Despite the inclusion and diversity movement in the workplace, many companies still have a long way to go before experiencing the benefits of diversity.

Benefits of Diversity in the Workplace - Talent Intelligence

It seems like common sense.

Put professionals with different social, cultural and demographic backgrounds into the same room. You should come up with a wide variety of ideas that help you solve a business problem or discover a new, bolder way of doing things.

Well, it is much more than common sense.

Comprehensive research has found that what many of us view as common sense is simply a narrative that describes the numerous benefits of diversity in the workplace. For example, a McKinsey research study demonstrated that companies operating in the top quarter for gender diversity and inclusion were 25 percent more likely to experience above-average profits.

Research shows us that the benefits of diversity can include improving the performance of your business.


The Society for Human Resource Management (SHRM) defines diversity as “the collective mixture of differences and similarities that include, for example, individual and organizational characteristics, values, beliefs, experiences, backgrounds, preferences, and behaviors.” They break down diversity even further into two categories – visible diversity traits and invisible diversity traits. In discussions revolving around diversity, visible traits are often what is emphasized and include race, gender, physical abilities, age, and body type. Invisible diversity traits include things such as sexual orientation, religion, socio-economic status, education, and parental status among other things.

Inclusion, while closely related, is a separate concept from diversity. SHRM defines inclusion as “the achievement of a work environment in which all individuals are treated fairly and respectfully, have equal access to opportunities and resources, and can contribute fully to the organization’s success.

It is important to establish a clear understanding of how the concepts of diversity and inclusion differ, as many well-intentioned companies have made the former a priority while neglecting the latter, leading to disappointing outcomes that often undermine the totality of diversity and inclusion efforts.

Benefits of Diversity and Business Performance

Diversity in the workplace started as more of a feel-good movement than a solid business principle that enhances the bottom line. Considerable research into diversity and inclusion demonstrates the financial benefits of bringing together a team that comes from a wide range of social, cultural and demographic backgrounds.

A study by Boston Consulting Group shows us that the benefits of diversity are much more than generating a feel-good story that occasionally makes the lineup of a national evening news program. Companies that recruit, develop and retain diverse management teams produce nearly 20 percentage points more in revenue because of the development of innovative business ideas.

According to a 2018 report from Hays Asia Diversity and Inclusion, greater innovation, along with improved leadership and company culture, represent the three most influential benefits of diversity in the workplace.

Now more than ever, diversity and inclusion in the workplace is a financially beneficial business practice. However, we still have a long way to go.

The Current State of Diversity: Gender Inclusivity Remains an Issue

Nonetheless, women remain underrepresented in leadership positions. A McKinsey study stated that for every 100 males promoted into management positions, just 85 percent of women received the same type of career advancement opportunities.

The disparity grew even larger for black and Latina women, which leads us to the most startling statistic of all. As of early 2020, women held only 38 percent of entry-level management positions.

Meanwhile, several companies have set the precedent for enjoying the benefits of diversity. Moreover, others have developed groundbreaking employee recognition programs that encourage diversity and inclusion in the workplace.

Suggested Best Practices

So much progress has been made in the last few decades, but in order to fully take advantage of the power diversity and inclusion brings to an organization, consider incorporating these three best practices to continue building on the foundation of diversity and inclusion you have established:

1. Continually build pipelines of diverse talent

It should go without saying that minority groups of all kinds are by their very nature, smaller than their majority counterparts. Size constraints of varying degrees can make recruiting the right kind of talent from a given group quite the challenge. Often the biggest barrier to building a diverse and inclusive workforce is the unfounded concern that an organization must sacrifice quality to meet a quota. The truth is that high quality, diverse talent exists but it may be harder to find.

Combatting this dynamic requires advance preparation.  Companies should make a point to engage with diverse talent on an ongoing basis long before the need arises to pull new people into the organization. By proactively getting to know people of varying backgrounds, business and HR leaders will be prepared to hire diverse talent with speed and confidence.

2. Be flexible and lead by example

Flexible work arrangements can be very beneficial to the development of a diverse and inclusive workforce. Flexibility such as work-from-home options help to alleviate the pressures of recruiting diversity candidates who may be a good fit for a role but may not be in a position to relocate. For candidates who are able to relocate, such flexibility often helps to reduce the impact of leaving behind a support system of friends and family who might otherwise step in to assist with things like child care. Flexibility provides the added benefit of aiding in the recruitment and retention of women at the senior level who, despite working full-time, still take on the bulk of household and child care responsibilities.

The key to making flexibility work is leading by example. It is not enough to simply put a policy in place – employees must understand and believe that taking advantage of flexible work arrangements will not reflect on them negatively. Very senior leaders should find ways to demonstrate that sometimes family considerations take precedence – and that’s okay.

3. Emphasize mentoring and coaching

Providing access to leadership and training opportunities for women, minorities, and other historically underrepresented groups at lower levels in the organization will boost efforts to craft a more diverse and inclusive senior leadership team by ensuring that diverse candidates are eligible and qualified for promotions. Mentorship programs have the added benefit of fostering inclusivity by offering employees a feeling of belonging and a safe place to discuss sensitive issues. This also creates a “chain of command” of sorts for escalating issues to senior leaders who are then enabled to keep an eye on the challenges of promoting diversity and inclusion, and can re-calibrate programs or approaches as needed.

Diversity and inclusion is a complex and nuanced topic with many factors for business and HR leaders to be aware of. In the coming months we will further explore ways to boost diversity and inclusion efforts but these three best practices are a good start for companies that are struggling to recruit and retain people from varying backgrounds. To develop a better grasp of how strong your diversity and inclusion efforts are, download our employee engagement survey to gain an understanding of the perceptions your employees have around this topic.

lynnea-tan-_FH38RD-Xx4-unsplashThe Bottom Line

A study conducted by Kisi discovered the benefits of diversity by focusing on four demographic factors: race, gender, disability and sexual orientation. It found:

  • Companies that developed above-average diversity programs reported innovation revenue that was 19 percentage points higher than companies that developed below-average diversity programs.
  • Workplaces that are LGBTQ+-friendly saw increased job satisfaction, improved health, greater work commitment and better relationships with co-workers among LGBTQ+ workers.

With the perks of diversity being obvious, the question remains – when will businesses lagging behind catch up to reap these benefits that a growing number of companies have already discovered?