Diversity, equity and inclusion (DEI) efforts in the workplace are of critical importance, now more than ever. Companies are donating money to diversity and equity causes and overhauling their business approaches to reflect their prioritization of inclusivity. According to one study released in 2021, almost 70% of Canadian companies had launched initiatives to create a more diverse and inclusive workforce.
That still leaves one-third of companies who are missing out on the benefits that DEI has to offer.
What is DEI?
Diversity, equity and inclusion efforts come in many forms. Diversity efforts will typically include a collection of policies and processes that ensure a diverse workforce in terms of ethnicity, gender and sexuality. Equity ensures that those processes and programs are impartial and fair to everyone. Inclusion is the practice of ensuring people feel they belong in the workplace or institution.
In the workplace, these efforts often focus on DEI training for employees. In fact, 33% of executives reported that their company focused its DEI initiatives on training.
Other popular approaches to DEI in the workplace can include:
- Safe pathways to reporting discrimination and harassment
- Dedicated DEI policies and procedures
- Diversity-focused recruitment and hiring practices
- Setting thresholds for minority representation in the workforce or on boards
- Partnering with a DEI consultant
While DEI efforts are the right thing to do from a moral and ethical perspective, there is also a compelling business case for launching DEI initiatives in your workplace. Here are four of the significant benefits that DEI efforts can foster.
1. Increased Revenue and Productivity
Numerous studies have linked diversity to increased profits and productivity. It just makes sense. If you’re selling to a global marketplace or your customer base, like most, is diverse, it’s far easier if your company seems more reflective of the people you’re trying to sell to. There is also growing evidence that diversity and the comfort that comes from inclusion efforts empower workforces to be more innovative and more productive.
According to a Waterloo University analysis of recent Statistics Canada labour market data, a one per cent increase in diversity netted a 2.4 per cent increase in revenue as well as a 0.5 per cent boost in productivity. This payoff extends past the workforce to management and even beyond. A McKinsey report found similar statistics worldwide, reporting that companies with the most ethnically and culturally diverse boards were 43% more likely to experience higher profits. At the other end of the scale, companies in the bottom quartile for gender, culture and ethnic diversity were 29% less likely to achieve above-average profitability.
To reach a global customer base, you need to be a global company. That means employing people from diverse genders, ethnicities and ages. It can help you better service existing clients as well as more effectively reach out to new markets. A Harvard Business Review found, for example, that diverse companies are 70% likelier to capture a new market. They’re also 45% more likely to report increased market share year-over-year.
2. Innovation, Amplified
There is also growing evidence that DEI in the workplace fosters more innovation at a faster pace. There are many plausible reasons for this. Of course, a more diverse workforce implies a less homogenous workforce, with equally diverse approaches, experiences and ideas. This is a breeding ground for new ideas and innovation. DEI training and programs may also help employees recognize and acknowledge their own biases, including entrenched ways of thinking, and lead them to actively work to overcome both while opening their minds to new approaches.
Because of this awareness, team members may be less inclined to overlook critical information and even less likely to make errors in judgement. It can also encourage more scrutiny of each team member’s actions. Cognitive resources are kept sharp and in use. And innovations, by definition, require people to step outside their comfort zone, an approach that diversity, equity and inclusion all foster.
Researchers are finding growing evidence that DEI can catalyze innovation. A United Kingdom study found that companies with culturally diverse leadership teams were more likely to produce new products than homogenous teams. A similar Spanish study found companies with more female employees were more likely to introduce radical innovations into the market over two years.
3. Higher Employee Satisfaction
The fostering of a strong company culture offers the immediate payout of increased engagement, retention and employee satisfaction. Publicly celebrating differences through your DEI efforts can strengthen a company culture and deliver improved employee job satisfaction. Workers will feel both empowered and respected and will be more likely to be more innovative, imaginative and productive.
When your employees are not engaged, the cost can be substantial. A Gallup study in 2013 pegged that cost at up to $550 billion every year in expenditures related to lowered productivity from existing employees and others related to replacing lost employees, including recruitment and on-boarding costs.
Reports also suggest that DEI can foster better relations between workers, including reduced conflict and improved relationships. Finally, the feeling of belonging that DEI can promote helps improve the mental health and well-being of your workers and reduce stress levels.
Interestingly, rather than slowing things down, diverse teams that follow an inclusive process make better decisions, and they make them far faster. Additionally, they typically get better results from the decisions they’ve made.
4. Improved Company Reputation
A growing number of organizations and media outlets are working to highlight and acknowledge diverse companies with annual awards. Even consulting companies like Deloitte and banks such as RBC and Scotiabank are offering diversity and inclusion awards. What this acknowledgement translates into for businesses is an opportunity to further capitalize on the goodwill and benefits they’ve already received through their DEI efforts. The Canadian government is also on board with its 50-30 initiative, which provides both resources and recognition for DEI efforts.
This kind of good publicity can, and often does, translate into more clients or customers and easier recruitment and retention. The business case for DEI is clear. Companies who fully embrace DEI at all levels of the organization hire better, retain the best, innovate more and achieve higher profitability.
