Valuing Diversity: The Opportunity to Strengthen the Corporate Bottom Line

Why do We Care about Diversity?

Companies that are open and diverse are also better able to attract top personnel and enhance their customer focus. Not only that, but the benefits extend to rising earnings, innovative actions, and cost minimization. A diverse and healthy workplace culture contributes to satisfied employees who have improved decision-making abilities, successful collaborations, and higher performance.

More diverse organizations are not only viewed as more appealing places to work, but they also consistently outperform and outshine their rivals. Every organization benefits from the wider perspective brought by its diverse employees. Having such an approach to doing business increases employee productivity, the quality of goods and services those employees produce, client satisfaction, and profits. In today’s global business environment, these issues have become quite significant. Over 75% of people surveyed in research studies believe diverse and inclusive workforces can lead to a competitive advantage, while about 39% of people honestly believe it offers a significant advantage over the competition.

Moreover, studies show that:

• Around 70% of diverse companies are better positioned to capture new markets. And with the higher number of markets comes improved performance and revenue.

• 43% of companies with diverse management exhibited higher profits.

• Companies with racial and ethnic diversity are 35% more likely to perform at a higher level and have increased return on investment (ROI).

• Diverse teams are 87% better decision-makers than individuals. Teams that have geographical diversity, members of different genders and races, as well as an age gap of at least 20 years, were recorded as making better business decisions.

• Companies employing an equal number of men and women manage to produce up to 41% higher revenue than companies that do not.

• Highly inclusive companies are more likely to hit their financial target goals by up to 120%. When companies improve the working environment and create an inclusive workplace, people feel empowered and band together and work harder to meet the company’s target goals.

One of the main forces behind innovation and creativity is the interaction of individuals from various ethnicities and social backgrounds. The most innovative, disruptive, and financially successful cities in the world—New York, Dubai, London, and Singapore—all have this trait of diversity. They are all large immigrant populations in international melting pots. According to research, high-skilled immigration directly correlates with an uptick in innovation and economic success in cities and regions.

According to research studies published by BetterUp,

The data show that diversity is good for business. The truth is a little more complicated. Diversity is good for business when the organization knows how to truly embrace, value, and make use of diversity in its leadership and workforce. Why? Because when managers and leaders know how to draw out diverse perspectives, build on them, and be inclusive of all the perspectives available on their teams, they get better ideas, question assumptions, identify blind spots, develop new approaches, and create better solutions. As a result, they see massive team innovation, performance, and growth.

(Source: https://www.betterup.com/blog/what-diversity-really-means-and-why-its-crucial-in-the-workplace)

Research by the Boston Consulting Group revealed that organizations with more diverse management teams generate 19% higher revenues as a result of innovation. This conclusion is important for tech firms, startups, and sectors where growth through innovation is a priority. It demonstrates that diversity is an essential component of a successful revenue- generating company and not merely a goal to aim for. As a specific example, the products and services introduced by these organizations within the previous three years account for roughly half of the revenue of businesses with more diversified leadership. That kind of supercharged innovation means that these businesses are better able to quickly adjust to changes in customer demand in a more dynamic business environment. Unsurprisingly, these companies also reported better financial results overall, with earnings before interest and taxes (EBIT) margins 9 percentage points higher than those of businesses with management teams that were less diverse than the industry average.