The Business Case for Diversity: How Inclusive Workplaces Drive Success 

The Business Case for Diversity: How Inclusive Workplaces Drive Success 

Business 3rd May, 2024 7 Mins Read

Did you know diversity could be a game changer for your company? In this blog, I analyzed the business benefits of diversity.   

In simple terms, diversity means recruiting people of diverse characteristics. The main differing characteristics are:  

  • Age   
  • Ethnicity   
  • Cultural backgrounds   
  • Gender  
  • Sexual orientation  
  • Educational level  

Forbes states that the business benefits of diversity include 35% higher financial return than non-diverse workplaces.   

Please understand what diversity brings to know the business benefits of diversity in a competitive environment. Diverse workplaces have employees with different perspectives and skill sets. They bring new and fresh ideas with them.   

Such skills help a company capture new markets or cater to new customers. If your American brand opens a Sri Lankan franchise, you need a South Asian executive base. You will need that to understand the common KPIs and drivers for serving local clients.   

Tangible Benefits  

The tangible benefits are mostly short-term benefits. A company quickly perceives such benefits.   

1. Increased Creativity and Innovation  

Ashley Stahl from Forbes stated that:  

A diverse team “opens the conversation to new, unexplored, and different ideas.”  

Indeed, there are members with different stylistic approaches in a diverse team. For instance, the women leaders bring empathy and integration to a team. The male leaders inspire a workplace to be more ambitious.   

Any imbalance in the gender ratio can compromise the creativity of the workplace.   

But how is innovation linked to diversity?  

Innovation depends on brainstorming new ideas. I will give an example of the business benefits of diversity, like better innovation.   

Your team might only have business management degree holders. However, if you have a global team, representatives from the USA, Japan, China, India, and many more will be available.   

Business management students’ academic learning and hands-on training are different in these countries. Thus, you have diverse ideas on the table.   

With such ideas sparking, innovation is in your hands!  

 2. Diverse teams bring unique perspectives and ideas  

I already described that the composition of a diverse team brings unique perspectives and ideas to the table. However, critics say too many ideas and creativity can harm your business.   

It might result in losing track of the central business ideas.  

If you also think so, diversity is your savior, here again!  

A diverse team has a fair representation of all age groups. The older employees know your business’s values, goals, and KPIs in and out. They have been employed for a long time. The younger employees have fresher ideas from the external market.   

The older and more experienced employees can channel the right disruption and creativity. The number of employees aged 55 and older increased by 41.5% in the US workforce 2022.   

CEOs value creativity as a critical skill for innovation  

IBM found in a survey that 60% of global CEOs search for creative candidates to occupy their leadership positions. And, you know that leaders bring innovation to the table.   

They set a course of action that is innovative. As a result, a business performs better than its competitors.  

3. Diversity helps in reaching untapped customer demographics  

Diverse companies have a variety of fresh perspectives while brainstorming or design thinking. So they can quickly train the workforce to think creatively.   

Coca-Cola started its business with a Western majority workforce in China. There were no Chinese representatives in business planning and development. As a result, the brand logo “Coca-Cola” read as “Ke-kou-ke-la” when printed on bottles in Mandarin.   

After circulating large volumes in the market, the company realized that Ke-kou-ke-la means “female horse stuffed with wax” in Mandarin.   

That was certainly something other than what the brand wanted to communicate.   

Now, Coca-Cola employs 99% of Chinese employees out of 49000 in China. As a result, the business growth of Coca-Cola in Asia-Pacific will be 2% in FY 2022, mainly due to contributions to sales in China.   

 Companies with greater diversity are 70% more likely to capture new markets.  

 An NBR survey found that diverse companies capture untapped markets quickly. They also have a vast physical business presence.   

Diverse companies have representatives of many cultures, backgrounds, and ethnic origins. As a result, they can attract customers across more markets with engaging messaging and advertisements.   

That’s why diverse companies are 70% more likely to capture an untapped market faster. Diversity is one of the most significant business benefits in an age of globalization and highly competitive rivalry.  

4. Companies with diverse workforce experience greater financial returns  

There are different parameters for measuring financial returns. Let’s look at how diverse workforces enjoy miscellaneous business benefits of diversity.   

