Originally published December 9, 2021 , updated on October 4, 2023

Diversity and inclusion in the workplace are as prevalent in the business sector as they are everywhere else. The nature of today’s climate is set in social justice. That is to say, more employees and consumers are demanding a higher representation of diversity within companies. And for good reason.

So many businesses are seeking to improve their diversity in the workplace. Some companies utilise diversity as a tool for competitive advantage. Others see it as a social responsibility. 

One thing rings true among the sea of motivations — gender and ethnically diverse companies are outperforming their competitors. 

Diversity Boosts Business Performances

According to McKinsey’s Delivering through Diversity report, companies that inhabit a gender and ethnically diverse workplace are 43% more likely to experience greater profits globally. To be precise, more ethnically diverse companies outperform competitors by 36%. In addition, those more gender diverse outperform the general marketplace by 25% globally. 

When companies adopt workplace diversity as a priority, they attract a wide range of employees. These potential employees harbour a multitude of backgrounds, experiences, and perspectives. Glassdoor published a survey of over 1,000 job seekers. The findings showed that 67% of applicants evaluated a company’s diversity before applying. The importance of workplace diversity is apparent not only in the business sector but also in the employment realm. Diversity in the workplace is shaping the very foundation of the marketplace. 

A diverse employee base means each individual can add their unique skillset to the table. Companies can then hone and develop this talent for greater performances. Through the creation of a diverse and inclusive workplace, companies are partaking in a globalised trend. This opens doors to business opportunities across the world. The structure of business models and traditional work processes can take a back seat when a diverse team is at play. With a larger talent pool from which to gather inspiration, businesses become more efficient and innovative. 

Companies that champion diversity sculpt a stronger, more empowered reputation within the industry. This increases the potential clientele base, generating new leads and, thus, revenue.  

Diverse Leadership Roles Generate Greater Profits

Cultivating a diverse employee base isn’t the only factor that has an impact on performance. Diversity within leadership and executive roles are just as vital. In other words, a more inclusive executive board generates more leads, bolsters sales, and increases profit.

A study published by Gallup in 2016 reported that gender and ethnically diverse teams garner up to 46% higher revenue. According to the McKinsey & Company survey, companies with diverse executive teams are 25% more likely to experience above-average profitability in the fourth quartile. This correlates to diverse teams outperforming companies by 36% in total after the fourth quartile. Moreover, companies with over 30% of women on their executive board outperformed competitors with fewer or no women in their team. Likewise, companies with ethnically diverse boards are 43% more likely to experience higher profits worldwide.  

The Reason Behind This Success

But why does this happen? A diverse leadership board encourages improved decision-making. A group that consists of a diverse team means that the task or problem at hand can be viewed in a variety of ways. Equipped with a multitude of perspectives, executives can find more practical solutions in a shorter period. To clarify, these informed decisions hold a diversity of insight, elevating visibility in a saturated sector. In 2017, Forbes released a report which stated that diverse teams are better equipped to make decisions 87% of the time. 

It’s clear that diverse leadership boards trump competitors whose executive teams are lacking. So with a more insightful outlook on problems, diverse leadership teams are able to come to conclusions more efficiently. They are also able to make more informed choices that boost both performance and revenue. 

Companies that adopt a more inclusive environment at both the foundation of their businesses and within the top tier are telling. Doing so proves their commitment, dedication, and understanding of the significant role diversity plays. It signals to potential investors and customers that the company values diversity. 

Diversity in the Workplace Fosters Innovation and Creativity

The exchange of various perspectives fuelled by different experiences and backgrounds fosters innovation. Tim Cook, the CEO of Apple Inc., says that diversity is critical to innovation. Diverse teams are more likely to address assumptions and suggest alternatives. This will consequently lead to more insightful and creative solutions that those of like-minded members may not have the ability to reach. 

Having a host of perspectives leads to creative and innovative solutions and ideas. And it’s not only the people involved who generate alternative concepts — it’s the environment. Spaces that accept all walks of life enable the creative process to occur. As a result, workplace diversity sculpts a realm where ideas connect and mould into something new. These novel solutions are more adept at solving non-routine and complex issues. 

Since many companies have a range of customers from various backgrounds, a diverse team is more likely to connect with the customer base. This deeper understanding assists companies in tailoring their marketing strategies to better suit their customers. A diverse and inclusive company is also more likely to represent untapped markets. Engaging in unexplored business charters leads to a wave of potential clients and revenue streams.

A Happy Workplace Leads to Increased Profits

An all-inclusive and accepting space helps employees feel more at ease. This allows them to work harder and retain fluidity. Employees who are comfortable in their workspace contribute to a thriving company culture. This, in turn, proliferates business success. Therefore, an accepting environment allows them to develop their skill and work ethic to produce stronger results. 

We at Goodman Lantern pioneer a path of diversity and inclusion in the tech industry. We strive to cultivate an all-inclusive workplace for social justice and corporate responsibility. Read up on Inclusion and Diversity at Goodman Lantern to learn more.

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