What is diversity? Does it actually matter? Is there any value in cultivating diversity in the workplace?

Diversity refers to those aspects that are different amongst people, whether it be gender, age, sex, location, or even language. It’s about different ideas, opinions, and views. When you incorporate diversity into the workplace you’re creating a powerful concoction.

I’m not just talking about addressing social injustices and closing the gender divide to create a more inclusive workforce (although that’s part of it, but something which some companies are still failing to do). I’m talking about the creation of new ideas and innovative products. I’m talking about improved problem solving and creativity. I’m talking about higher earnings and business success – ROI. I’m sure as a business owner I’ve caught your attention.

In the past, some companies weren’t sure – and no doubt some still aren’t – how to approach diversity. And so, what you had were companies hiring diverse employees for the sake of it i.e. to fill a quota. Companies understood they needed to do it.

The problem was they didn’t know how to approach it, and they weren’t committed to the idea because they couldn’t see the value. How would it benefit their company if they invested in it? Diversity was this abstract concept.

The problem with this approach? It has a negative effect on your company and it doesn’t allow you to attract top talent because your workforce isn’t representative of the population.

Further, for employees who are hired from marginalized groups, they feel even more marginalized, as people don’t want to be a token. What they want is acknowledgment for making a contribution to the betterment of the company.

But diversity in the workplace is now perceived in a different light. Companies are recognizing diversity actually contributes to a better company and allows them to better compete on a global scale. There’s plenty of research and real world examples that point to the inherent benefits of cultivating diversity in the workplace.

1. Diversity Fosters Innovation And Creativity

Diversity Fosters Innovation And Creativity

Diversity drives innovation and creativity. If you recall: diversity refers to differences, from physical attributes to the color of a person’s skin, to a difference in views, perspectives, and ideas.

Diversity drives innovation and creativity because you’re drawing from these differences. It encourages out-of-the-box thinking, something that wouldn’t be as prevalent if you had people in your company who came from the same backgrounds, spoke the same language, and in effect had similar views on the world.

Forbes conducted a comprehensive survey of 321 executives to better understand the role diversity plays in companies. The 321 executives came from a background in diversity for their respective companies. Researchers used a representative sample of executives from America, Asia-Pacific, Europe, Middle East, and Africa.

And the findings?

The majority agree that the difference in perspectives is a pivotal factor in an innovation strategy. But it’s more than that.

2. Diversity Helps Builds Customer-Centric Products

If you’re creating a product for a specific market you need to have an understanding of that market, from buying behaviors, how people shop, and other cultural nuances.

Diversity in the workplace allows you to tap into the minds of employees who have insights into those markets. It allows you to create products that meet their needs.

For example, there are many companies such as AT&T, Mattel, and Intel which have Employee Resource Groups (ERGs) that foster inclusion and provide insights into diverse markets.

According to Mattel Board Member Huey Wilson (cited in the Forbes Study):

“Our Employee Resource Groups are very important to us. They help us define products that work for their region or demographics.”

And Frédéric Rozé, CEO of L’Oréal USA is also realizing the benefit of diversity to capture new ideas and inform product development:

“We have different brands that meet the diverse needs of our consumers, but another benefit of being a player in different regions is that you can pick up ideas from the outside and apply them to the business.”

You also need cultural sensitivity to avoid mistakes that could cause embarrassment when launching a new product. Huey Wilson goes on to say:

“We have to make sure that we’re culturally sensitive. There have been some big near misses that we might not have avoided without the ERGs.”

Here’s an example of how Mattel ERGs are driving innovation by gathering cultural insights. Mattel decided to launch a new line of dolls targeted at African American Girls. To ensure the dolls were culturally sensitive senior management approached the African-American Employee Resource Group (MAAF) for advice and guidance.

They helped choose a name, assisted with the look, and honed in on details such as skin tone, nose, and hair, to make sure of cultural sensitivity. Such attention to detail contributed to the dolls being a top selling product among minority-focused brands.

Through cultivating a diverse workplace you’ll be in a better position to produce a product that works. One that takes cultural nuances into account. One that taps into a buyer need. One that’s liked. One that’s not offensive and one that actually succeeds in the marketplace.

3. Diversity Attracts Top Talent

Diversity Attracts Top Talent

Diversity isn’t only about producing products that are innovative and culturally relevant. It’s about creating an inclusive culture within your company, a culture that ensures you attract and keep top talent. Companies then are using diversity as a strong recruitment and employee retention tool.

The idea is simple: by having a more diverse workforce, you’ll have access to a broader talent pool who will be more willing to work for your company over another. In the words of Eileen Taylor, Deutsche Bank’s Global Head of Diversity:

“If you want to attract the best talent, you need to be reflective of the talent in that market.”

Companies are using different tactics to attract top talent. For example, L’oreal, that recognizes the importance of diversity for innovation connects with 3000 students on campus each year. They do this in a variety of ways – games, student organizations, or presentations.

4. Diversity in the Workplace Gives you a Competitive Advantage

All the prior factors give your business a competitive advantage and you’re in a stronger position to compete globally. Rosalind Hudnell, Director of Global Diversity and Inclusion at Intel says in Forbes:

“We have a vast amount of diversity

[within the company] that comes into work every day to build technology that plays out around the world. You can’t be successful on a global stage without it.”

It’s simple: you’ll be out-innovating your competition with culturally relevant products created by diverse top talent. Perhaps a mouthful, but it paints a picture of unprecedented success for your company.

If you’re still not convinced about the value of cultivating diversity in the workplace, perhaps it’s time for some numbers. After all, numbers never lie!

5. Diversity Drives Earnings and Returns on Equity

Diversity Drives Earnings and Returns on Equity

According to Mckinsey, “Between 2008 and 2010, companies with more diverse top teams were also the top performers.” Mckinsey analyzed the board structure of 180 publicly traded companies in France, Germany, the United Kingdom, and The United States of America.

ROE’s were 53 percent higher – on average – for companies in the top quartile of diversity than those in the lowest quartile.

EBIT margins were also 14% higher -on average- for diverse companies compared to those without.

The findings were the same for most countries, except for the ROE for France. But, in France’s case, there EBIT was 53% higher.

Final Thoughts

Diversity is more important than it’s ever been. Research shows it matters and will add immense value to your organization.

It fosters innovation and creativity. It helps you create customer-centric products while remaining culturally sensitive. It allows you to attract and keep top talent. And perhaps, more importantly, it allows you to remain competitive in a global market through giving you a competitive advantage. That, of course, is beside the fact that it actually improves ROE and EBIT margins.

This is why an increasing amount of companies are focusing on creating a culture of diversity in the workplace and why this trend will likely continue long into the future.

Do you have a diverse workforce? Are you cultivating diversity in your workplace?