Diversity: a fundamental business asset

Everyone deserves an opportunity to work in a safe, supportive, and inclusive workplace that values diversity. Professionals deserve the chance to develop their skills, share their voice, and reach their potential, regardless of race, religion, gender, sexual orientation or physical abilities.

Diversity in the workplace doesn’t just serve employees; diversity is a fundamental asset to business as it produces a more creative, innovative, and resilient organisation. Learn more about why diversity matters and how the benefits of diversity impact employees, leaders, and organisational outcomes.

 

The importance of diversity in leadership

Although progress has been made across the UK to prioritise inclusion and diversity, there is still a lot of work to be done to increase diversity in leadership roles. At present, people from ethnic minority backgrounds make up approximately 13% of the UK population, yet only 4.7% (51 people) of the most powerful leadership roles are held by them.

Women’s representation in the UK labour force is steadily increasing and companies are appointing more women to senior leadership roles, but there continues to be a disparity in the types of jobs and level of seniority women can achieve. Only 8 women (3.2%) held CEO roles in the FTSE 250 and although women occupy roles as Human Resources directors (63.3%), only a small proportion of women occupy roles as finance directors (15.6%) and chief information officers (11.7%).

The Guardian also shed light on the overwhelming need for greater representation of professionals with disabilities in leadership roles and in the workplace in general. As of 2021, there are no executives or senior managers who have disclosed a disability at any of the UK’s biggest firms in the FTSE 100 and the average representation of people with disabilities among employees in the UK sits at just 3.2%. Companies are implementing disability employee networks and resource groups (ERGs), to respond to this disparity and build inclusive disability-confident workplaces.

 

How can leaders encourage diversity in the workplace?

Diversity in the workplace often starts from the top down and leaders have a responsibility to advocate for inclusion and diversity through better organisational practices in the following areas:

 

Policies: Implement an “equal opportunity policy” that outlines and enforces respectful behaviour and procedures that promote diversity.

Recruitment: Recruiters and interviewers must adopt an inclusive attitude, communicate this attitude in job postings, and hire based on a candidate’s qualifications.

Training and development: Leaders and employees should undergo regular diversity training, unconscious bias training, and new staff inductions that reiterate the importance of diversity and help to reprogram problematic unconscious behaviours that affect decision making.

 

The benefits of diversity and inclusion

Diversity and inclusion are essential in businesses. Embracing people’s individuality and creating a safe space for everyone to be represented, seen, and heard, not only benefits employees but benefits organisational outcomes. There are five significant benefits of diversity for companies that welcome differences.

 

  1. Increased creativity

Diversity enhances creativity. NPR details the research conducted by the social scientist Adam Galinsky. Galinsky’s interesting research investigates if diversity and cultural exploration can influence creativity. His studies found that people who have deep relationships with someone from another country score higher on creativity tests.

Galinsky also found that when fashion designers spend time immersed in different cultures before releasing a clothing line this exposure to different ways of life “predicted their entire fashion line creativity.” Galinsky reflected on his work by saying, “There's something about deeply understanding and learning about another culture that's transformative.”

The exposure employees have to different people in the workplace, and in life at large, affect creative thinking. Diversity in the workplace also allows people to share unique ways of thinking and achieve creative solutions to problems based on new perspectives.

 

  1. Boost innovation and financial results

Forbes recently confirmed that diverse teams have the power to unlock innovation, drive market growth, and gain a competitive edge over other organisations. The article reports that earnings before interest and taxes (EBIT) margins for companies with diverse management teams were 10% higher than for their competitors with below-average management diversity.

Diversity in the workplace directly influences innovation and unlocks a higher potential for financial performance. Forbes states that companies with above-average diversity produced more revenue from innovation (45%) than from companies with below-average diversity (26%). This 19% innovation-related advantage resulted in a higher ROI.

Another report found that businesses that implemented racial equity measures earned an average of £5.6bn in revenue, compared to £3.6bn for the firms that failed to do so. Research supports the truth that diversity facilitates innovation and supporting inclusion is good for business.

 

  1. Stronger company culture and employee satisfaction

Culture is the foundation of a good workplace. Diversity in the workplace can lead to happier employees which will reflect in output and quality of work. Changing company culture doesn’t happen overnight. Ceridian released a report about how to support diversity, equity, and inclusion (DEI) initiatives to improve work culture.

The report suggests UK businesses must regularly assess company policies, make DEI resources readily available, acknowledge holidays of all cultures, regularly revisit training programmes, and encourage cross-sectional communication among teams and departments. These practices all contribute to stronger company culture.

 

  1. Better employee retention

People stay at companies that treat employees fairly, provide flexibility, value employee well-being, enable career development, and initiate regular performance conversations.

According to the CIPD, research shows that employees who face discrimination, exclusion, or barriers at work (including women and members of the LGBTQ+ community) are more likely to feel a push to seek job alternatives.

What “pull factors” influence employees’ decision to stay at a company? Research shows that the most important consideration when staying with their company is job security. Employees ranked job security (51%), ahead of flexibility (40%) and pay (32%). Working in an inclusive environment contributes to job security because it allows professionals to feel supported, safe and seen in their work environment.

 

  1. Reach and social impact

The leaders of tomorrow prioritise social impact and strive to systemically transform business using sustainable practices. Research shows that consumers are willing to pay more for sustainable and ethical companies that respect human rights (36%), reduce waste (35%), and commit to ethical working practices (32%). Companies that understand why diversity matters can expand their reach and social impact.

In one example of ethical leadership, Leyya Sattar was featured on the Forbes 30 Under 30 list for Europe 2021. Leyya is passionate about promoting inclusivity in the workplace and launched an online community where marginalised individuals could connect and share experiences. The online space quickly grew into a business called The Other Box. The Other Box works with corporate clients to build equity, combat unconscious bias and make workplaces more inclusive.

Ethical leadership and companies that prioritise social impact in their business strategy, make a difference in the world and reap the rewards through increased investment, improved customer acquisition and attracting the best possible talent.

 

This blog was originally published by Aston Business School.

Aston Business School is one of the leading business schools offering the Help to Grow: Management Course. For more information, click here.