Beyond creating opportunities and developing organizations that reflect the rich, diverse world we live in, diversity as a strategy increases business growth, client retention, and employee engagement. True implementation of diversity leads to positive changes within and outside of the workplace environment, inspiring employees and attracting more clients.
A myriad of studies have highlighted the tangible effects of diversity. Below are the three main benefits:
Increased Business Results
According to McKinsey & Company’s 2019 analysis, gender-diverse companies—particularly among executives—were 25% more likely to have above-average profitability than their competition. Similarly, ethnically- and culturally-diverse companies outperform their competition by 36% in profitability. In other words, diversity brings concrete economic benefits to an organization, helping them increase productivity and professional drive through greater communication and understanding. Moreover, the table below demonstrates that the economic benefits of diversity have increased over time, suggesting the organizational value of diversity will continue to grow.
Additionally, according to the Harvard Business Review, a team with a member who shares their client’s ethnicity is 152% more likely to understand the client. This understanding leads to increased client retention and moreover allows the relevant organization to cater to a wider community. However, employee-client connection is not solely limited to ethnic diversity; Felix Malitsky, President and Founding Partner of Fortis Lux Financial, provides this example:
“Let’s say you’re a single mom and part of our financial services team, and you’re working with a client who is also a single mom. You know the challenges. If you can help the rest of the team understand that it’s very powerful. From an emotional standpoint, from a connection and support standpoint, it adds a lot of value to our organization.”
A Rise in Creativity and Innovation
The incorporation of individuals with unique backgrounds into an organization increases the level of innovation. Numerous studies spanning decades of time demonstrate diversity enhances creativity, point blank. Diversity “encourages the search for novel information and perspectives, leading to better decision making and problem solving” because people tend to be more diligent and open-minded when working in diverse environments. With a curated team of unique individuals, new ideas break forth, leading the organization towards innovative solutions to complex problems. When these teams are presented with a challenge, they are better able to develop varied and inventive proposals as a result of their wide range of thoughts and experiences. Additionally, these factors increase adaptability and flexibility in the office, allowing the organization to be more competitive in a quick-paced marketplace.
“Diversity inspires innovation and creativity and leads to better decision-making. It is imperative that we work to ensure that the make-up of our firm mirrors that of our clients and the world around us.”
Paul M. Schmidt
Chairman, BakerHostetler
Attracting New Hires
One of the key components of diversity’s positive feedback loop is attracting new hires, where genuine implementation of diversity helps grow an organization’s talent. The reason why is simple: when looking for work, members of marginalized groups often seek out organizations that value diversity, applying to openings in multicultural and gender-diverse offices. A 2020 Glassdoor survey found that 76% of job seekers believe a diverse workforce is a crucial factor when evaluating organizations for potential employment. These numbers only increase for marginalized communities. A diverse work environment makes an organization more attractive to diverse groups, thus leading to further workplace diversity! With this positive cycle, a welcoming and inclusive workplace attracts more individuals with unique experiences, helping ensure an organization can reap all the benefits of diversity.
Diversity is critical to an organization’s growth and its competitive advantage; it leads to increases in innovation, greater talent hiring and retention, and beneficial economic outcomes. Diversity is imperative not only for the workplace, but for the community at large, as our workforces should reflect the multicultural, gender-diverse, beautiful world we live in.
Dima Ghawi is the founder of a global talent development company with a primary mission for advancing individuals in leadership. Through keynote speeches, training programs and executive coaching, Dima has empowered thousands of professionals across the globe to expand their leadership potential. In addition, she provides guidance to business executives to develop diversity, equity, and inclusion strategies and to implement a multi-year plan for advancing quality leaders from within the organization.
Reach her at DimaGhawi.com and BreakingVases.com.
