When a company has a truly diverse workforce and an inclusive culture, employees feel comfortable bringing their whole selves – their unique ideas, perspectives, and experiences – to work. This translates into big benefits for employers as statistics and studies show that diverse companies are more profitable than their less diverse counterparts.

Organizations are taking note and continuing to prioritize diversity. But while gains are being made, there’s still a long way to go. 

What is workplace diversity?

A diverse workplace mirrors society in that it includes people of different races, genders, ages, sexual orientations, religions, and those with a range of backgrounds, experiences, education, and beliefs. Hiring a diverse mix of people is the first step to achieving workplace diversity but eliminating institutional bias so that employees feel a sense of belonging and inclusion makes a diverse workforce powerful.

Workplace diversity and inclusion is critical because it is demonstrably better for business. A diverse mix of people leads to a diversity of thinking, which in turn leads to increased creativity and innovation. Inclusive companies are “1.7 times more likely to be innovative,” according to Josh Bersin, his research also shows that they get “2.3 times more cash flow per employee.” 

Diversity in the workplace examples: Who’s included?

The goal of diversity in the workplace is better business outcomes, including increased innovation, revenue, employee engagement, and retention. This is predicated on providing equitable pay and representation for the entire workforce – no matter their gender, ethnicity, or religion –   from the mailroom to the boardroom. When everyone feels included, has their opinions sought and valued, and has the opportunity to fulfill their professional potential, both companies and employees benefit.

Examples of different areas of diversity to focus on in the workplace include: 

Rainbow popsicles on blue background

Diversity, equity, and inclusion (DEI): A definition

Diversity, equity, and inclusion (DEI) go hand in hand.  When you have diversity without inclusion, you may have a representative workforce, but you aren’t taking advantage of employees’ diverse perspectives and different approaches. And when you have diversity and equity without inclusion, you’re missing the opportunity for your talent to thrive and be engaged as they may not feel that they belong or are valued.

“Being genuinely valued and respected involves more than just feeling included. It involves having the power to help set the agenda, influence what – and how – work is done, have one’s needs and interests taken into account, and have one’s contributions recognized and rewarded with further opportunities to contribute and advance.”

Harvard Business Review

Diversity

Diversity focuses on understanding that each person is unique and bringing people of all backgrounds into the workplace. When tracking diversity internally, it’s essential to break data down – rather than just looking at how many women or minorities are in an organization, for example, look at how many are in the C-suite and at what point in their career progression these groups are leaving the organization. 

Equity

Workplace equity levels the playing field to ensure all employees have the resources and opportunities they need to reach an equal outcome, whereas equality assumes the playing field is already level and treats everyone the same way. When looking at equity in the workplace, tracking all the stages of the employee life cycle is helpful or spotting areas for improvement.

Inclusion

Inclusion in the workplace gives all employees a voice and room to thrive. It means that everyone feels comfortable and confident being themselves while also feeling valued, important, and heard. Gathering qualitative perception data anonymously from employees via surveys is key for evaluating if a company’s inclusion efforts are working. 

Woman employee being congratulated by her peers

5 benefits of workplace diversity

DEI is much more than nice-to-have, and the statistics bear that out. The business case for workplace diversity continues to grow as research continues to show its many tangible benefits, including increased:  

