effective, both at empowering a multitude of employees and proactively removing any barriers the team faces. Leaders are also responsible for developing their employees, from providing diversity training to instilling the need for ethical compliance.
“Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise.” – James Surowiecki
Companies demonstrating thought leadership are not homogenous, but instead, entertain divergent discussions before taking action. While this requires strong leadership to manage, the results are evident. As a study from Deloitte shows, “diversity of thought” helps avoid groupthink and propels organizations toward effective solutions that align with profit goals.
Change is constant in business. By hearing alternative voices continuously, a diverse workplace promotes an agile mindset while simultaneously reinforcing the need for new ideas. By drawing from a diversified pool of thought, leaders gain strength and stability ensuring ideal decision-making.
Opening up to Diversity
A rising tide will raise all ships, but truly diverse organizations are already sailing ahead of the competition. Don’t wait to embrace the benefits of inclusiveness. Your organization will enjoy a ready understanding of new markets, reduce costs concerning turnover as well as increase workplace creativity and innovation.
Your leadership will also increase in efficacy, both from sourcing uncommon solutions and by tapping into expanding markets in real time. As for ethics and compliance, diversity is a surefire way to mitigate risk. When it comes to business advantages, a diverse workplace delivers far more than the sum of its parts.