Many companies have been focusing on diversifying their workforce in recent years—and not only because it’s the right thing to do, but because it can greatly increase their success. Diverse companies bring in 19% more profits, a recent study found. Another study has shown that companies that rank highest for diversity among their executives are 33% more likely to outperform their competition.
Why does diversity have such an astonishing effect on companies’ success? Read on to learn why diversity benefits organizations and how to achieve it in practice.
Why diversity matters
Having a diverse workforce gives an organization a bigger pool of ideas. Because each employee has different life experiences, they each bring something different to the table. If you’re working among a team of salespeople from one demographic, for instance, they won’t necessarily have insight into what motivates people of other demographics to buy a particular product.
Diversity encourages innovation through the vibrant exchange of ideas, a recent study found. This can ramp up productivity and success in countries where it is seen as a positive. It also reduces groupthink, helping people to arrive at the best solutions. Plus, it makes a company a more appealing place to work.
What diversity means
Working toward different types of diversity, like age, race, physical ability, and gender, has the most positive effect, providing the broadest range of talents and insights.
The Society for Human Resource Management (SHRM) highlights the value of age diversity, pointing out that an organization could have five generations in its workforce. Companies with age diversity on their teams have higher productivity—probably resulting from the cross-generational mentoring that occurs on such teams.
How to achieve diversity
Many companies believe in the value of diversity but aren’t quite sure how to achieve it in practice. If their workforce is largely white, for instance, most of their employee referrals may be white as well.
SHRM shares some guidelines for diversifying your workforce. Here are a few key steps of that process.
- Compile data to find out where diversity is lacking. Then, identify unconscious biases and other barriers to diversity (such as company practices).
- Consider how you’re recruiting new talent. Could you advertise job openings in a way that reaches new demographics more readily? For example, you might attend career fairs at schools or cities with diverse student bodies. You could also form alliances with media partners whose publications have a diverse readership.
- Reflect on your culture. What message and environment are you creating for your employees? Train your staff in cultural sensitivity to make your workplace more welcoming to everyone.
- Provide equal opportunities to advance to leadership positions. Rather than just changing the composition of your workforce, make sure you’re promoting a broad array of people to leadership positions. To accomplish that goal, make sure they have the mentoring and other support to get there. As people of diverse backgrounds see leadership that reflects their own demographics, they’ll believe they can advance into those positions as well.
- Engage in inclusive decision-making whenever possible. This will also show a diverse team that they’re valued while allowing you to leverage their full spectrum of insights.
To boost age diversity, companies should also focus on helping older employees gain new skills as needed rather than presuming they aren’t interested in (or capable of) learning something new. That will help them retain loyal employees, as many older employees are working longer than they did in the past.
It’s helpful to bring multiple recruits on board in a similar timeframe when working to diversify. Otherwise, the one new recruit can feel isolated. Making sure the workforce is truly diverse, rather than having one token person who breaks the mold, is crucial to the success of your efforts. This provides people with psychological safety, helping them feel more heard and understood.