What diversity means for your business
Employee diversity is more than a moral obligation — it’s also a valuable resource.
There’s a lot of buzz right now about “DEI” initiatives – which stands for diversity, equity and inclusion. But what you might not know is that there are actually different types of diversity, and each one has its own benefits.
The bottom line
Let’s look at why diversity overall is beneficial to the bottom line. As with any system, a wide variety of skills and viewpoints tend to strengthen an organization. This cognitive diversity is important in driving innovation, higher revenues and better decision-making, and – very important in today’s talent wars – it creates a wider talent pool to draw from. In fact, diversity can drive up to a 60% improvement in decision-making. Public companies in the U.S. with diverse executive boards have been shown to have a 95% higher return on equity than non-diverse boards, and companies in the top quarter for gender diversity were more likely to have above-average profits. Companies in the top quarter of ethnic and cultural diversity outperformed those in the lowest quarter by 36%.
With these kinds of numbers, diversity is quickly becoming table stakes for companies who want to excel, innovate and outperform in their respective industries.
Types of diversity
There are four different types of diversity in the workplace. Your business may already encompass some of them.
First, there is what’s called internal diversity, comprised of dimensions of diversity that people tend not to see on the surface. This type of diversity corresponds to the circumstances into which a person is born. It can include an employee’s sense of self as well as their marital, parental, veteran status, education level, political affiliation. It might also include non-visible physical disability or limitations, gender identification and sexual orientation, among others. These aspects are also protected by federal employment law.
Then there is external diversity. These are demographic categories that are the most visible. For instance, race, gender, disability, height/weight, or age. Many of these factors dovetail very closely with internal factors.
There’s also industry and experience diversity. These categories might include management status, union affiliations, job functions, seniority and different departments within the company. Looking at diversity through the lens of each department and at each level of management is a good way to track diversity within your company. Having people with professional experience from a variety of industries can prove beneficial when it comes to innovation, should they have the proper transferable skills.
Finally, there is cognitive diversity. This can encompass someone’s outlook on life, their political beliefs, their knowledge of history, and how influenced they are by cultural events. Diversity of thought allows for fresh perspectives to best solve complex issues and plan for future growth and longevity of the business.
Diversity isn’t just a “nice to have” anymore. Actively pursuing different kinds of diversity can help you map a course to increasing diversity – and potentially your profits.
- Take a look at your current employees through the lenses above – you may have more diversity than you think already
- If you’re currently hiring, consider how recruiting diverse candidates might increase your talent pool
- If you’re interested in increasing diversity at your company, reach out to your advisor about ideas on where to begin
Sources: indeed.com; ideal.com; mckinsey.com; EEOC.org