Many companies still think of diversity, equity, and inclusion as business requirements or boxes to check. DEI are catalysts for business success. Time and again, studies have found that diversity increases revenue. The Boston Consulting Group found that companies with more diverse leadership teams have 19% higher revenues. Another study showed that hiring more female leaders leads to greater profitability. Even cities with a larger population of high-skilled immigrants tend to have increased innovation and greater economic performance. Diversity is just good business.
Diverse problems need diverse perspectives
Innovation is a powerful differentiator and revenue driver. It helps businesses find creative solutions to problems and nurture new ideas that give them a competitive edge. Diversity is an enabler of innovation. More diverse teams can quickly adapt to new challenges, consider problems from multiple angles, and stress-test multiple solutions – leading to a better thought-out solution. One study showed that more diverse groups make fewer factual errors because they avoid the potential biases of more homogenous groups and tend to be more careful and thorough in their analyses.
Considering diverse perspectives helps companies understand multiple groups and avoid bias in their end products and services. It enables them to build solutions that address the needs of more people. And this includes branding and marketing. In a multicultural, multi-gendered global society, being diverse in your branding helps you resonate with a broader audience. With diversity in mind, not only can companies bring more innovative solutions to the market, but they can tap into new segments of the market. Consider this: by 2065, America will have no ethnic majority. To continue to be relevant and grow revenue year over year, companies must embrace the plurality of the new world.
Inclusion helps diverse teams thrive
Inclusion is fundamental to developing a growth mindset culture and unlocking the true potential of diversity. Stanford psychologist Carol Dweck coined the concept of “growth mindset” as the idea that one can grow their capacities, understanding, and skills over time. Having a growth mindset is an essential factor in a company’s success, and many companies, like Microsoft, have embraced and adapted to the concept. The collective intellectual power of a diverse team needs to be fostered and embraced through an open and inclusive culture – one that incentivizes teams to reflect those same values. Inclusion has been shown to improve performance by up to 30% in diverse teams.
Companies that neglect to nurture an inclusive environment can leave their employees feeling unseen, unheard, and afraid to ask questions—the Achilles’ heel of productivity. Inclusion enables openness, curiosity, and authenticity, which create an environment for more productive conversations, quicker response times, improved team cooperation, and happier employees. Studies have shown that high-performing teams need psychological safety to build trust, get inspired, and be creative. Unconscious bias, for example, is a learned assumption that we aren’t always aware that we have. It can perpetuate stereotypes and limit new ways of thinking. Embedding diversity, equity, and inclusion in a culture encourages employees to listen actively, recognize their biases, question their assumptions, think in new and different ways, and embrace a growth mindset.
Additionally, inclusion is vital to the mental health of employees. It helps reduce the anxiety that comes from interpersonal risk-taking and ensures that employees feel safe, engaged, and welcome. And happier employees are more productive employees.
Embrace conscious consumerism
Many modern consumers are conscious of companies’ social impact and use it to decide purchasing decisions. They expect companies to advance global change – from addressing racial injustices to being leaders in diversity, equity, and inclusion. While this is not a new concept, technology has amplified the impacts of conscious consumerism. Finding a more conscious alternative or switching to a new brand is just a few clicks away. Nowadays, consumers are four to six times more likely to purchase, trust, and advocate for purpose-driven companies. Companies that uphold their values and commitments during hard times, like during a global pandemic, tend to be in an even better position.
Brands that capitalize on these consumer expectations will increase trust with their customers, gain the loyalty of their customers, strengthen their brand, improve their stock performance, and increase their revenue. Purpose-driven consumers are even willing to pay a premium to patronize companies that align with their values. Being transparent about progress and growth in diversity and inclusion is vital to prove a positive impact. Meanwhile, companies that don’t embrace DEI – or work against the changing status-quo – are at risk of making a costly mistake and losing customers. Though no one is immune to cancel culture, actively showing progress towards building and embracing diversity can significantly de-risk the business. Consistent reporting on these metrics will help maintain consumer trust and give customers an “insider” understanding of the company’s response efforts. And the more you work towards diversity, equity, and inclusion, the better you’ll understand your business’s expectations and blind spots.
The bottom line benefits
I think we can agree that the results speak for themselves. DEI is not a trending workplace initiative. It is a permanent and necessary shift in workplace dynamics that will improve companies’ health and economics. By honestly embracing DEI at all levels, companies will avoid the dangers of conformity. Diversity of minds, backgrounds, genders, political views and ethnicities is critical in building a solid business, innovating and adapting with the times, and increasing revenue. By creating an inclusive culture to support the changing dynamics, companies will be able to experience the genuinely transformative power of diversity.
Interested in creating a more diverse and inclusive workforce at your company? The Professional Diversity Network has been helping employers build productive and diverse workforces since 2003. Contact us today to find out how we can help with your unique recruitment needs.