Factors of Diversity Nature of financial return 
Highest gender diversity   25% chance of better financial gain compared to peers   
Highest ethnic diversity 36% more likely to gain more revenue than peers   
Diverse operating team   2.5 times higher cash flow against each employee 
Diverse leadership team   87% better business decision, driving revenues higher 
Companies with higher DEI 22% more likely to get an investment   
Source: Linkedin

Table: statistical evidence of higher financial returns from diversity  

5. Studies show diverse teams perform better and bring in more profits  

 I will try to reflect on the benefits of diversity in terms of revenue returns through the example of successful companies.   

In the US, Mastercard enjoys the multiple business benefits of diversity. In Mastercard, women earn $1 against every $1 earned by men. Women representatives are also included in 81% of the candidate interviews.   

Mastercard also maintains parity in the earnings ratio of native whites and people of color in the company. Consequently, the revenue of MasterCard increased by 12.87% in 2023.   

Accenture, another US-based firm, was voted #1 on the Diversity and Inclusion Index. The company has a 47% female workforce with 1.2 LGBTQ associates. In 2024, Accenture has already achieved 2.26% Y-o-Y growth.  

Intangible Benefits  

These are primarily long-drawn benefits. These business benefits of diversity showcase how diverse companies sustainably perform better.   

1. Improved Employee Engagement  

Employee engagement helps to increase productivity. Engaged employees also support each other.  

 Diverse employees feel valued and included.  

Experts say that the employee retention rate of diverse companies is higher. Inclusive workplace success means all employees mutually support and respect their customs, language, and ethnic differences.   

 Higher engagement levels lead to increased productivity  

 A McKinsey survey found that 51% of productivity depends on leadership in a company. However, 56% replied that it depends on employee engagement and cohesion. However, McKinsey also stated that 63 to 80% of companies have an adverse attitude towards diversity.   

However, it is sure that companies that take I&D seriously perform better. For example, Novartis is one of the rare, diverse pharma companies. Novartis has 51% women in the workforce. Nearly 47% of their leadership is also composed of women.   

As a reward, the revenue of Novartis grew from 1.5 billion (2022) to 8.5 billion (2023).   

2. Enhanced Reputation  

More talented people want to join a diverse company. Diversity also helps a workforce to retain their best candidates.   

Embracing diversity improves company image.  

NBR found that most discrimination occurs due to unconscious bias in the workplace. This kind of bias leads to preconceived notions of stereotypes around diverse employees.   

HBR found that many managers in the UK ask their nonwhite employees to smile more so that others don’t fear them.   

Such issues create the impression of toxic management in the minds of employees. Managers should let employees blend naturally with the workforce. As a result, they will learn to respect their differences. The others will learn the same also.   

 Attracts top talent and fosters a positive work culture  

 Around 76% of employees want to work in diverse companies only. So, your reputation matters when you recruit employees. Around 75% of employees want to shift to a more diverse company.   

So, you can retain employees if you have a diverse team. Again. The workplace is positively boosted, as employees stay for a long time. They get to know each other’s strengths and limitations and support each other.   

3. Innovation and Problem Solving  

Innovative workplaces enjoy several business benefits of diversity. They are less conflicting and launch better business ideas.   

 Diverse teams offer a range of solutions.  

Employees in diverse teams don’t engage in conflicts naturally. They understand each other’s mindset and hence avoid conflict.   

 Eliminates standard approaches to problem-solving  

If you are a diverse company, you will rarely need formal grievance management mechanisms. Since 85% of global employees run into conflicts, I&D can be crucial in problem-solving.   

Conclusion  

There are ample business benefits of diversity. However, the most important is high productivity and revenue returns. Moreover, diverse employees have a greater understanding. As a result, they don’t quickly get into conflicts.   

A diverse workforce has a wide range of worldviews. Therefore, such companies are more innovative. They quickly tap into new markets and new customer demographics.   

By promoting workforce diversity, you are building the path to a well-retained workforce. Employees there understand each other well. They also support and help others. As a result, the performance of diverse workforces is better at individual and group levels.   

tags

Business Case Workplaces Drive Success

Ankita Tripathy loves to write about food and the Hallyu Wave in particular. During her free time, she enjoys looking at the sky or reading books while sipping a cup of hot coffee. Her favourite niches are food, music, lifestyle, travel, and Korean Pop music and drama.

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