July 06, 2017 Starting and Managing a Small Business

It’s 2017, so certainly you’ve heard the phrase “workplace diversity” bandied about. Business development and human resource experts know now that the term is more than just a modern HR buzzword, but a solid business strategy to emulate across the board.

Recent research and long-range data support the idea that workplace diversity can improve company morale, strengthen employee loyalty, attract quality talent, foster a sense of community, and boost business public relations. Even more impressive, economic experts posit that increased workplace diversity may earn companies greater profits!

In other words, it’s not just a “feel-good” move. Workplace diversity is good for your bottom line.

Increased Workplace Diversity May Earn Your Company More Money

A compelling study conducted by renowned university economists determined that diverse offices may function more efficiently than offices with less diversity, thus earning more money overall. The compilation and analysis of the study, entitled Diversity, Social Goods Provision, and Performance in the Firm, was published in the Journal of Economics and Management Strategy. Sara Ellison of MIT’s Department of Economics co-authored the publication with Wallace P. Mullin of George Washington University.

This long-term, data-driven study spanned eight years. Business revenue and employee data was collected from 1995 thorough 2002. Data was collected from more than sixty U.S and international businesses. Some offices were all male, some all female, and some mixed gender. Survey data measured a broad range of various factors, including, but not limited to, employee satisfaction and overall morale. 

MIT News report that, “Among other results, the economists found that shifting from an all-male or all-female office to one split evenly along gender lines could increase revenue by roughly 41 percent.”

The explanation, according to researcher Ellison, is that, “Having a more diverse set of employees means you have a more diverse set of skills …[which] could result in an office that functions better.” Ellison continues, “There have been a number of studies looking at things like diversity and performance, but they don’t always use the [bottom-line] measures of performance that economists might prefer.”

Gender Diversity Helps Women Advance in Underrepresented Fields

Despite increased interest in workplace diversity, women continue to be under-represented in key business areas. Women are still struggling to gain traction in top-ranking positions, as well as fighting for employment in traditionally male-dominated fields.

According to McKinsey research summarized in Women Matter 2016 “In Western Europe, only 17% of executive-committee members are women, and women comprise just 32% of members of corporate boards for companies … In the United States, the figures are 17% for executive committees and just under 19% for boards.”

It’s clear from these numbers that gender diversity should be a top priority for all modern businesses. Gender inclusion, from the top corporate levels to the bottom, will help boost women’s involvement and representation in the business community, as well as in STEM and highly technical fields. Essentially, there’s a large pool of skilled (female) employees that are consistently being overlooked – don’t waste that resource!

Inclusive Companies Report Higher Levels of Employee Engagement

According to the Harvard Business Review (HBR), workplace diversity and corporate inclusion should go hand in hand. A broadly diverse staff or management team alone doesn’t mean ultimate success for diverse employees. Harvard opines that “inclusion” means working with people of color, women, disabled, and LBGT individuals to unlock their talents and develop them into valuable business associates.

The Harvard Business Review reports, “Our research finds that employees with inclusive managers are 1.3 times more likely to feel that their innovative potential is unlocked. Employees who are able to bring their whole selves to work are 42% less likely to say they intend to leave their job within a year. Those with sponsors are 62% more likely to have asked for and have received a promotion. And 69% of women who off-ramp would have stayed at their companies if they’d had flexible work options.”

The research supports that diversity coupled with inclusion can result in the best talent recruitment, plus engaged, loyal employees. While diversity alone is important, without inclusion, diverse staff will continue to feel overlooked. Supporting diverse employees in the workplace can mean higher rates of employee engagement and lower rates of employee turnover.

Challenges With Workplace Diversity May Trigger PR Problems

Companies who fail to diversify may suffer PR consequences, as well as higher employee turnover. Uber is a prime example of how a well-regarded, successful company was forced to deal with PR problems due to diversity issues.

Recently, Uber faced broadly reported claims of gender discrimination. These damaging reports led to the resignation of many of the company’s top talent, including their former President. Employment and PR experts state that Uber’s lack of diversity became a high-profile problem for the company.

Uber is not the only company facing diversity issue backlash. According to business pros, the tech industry may also be facing diversity problems. Indeed surveyed 1,002 people working for tech companies across the country to see how diversity is impacting the industry.

Indeed’s survey results determined that 24% of tech workers had felt discriminated against at their current company. Moreover, 34% of Asian tech workers reported discrimination, while 29% of female tech employees felt discrimination. In contrast, “77% of [tech] respondents say it is very or quite important to have a diverse company.”

Companies who publicly deal with diversity challenges face PR and media headaches. Additionally, such companies may reduce their ability to woo and hire top employees, since so many workers in modern business report that they value diversity in the workplace.

Workplace Diversity Reflects Modern Demographics

Broadly diverse companies reflect the make-up of the population at large. Modern companies should strive to adapt to the changing U.S. and international demographics. Keeping pace with societal changes demonstrates to your customers, clients, and business colleagues that your company is open to advancement and keeping pace with modern values.

Employment experts state that diverse individuals bring a broad range of skills, backgrounds, and talents to the company — which can help companies innovate and evolve. Modern business means accessing new perspectives and insights for the better, including diverse views and backgrounds. By including employees that are representative of modern demographics, you’ll end up with input from all the demographics your business serves – not just one tiny part. That means you can put together better products and services and open up new markets.

Workplace Diversity Fosters a Sense of Community

Workplace diversity is important for those intangible factors in modern business, such as cultivating a sense of community within the company. Connected employees are enthusiastic, committed workers. Modern businesses know that a strong sense of community in the workplace can inspire their employees to do their best and boost overall job satisfaction.

Ann Nadeau, officer at Great Place to Work, claims “The best workplaces forge bonds among co-workers of different political views, different backgrounds, different job titles … The sense of community is palpable.” A connected sense of community will create an ongoing sense of mutual respect, which will add up to a more positive corporate culture for all employees.

All Are Welcome

The bottom line: In today’s business world, workplace diversity matters. Higher rates of workplace diversity can help companies evolve, innovate, problem-solve, and be more efficient. Moreover, highly diverse workplaces offer employees a better sense of community, increased worker engagement, and a more positive corporate culture.

Workplace diversity is a win across from the board, for employees, employers, and businesses, both large and small. Happier employees, better performance, and more money – it’s a no brainer!

For more information on which modern companies are diversity all-stars, Fortune and Great Place to Work publishes an annual 50 Best Workplaces for Diversity.

 

Top Related Resources

Resources for Women-Owned Businesses

Business Resources for Service-Disabled Veterans

Resources for Minority Owned Businesses

Let's Get Started

In just 15 minutes, you can be on your way toward applying for a small business loan. Start by telling us a little about yourself.