There’s no denying the world is becoming smaller and more interconnected. As a result, societies as well as businesses are becoming increasingly diverse. This is not something that is necessarily being actively pursued. Instead, it’s more of a reflection of international travel, Internet connectivity, and multinational companies expanding across the globe. But more and more businesses are appreciating the importance of diversity as well as inclusive and equitable practices. It will be these companies that will be best positioned for future success. This simply isn’t a generic statement but instead one backed up by hard facts and data.
Understanding this, diversity, inclusion, equity should be an important mantra for businesses when looking ahead. This is especially true for tech companies. (Read more about the diversity issues tech companies face in this Bold story.) Adopting strategies that cultivate such work settings and cultures can help companies gain a unique competitive advantage in the marketplace. But doing so takes planning, effort, and a commitment of resources in order to achieve such environments. Only by recognizing the benefits that diversity, equity and inclusion in business offers will enterprises invest in these areas. And the following provides a brief overview that should help convince any business this is a smart strategy for the future.
“In order to drive change, an effective diversity, inclusion, and belonging strategy needs to be integrated into your larger business strategy and include broad-based accountability. Accountability, starting with leaders, is essential.” – Yetta Toliver, Global Head of Diversity, Inclusion and Belonging, Xerox
A Snapshot Now and Into the Future
When it comes to the importance of diversity and inclusion in business, statistics don’t lie. Indeed, White individuals comprise the racial today at around 76 percent. But that won’t be for long. Over the next 2 decades, racial minorities in the U.S. will have attained majority status. And by 2065, there will be no single racial or ethnic majority on the planet. These predictions are based in part on past changes. For example, Millennials are 16 percent more diverse in ethnicity that Baby Boomers. But these projections are also based on an accelerated pace of diversity stemming from increased globalization.
While the importance of diversity may seem quite evident based on these stats, the same may not be true for equity and inclusion. Especially when it comes to gender, notable inequities remain and quite significant. For example, the average gender gap in pay is roughly 17 percent. As a result, fewer and fewer women are participating in the workforce. Likewise, less than 4 percent of all Fortune 500 CEOs are women. This is despite the fact that more women than men are college-educated. Similar statistics are also evidence for racial minorities and for those with disabilities. If businesses truly want to excel, these figures need to shift. Greater equity and inclusion in business is a must in an effort to thrive in the coming decades.
“Don’t be shy about starting something small and getting as many people involved and engaged as you can, because it will build.” – Dion Harrison, Chief Diversity Officer, Elevate Credit
The Importance of Diversity for Success
Accommodating a more diverse workforce and global population should be a good reason to promote inclusion in business. But additional data makes this even more clear. When it comes to diverse management, businesses on average earn 19 percent more in revenues. Likewise, diverse companies also enjoy 2.3 times as much cash flow per employee compared to poorly diverse businesses. Even those who have more varied Boards of Directors outperform other companies by more than 40 percent. Therefore, not only does greater diversity make intuitive sense. It also improves a business’ bottom line.
These figures generally refer to the importance of diversity from all perspectives including race and gender. But in looking at gender diversity specifically, additional data also support the importance of diversity as well. Executive teams who have increased gender diversity average 21 percent more profits than those that don’t. Gender diverse teams also enjoy 27 percent greater value creation and 15 percent higher performance. These same teams have also been shown to be better at decision-making abilities. Based on research, diverse teams are 87 percent better in this regard, which naturally fosters greater success. (Read about how diversity in leadership is a cornerstone of business success in this Bold story.)
“It’s absolutely crucial that the CEO be engaged, that [diversity, equity and inclusion] be top of mind, and that they focus on it and talk about it often. If it is buried within the organization—underfunded, understaffed, gets a lot of lip service—that doesn’t get the job done.” – Edna Kane-Williams, Executive Vice President and Chief Diversity Officer, AARP
Equity and Inclusion in Business Are Also Data-Supported
When it comes to equity, businesses need to invest in equal opportunities for all members. When they do, they reap significant benefits that they might not otherwise appreciate. Based on statistical models, a more equitable workforce would increase the national GDP by 26 percent. In real dollars, that means roughly $28 trillion! Likewise, on an individual company basis, those pursuing equity in gender enjoy 41 percent more in revenues companies to inequitable organizations. While these figures are impressive, similar ones also exist for racial and generational equity endeavors as well.
Inclusion in business is vital for success as well. A diverse team and workforce are great, but without inclusion, many benefits are lost. Inclusion in business is needed to encourage engagement and participation. When this occurs, tremendous results follow. For example, inclusive companies have 1.7 times more innovation than others, and they also earn 2.3 times the amount of cash flow. Inclusive companies are also 120 percent more likely to hit financial targets and earn 1.4 times more in revenues. These are pretty astounding statistics that further support why equity and inclusion in business are essential.
Pursuing a Clear Path to Future Success
The evidence is clear…diversity, equity and inclusion should be a primary focus for businesses striving to be success. Those that recognize the important of diversity, equity and inclusion in business will invest in specific strategies to achieve these goals. Using the most common and important diversity, equity and inclusion metrics is a great starting point. These provide the inspiration and motivation for change that will ultimately put a business in the best position to succeed.
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