From encouraging better team performance to improving your ability to hire, here are five reasons why HR needs to focus on D&I
While diversity and inclusion (D&I) has been on the radar of smart organisations for years, in recent months the impetus for true inclusion has grown significantly, with high-profile initiatives such as gender pay gap reporting in the UK, and the widespread reporting of sexual harassment in the film industry, pushing the agenda forward significantly.
Here are the top five reasons why it’s vital that D&I is top of your organisation’s people agenda.
1. You’ll have a better understanding of your customers
Let’s start with one of the most obvious business cases for better D&I: to enable your organisation to understand the customers it serves. In 2014, the nearly 12 million disabled people in the UK were estimated to have a combined disposable income of around £80 billion. Yet 2017 figures suggest that only 3.4 million disabled people are in employment. The organisations who employ disabled workers will, arguably, be able to design products and services that suit their needs – potentially giving them a significant competitive edge. The same reasoning applies to customers in other demographic groups, too.
Organisations are slowly realising the business benefits of diversity. Nearly half (49%) of employers surveyed for LinkedIn’s Global Recruiting Trends 2018 said they focus on diversity to better represent their customers. Other key reasons cited by respondents included ‘to improve company culture’ (78%) and ‘to improve company performance’ (62%).
2. Diverse teams perform better
Cognitively diverse teams solve problems faster than teams of cognitively similar people, according to 2017 research published in Harvard Business Review. The researchers noted that, while many organisations might already be cognitively diverse, “people like to fit in, so they are cautious about sticking their necks out. When we have a strong, homogeneous culture, we stifle the natural cognitive diversity in groups through the pressure to conform.”
Meanwhile a 2013 report by Deloitte found that when employees ‘think their organisation is committed to and supportive of diversity, and they feel included’, their ability to innovate increases by 83%.
Diverse teams have also been found to make decisions 60% faster than non-diverse teams. “Unfortunately, non-inclusive decision-making is all too common,” says report author Erik Larson. “All-male teams make about 38% of the decisions in a typical large company, and the gap is even worse among less diverse firms like those in Silicon Valley’s technology industry.”
To be able to report on how teams’ diversity affects performance in your organisation, you’ll need to use a comprehensive HR system to capture personal or demographic information about employees, the composition of actual teams (which may well differ to the reporting lines on your organisational chart), and achievements against objectives.
3. It’ll encourage greater innovation and creativity
Having a workforce comprised of people with different backgrounds, experiences and skills means the ideas generated by these teams won’t be homogenous – they’ll be innovative and creative. And this can have a significant impact on an organisation’s bottom line; US public companies with a diverse executive board have a 95% higher return on equity than those with non-diverse boards, according to a McKinsey study.
4. It’ll be easier to hire and retain talent
Supporting employee networks for specific demographic groups – based on gender, sexuality, ethnicity or religion, for example – has a direct link to employee retention and engagement, a 2017 study by Women Ahead found. On the report’s launch, Women Ahead founder and CEO Liz Dimmock, said: “Networks aren’t just a nice thing to talk about. They’re a really key business enabler that leads to bottom line performance, productivity and innovation.”
Some organisations are looking beyond D&I to the concept of ‘belonging’ – a key focus cited by 57% of organisations surveyed for LinkedIn’s Global Recruiting Trends 2018. “Here’s why: diversity is being invited to the party, inclusion is being asked to dance, and belonging is dancing like no one’s watching,” said the report. “Belonging is the feeling of psychological safety that allows employees to be their best selves at work. Even at the most diverse of companies, employees will disengage and leave if they don’t feel included and accepted.”
5. It’ll boost your employer brand
With larger UK organisations required to publicly disclose their gender pay gaps for the first time in April 2018, there is more public awareness than ever of companies’ D&I initiatives (or lack of them).
In a 2017 survey by PwC, 54% of women and 45% of men surveyed said they researched if a company had D&I policies in place when deciding to accept a position with their most recent employer. A further 61% of women and 48% of men said they assessed the diversity of the company’s leadership team when deciding to accept an offer.
So it makes sense that, according to a recent Glassdoor study, more than a third (35%) of hiring decision-makers at UK organisations expect to increase their investment in D&I. More than half (59%) said that a lack of investment in D&I was a barrier to attracting high-quality candidates, while a fifth (20%) said D&I initiatives were among the most significant factors that influenced a candidate’s decision to join an organisation.
This article was first published in September 2014. It was updated in February 2018 for freshness, accuracy and clarity.