  1. Profitability: Multiple studies show that diverse companies are more profitable. McKinsey research concludes that companies in the top 25% for ethnic and cultural diversity were 36% more profitable than those in the bottom quarter, and when women are well represented in the C-suite, profits can be almost 50% higher. 
  2. Productivity: Over and over again, research shows that more diverse organizations are more productive. For example, the Academy of Management Journal research concludes that “racial diversity in upper and lower management results in greater employee productivity.” In addition, according to Forbes, inclusive teams “make better business decisions up to 87% of the time, and they make those decisions twice as fast within half as many meetings.” 
  3. Employee recruitment and retention: Workplace diversity may be even more important for employees than employers. Glassdoor reports that 76% of employees and jobseekers say that diversity “is an important factor when evaluating companies and job offers.” And a Gallup poll found that engaged employees are “more likely to say their company values diverse ideas.” 
  4. Job satisfaction and performance: Forrester report shows that when employees feel a sense of belonging at work, it leads to a 56% increase in job performance. That sense of belonging, feeling represented, and feeling respected creates a sense of satisfaction and improves performance – 91% of employees who feel they belong are engaged, compared to 20% of those who feel they don’t. 
  5. Innovation and creativity: Inclusive decisions are better decisions. Forbes found that 85% of business leaders believe that “a diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation.” Another study found that people need to feel safe and supported to contribute innovative, creative ideas. And companies with higher diversity levels see 19% higher innovation revenues

Workplace diversity stats: A reality check by the numbers

Despite the clear benefits of workplace diversity – and despite 69% of executives saying diversity is one of their top priorities – there’s still a long way to go to achieve true diversity. These numbers tell the story:

Colleagues using a laptop together at work

Accountability, transparency, training, commitment, and action are just some of the ways companies can work towards greater diversity in the workplace.

Potential hybrid workplace inequalities

As businesses transition to a hybrid workplace model, they need to be aware of the potential barriers and inequalities that a mix of remote and in-office workers creates. The main risk is that not being seen in person could create barriers to advancement for those who work from home. And since those who work from home tend to be working mothers, minorities, and those with disabilities, this could further exacerbate existing discrimination.

As an example, a joint study from Qualtrics and the Boardlist showed that during the pandemic women and men working remotely with children at home had very different experiences:

And that’s just statistics about gender diversity. According to the New York Times, “with fewer connections and less extensive networks than white colleagues, to begin with, Black and Hispanic workers can find themselves more isolated than ever in a world of Zoom calls and virtual forums.”

But it’s not all doom and gloom when it comes to diversity in a hybrid work environment. Gartner research shows that “organizations that effectively manage the transition to a hybrid work environment and employ sustainable initiatives can boost inclusion by 24%.” The forced working from home precipitated by the pandemic already had organizations shifting to thinking about how to foster DEI online, and that thinking can also be honed and applied to hybrid arrangements. 

To boost DEI, a hybrid workplace model needs to be explicitly designed with diversity in mind. HR departments can support eliminating bias by tracking promotions, bonuses, pay raises, and more. And managers can be trained on how to recognize and avoid bias and how to create and track bias-free KPIs to ensure employees are being assessed on the same criteria. 

There is an opportunity to use hybrid work opportunities to shape more equitable workplaces, but it needs to be done intentionally and mindfully, and it needs to be tracked.

Using HR technology to support workforce diversity 

Technology can be a powerful tool for combatting bias and creating diverse, equitable, and inclusive organizations, especially artificial intelligence (AI), which can help spot and reduce conscious and unconscious bias throughout the employee life cycle. 

US$64B

Cost of workplace bias in the U.S. annually
Impact Group

Starting with the recruitment process, AI for HR can be used to proactively identify gender-biased language in job descriptions and automatically screen candidates based on their qualifications rather than names, genders, and other bias-prone information from applicant profiles. This helps:

On an ongoing basis, data from an organization’s human capital management (HCM) platform can be used throughout the entire employee life cycle to track promotion rates, retention rates, employee engagement, and more. 

However, AI systems need to be built without human bias creeping into them. Using a broad range of data is imperative, as is eliminating bias at the point of data collection. The Amazon experience is a cautionary tale; gender bias was built into their AI hiring tool because they used biased data to build their AI model.

When used intentionally, technology can imbue the HR process with a more diverse approach to everything from talent acquisition to employee development. HR technology can also drive better employee engagement and help close gender and racial wage gaps.

Discover how the SAP SuccessFactors HXM Suite supports workplace DEI efforts.