While, at the core, diversity and inclusion truly is important simply because it is the right thing to do, it also comes with a multitude of benefits to companies big and small, including increasing the pool of qualified applicants, retaining high performing employees, and increasing creativity, innovation, and productivity- all of which add to the biggest return for companies- increased revenue. However, simply creating diversity in the workplace does not work effectively for those employees or the company. You cannot bring diverse candidates into an environment that is non-inclusive, otherwise, you threaten their tenure and security. Bringing diverse employees into a non-inclusive environment only invites them into an unwelcoming, uninviting, and toxic culture that will cause harm to their well-being.
Creating an inclusive culture where employees can thrive and feel welcomed is a highly critical area that many companies fail at, in part due to the complexity of creating an inclusive culture, but also, in some situations, due to companies only buying into diversity and inclusion because they see the dollar signs and want to reap those benefits that diverse employees can bring them. Which is why it must be noted that while all of these benefits are great news for the future of companies and the pocket books of employees and leadership, the most important factor and push for creating a more diverse and inclusive company culture must be because it is the right and just course of action to take.
Invite a Larger Pool of Candidates
When a company truly embraces diversity in the workplace they begin to open their doors to a larger pool of highly qualified and talented job hunters- two thirds of which indicate that diversity is an important factor when choosing a company to apply to and work for. In order to win in a highly competitive market, especially when the unemployment rate is at a low and candidates have the upper hand, employers must do everything within their power to draw in the biggest pool of candidates possible, so that they increase the likelihood of hiring the best in the industry and top talent over their competitors.
This does not mean standing out as a diverse and inclusive company by modifying marketing materials to appear diverse (although, companies must increase diversity in marketing materials) but actually implementing truly diverse and inclusive policies that naturally draw in a wider range of future employees and using word of mouth and recruitment techniques that put these on display.
Eighty four percent of surveyed executives revealed that they know that a “lack of attention to diversity and inclusion contributes to employee turnover.” According to the U.S. Bureau of Labor Statistics March 2019 saw a voluntary turnover (employees quitting of their own free-will rate of 3.4 million, a 0.1% increase from March 2018, which was a rate of 2.2% country and industry wide. While the uptick in voluntary turnover is small percentage wise on a federal level, the costs to corporations can be astronomical.
For example, in 1999 Nextel built a case for diversity and developed a diversity training program built around the concept of not only creating a better environment for employees, but decreasing turnover costs and increasing retention and employee satisfaction. Nextel reported that the implementation of this training lead directly to the retention of 36 employees- an immediate savings of $3,204,000 in turnover costs (with an average turnover cost averaging $89,000 per employee). Nextel saw an ROI of 163% from their investment in diversity training.
Using Nextel’s average turnover cost per employee, the federal turnover rate in March 2019 cost businesses a total of $302.6 billion. While we cannot state directly how many of those specific turnovers were directly related to a lack of diversity and inclusion, we do know that workplace culture drives turnover and costs the tech industry more than $16 billion each year (according to this study) Plus, nearly 40% of employees surveyed in that same study indicated mistreatment and unfairness played a large role in their decision to leave their company, and nearly two-thirds of those indicated that they would have stayed if their employer fixed its culture.
Boosts Creativity & Innovation
While reducing turnover rates, a prominent stance on diversity and inclusion increases employee engagement and innovation. When companies lack diversity and have employees hailing from very similar backgrounds, cultures, and experiences, creative idea generation is stifled due to a lack of varied experiences and backgrounds- sameness breeds sameness.
When multiple perspectives, personalities, experiences, and voices are in the room and welcomed at the table, the best kind of innovation occurs- ideas are bounced off of one another, out-of-the-box thinking occurs, norms are flipped on their heads and the company reaps the benefits. A study from Forbes resounded this concept, concluding that “the best way to ensure the development of new ideas is through a diverse and inclusive workforce.” In short, more creative and innovative ideas and solutions are brought to the table when there are enough chairs for diverse employees to sit at.
In environments where creativity is not only encouraged but allowed to take the forefront in employee’s duties productivity sees a steady climb (since creativity does lead to more productivity), so much so, that diverse teams see upwards of a 60% improvement on decision-making, and innovation increases by 84% when employees feel included- according to this study by Deloitte.
Increased opportunities for creativity lead to increased productivity- both of which are remarkably amplified on more diverse and inclusive teams.
The Bottom Dollar(s)
When retention, creativity, productivity, and innovation- all of which are critical success factors- have steadfast results and growths, the biggest and most ?? numbers in business rise as well- the company’s revenue. During a McKinsey study, it was found that US public companies with executive boards that were diverse had a 95% higher return on equity than boards with similar demographics. REO isn’t the only factor that studies have found are positively effected when leadership and employees are diversified, in fact, revenue trends upwards by 19% more in companies with diverse management.
Lastly, market shares increases were reported by 48% of companies in the US with more diversity in senior level management, while only 33% of companies with less diverse management saw similar market share trends, according to a 2013 study by Center for Talent Innovation.
Diversity and inclusion must go hand-in-hand, and employees and leadership alike must passionately support the creation and sustainment of authentic inclusion and diversity in order to create environments where employees come, stay, and feel welcomed. When this is done properly, corporations will see an increase in their candidate pool, reduced turnover, and increased creativity, productivity, and revenue. In short, when diversity and inclusion wins, we all win.