Diversity in the workplace has been praised as not only being ethical but a smart business decision. However, the main question that stumps passionate diversity advocates is, “How will investing in diversity make us money?” In, a perfect world, arguing that investing in diversity is the ethical thing to do would be enough for any hiring manager. Unfortunately, most of us live in the business world where nothing is done unless it helps raise the bottom line, and now it is up to you to prove that diversity does exactly that.
Admittedly, it’s a difficult argument to quantify. Saying that adding diversity initiatives would add X amount of dollars to the bottom line would be oversimplifying the benefits of diversity because the exact benefits are hard to trace. Lucky for you, we’ve put together the business case that you have been looking for. Whether you are a skeptic of diversity or a diversity devotee, the numbers prove that diversity works.
Diversity is an Expectation for Top Talent
Job seekers are beginning to expect companies to have a diverse workforce and value diverse employees. According to Glassdoor, 2 in every 3 active and passive job seekers said that a diverse workforce is an important factor when evaluating companies and job offers. According to a Glassdoor study, when asked how important a diverse workforce is when evaluating companies and job offers 67% of respondents indicated that diversity was important or very important to their decision. When broken down, the numbers were even higher among women (72%), African Americans (89%), Hispanics (70%), Asians (80%), and millennials (86%). However, nearly 6 out of 10 employees think their company should be doing more to increase diversity. Therefore, by not investing in diversity efforts you are actively persuading top talent to look elsewhere for the diversity of thought they are looking for.
Higher Financial Performance
McKinsey & Company published a study in 2018 correlating higher gender and ethnic diversity to higher earnings before interest and taxes (EBIT). The study concluded that companies in the top quartile of gender diversity had a 21% higher likelihood of above-average financial performance than companies in the bottom quartile. Similarly, companies in the top quartile of ethnic diversity saw 33% higher likelihood of having above-average financial performance than companies in the bottom quartile. This is in part to diverse teams having more innovative R&I, enhanced group think, greater insight into real-world perspectives, quick access to cultural ambassadors, new product concepts, and introduction to new markets.
Boston Consulting Group (BCG) came out with a similar study concluding that there existed a statistically significant correlation between the diversity of management teams and innovation. Companies that had higher diversity within management saw 19% higher innovation revenue than companies with below-average diversity. A Harvard Business Review study tied this correlation to the fact that diverse teams understand diverse market needs, leading to more relevant product development that meets real-world needs versus non-existent problems. A 2017 Harvard Business Review report found that teams with higher cognitive diversity were 53% more effective and efficient in completing cognitive tasks than less diverse teams. From being able to identify sore spots in brand marketing to revealing new product and research opportunities, multicultural talent brings new perspectives and solutions.
Racial Minorities are only Getting Larger
The Brookings Institute estimates that minorities will make up the majority of the United States population by the year 2045. The Hispanic community is set to see the fastest growth in population. However, all minority groups are forecasted to see steady growth as well. By 2045, whites will make up 49.7% of the United States population, while Hispanics will make up 24.6%, African Americans 13.1%, Asian’s 7.9%, and all other racial minorities 5%. If we look at the racial demographics by age in the table, minorities will be the majority of the workforce even sooner. Therefore, by delaying diversity initiatives you are isolating young talent and simply delaying the inevitable.
Not only is diversity the right thing to do, but it would be a mistake to ignore or delay the benefits of diversity in the workplace. Although many skeptics still believe the financial benefits of diversity are non-existent or not proven, hundreds of companies around the world have proven that diversity initiatives are beneficial, if not necessary, to grow in today’s consumer-driven market. That is why DCAProsearch is dedicated to diversifying the marketing and advertising space with top diverse talent because we believe that diversity isn’t only the right thing to do, it is the way of the future.