Businesses need employee diversity
Businesses benefit in many ways by promoting ethnic and gender employee diversity in their top-level management positions, typically seeing improved motivation, innovation, talent retention, and overall better returns on investments. A 2015 study by McKinsey showed that companies with ethnically diverse workforces do better financially. For instance, they’re 35% more likely to financially outperform their competitors who do not emphasize diverse hiring practices. Gender diversity also helps a company’s bottom line as well. Businesses who have a gender-diverse workforce are 15% more likely to financially outperform less diverse companies. This data indicates that companies should seriously consider promoting both gender and ethnic diversity simultaneously for continued growth.
Employee diversity on the Rise
There’s been a movement for promoting more diversified workplaces for decades, but the cause recently gained more attention. According to data from Change the Equation, African-American and Hispanic workers make up 29% of the American workforce, an increase from 24% in 2001. Additionally, more women are rising up in the ranks and taking over executive positions in their companies than ever before. Women like Yahoo’s CEO Marissa Mayer and Facebook’s COO Sheryl Sandberg are prominent examples of this shift in leadership diversity. U.S. women are very productive in the workforce, responsible for 47% of the country’s gross domestic product.
Innovation is important for companies to stay relevant in today’s economy, and employee diversity is a huge source of innovation. True diversity means embracing people of different ethnicities, races, genders, religions and cultures. By hiring a diverse workforce, businesses can look at complex problems from all angles and use different ways of thinking to solve them. Forbes reports that 85% of 321 large international corporations believe diversity is important to innovation. IBM hires 427,000 people and has remained innovative in part by hiring a diverse workforce.
Diversity Fostering Business Performance Growth
Employee diversity is a key component in business growth, development, and the financial bottom line. Combined with innovation and modern management practices, companies can easily improve their revenue and reduce expenditures. The same McKinsey study showed that differences in sexual orientation, age, and global mindset provided companies with a competitive advantage in their industry. Researchers discovered the massive benefits of gender equality in the workplace. Companies that were gender-balanced could improve revenue by an incredible 41% as compared to their competitors without a balanced workforce.
IBM isn’t the only large corporation to incorporate employee diversity into its growth plan. An engineering study revealed that General Electric uses similar tactics, hiring a diverse workforce to promote innovation in their company culture. They’ve ventured into the lucrative Internet of Things industry, which will increase by 36.3% in compound annual growth from 2012 to 2025.
The Positive Impact of a Multicultural Team
Companies today need to take steps to improve their competitive edge, and diverse hiring practices have shown that they add value to businesses worldwide. A Harvard Business School report backs up this idea. It pointed out that companies which emphasize employee diversity remain open to different ideas and combine these ideas to create new and exciting breakthroughs. These differences prompt cultural discussions and ideas that can help solve problems in international expansion or allocation of resources. Multicultural workforces were found to be more creative and adaptable. This is beneficial to companies who are expanding into new areas of the market.
The good news is that companies of all sizes are starting to realize the benefits of hiring a diverse workforce prompting a lasting movement. Discrimination has no place in a business seeking continuous growth, and must not be allowed to take hold in the workplace. Large tech companies are getting on board with this mindset. Intel has set aside $300 million to improve diversity in their computer science and engineering departments. Additionally, Google and Facebook have both committed to improving diversity in their offices. With these big players on board, it looks like diversity is here to stay—good news for everyone.
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Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He is currently writing a book about scaling up business and his experience implementing lean methodology.