Why is diversity important in the workplace?

Most people readily accept the fact that workplace diversity is a positive thing for companies and teams. But fewer people can clearly articulate why that’s the case.

So, exactly why is diversity important in the workplace? And how can you ensure you reap the full benefits of your diversity initiatives – while simultaneously prioritizing support, inclusion, and employee engagement over buzzwords and marketing spin?

This guide answers all of your questions about workplace diversity: what it is, why it matters, and how to get it right.

The basics: Introduction to workplace diversity

Let’s start with a straightforward answer to this question: What is workplace diversity? Workplace diversity means building and maintaining a team of people who have different backgrounds, experiences, and perspectives.

Ironically, it’s easy to have a somewhat narrow view of diversity – such as thinking only of race. However, diversity is broad and includes people of different races, gender identities, ages, cultures, religions, abilities, and more.

What are the key components of a diverse workplace?

You can’t have diversity at work without a diverse workforce. Put simply, you need employees who are different from one another.

This is often talked about as the only step for diversity when it’s really only the first step. Assembling a group of varied people doesn’t do much if you don’t also have the culture and systems in place to support them. To make the most of diversity, you also need:

• Inclusion: Actively welcoming and involving all employees in opportunities, discussions, and decision-making, while acknowledging and valuing their contributions
• Equity: Ensuring fair treatment, access, and opportunities for all employees (and actively addressing any imbalances)
• Accessibility: Making workplaces, tools, and resources available and usable for everyone regardless of their abilities
• Open communication: Encouraging respectful, transparent, and honest conversations across all employees and all levels of your company
• Cultural awareness: Promoting understanding and respect for other cultural perspectives, traditions, and practices
• Bias awareness and action: Recognizing and actively reducing biases in your company, including in hiring/promotion decisions and in daily interactions
• Flexible policies: Offering adaptable policies to accommodate different needs
• Psychological safety: Creating a space where employees feel comfortable sharing ideas and voicing concerns without fear or negative consequences
• Diversity training: Providing ongoing education on diversity, equity, and inclusion to build awareness and empathy across your company
• Mentorship and development opportunities: Offering growth and support opportunities for all employees (including underrepresented groups)

Why diversity is essential for a thriving workplace

Now for the big question: why is diversity important in the workplace? From increased innovation to better business outcomes, a diverse workplace offers many compelling advantages – for both the business and individual employees.

How diversity benefits employees

• Better job satisfaction: When employees feel seen, respected, and valued for their diverse experiences, they have higher job satisfaction – which can lead to better engagement, increased productivity, and greater loyalty to the company.
• More growth opportunities: Employees are hungry to learn at work. Yes, they want to build relevant skills, but they also want to be exposed to new ideas, different cultural perspectives, and other problem-solving approaches. Diversity opens people’s minds and fosters more empathy, communication, and collaboration.
• Stronger sense of belonging: Employees who feel seen and included feel a greater sense of belonging at work. And belonging isn’t just an intangible, feel-good concept. It has real impacts on both job performance and turnover.
• Improved wellbeing: Workplaces can be a huge source of stress for employees – especially if they feel excluded or discriminated against. In contrast, a supportive and inclusive workplace helps employees feel safer and more valued, which means they experience improved mental health and wellbeing.

How diversity benefits the business

• Enhanced innovation and creativity: Listening to and considering diverse perspectives leads to fresh ideas and creative solutions that might not have otherwise surfaced. Numerous studies have shown that diverse groups are more innovative and productive than homogenous ones.
• Better problem-solving: Teams with varied backgrounds can analyze problems from different perspectives. Not only that, but research shows that diverse teams process information more carefully and diversity also helps mitigate cognitive biases like groupthink. In one study, decisions made by diverse teams generated 60% better results.
• Improved financial performance: Think diversity won’t impact the bottom line? Think again. Diverse companies are more likely to see stronger financial returns, likely related to better decision-making and greater innovation. According to McKinsey, companies in the top quartile for board gender diversity are 27% more likely to outperform financially than those in the bottom quartile.
• Positive employer and brand reputation: Customers, clients, and prospective employees appreciate companies that value diversity. 53% of workers say a company’s diversity, equity, and inclusion (DEI) initiatives play a key role in their decision about where to work and 75% of consumers say DEI influences their purchase decisions.

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How workplace diversity drives company culture

It’s impossible to tease out your diversity and inclusion efforts from your workplace culture. They’re two sides of the same coin. Your efforts influence your culture, and your culture influences your efforts.

With that said, let’s break this down a little further. Your commitment to workplace diversity shapes your overall workplace culture by:

• Broadening perspectives, encouraging new ways of thinking, and fostering a culture of open-mindedness
• Building trust and psychological safety, so employees feel comfortable speaking up, sharing ideas, and even pushing back when necessary
• Setting a standard of fairness and equity that promotes respect across your entire company
• Increasing empathy and cultural awareness, which strengthens your employees’ relationships with each other and prevents misunderstandings
• Encouraging accountability and continuous learning to make the workplace better for everyone

We’ve covered how diversity has positive impacts on your company culture, but it’s equally important to understand the ways that your existing culture will mold your diversity efforts. For example, you can put in the work to recruit and hire diverse talent. But without supporting cultural aspects like psychological safety, inclusion, and equal opportunity for advancement, your effort will be empty – and, even worse, it’s likely to cause damage to your employee engagement, wellbeing, and perception of your company.

When your culture genuinely values inclusivity (and has the programs in place to back it up), employees see diversity as a shared priority rather than an item to check off a list.

Put simply, a culture that celebrates diversity becomes a magnet for it. This becomes a cycle where inclusion and diversity continually strengthen each other, leading to a workplace people genuinely want to be a part of.

Common challenges in implementing diversity initiatives

Building a diverse workplace is critical, but much like any other change or new priority, getting there isn’t always straightforward. You’ll likely face obstacles that can slow your progress or make it tough to see real results.

Here’s a look at some of the most common challenges when implementing diversity initiatives and how they can impact your efforts.

Overcoming unconscious (or conscious) bias

All of us have biases. Some of these biases we’re aware of (that’s conscious bias) and others operate without our knowledge or intention (that’s unconscious bias). In either case, these biases influence our decisions and can show up in many areas – like hiring, promotions, and our day-to-day interactions.

For example, people might unintentionally gravitate toward candidates or colleagues who share similar backgrounds, interests, or educational experiences (that’s called similarity bias).

Addressing biases isn’t about eliminating them entirely. That’s an unrealistic goal. Instead, it’s about recognizing biases and putting practices in place to minimize their effects. Efforts like relevant training, structured interviews, and continuous performance management can help keep biases in check.

Managing resistance to change

While most people understand and accept the benefits of diversity, change is still hard. It breeds uncertainty, which can be off-putting for your employees and your leaders.

That means you might experience pushback, whether it’s from employees who aren’t sure how diversity initiatives will affect them or from leaders who are cautious about overhauling their own established systems.

Take comfort in the fact that objections and opposition are normal – humans are practically hardwired to resist change. Clear communication and plenty of transparency about the goals and benefits of diversity can bring everybody on board and ease their concerns.

Dealing with resource limitations

Effective diversity initiatives often need time, budget, and dedicated staff. Without these resources, diversity efforts can fall short or quickly lose steam.

Yet resource limitations can be a real roadblock, particularly in smaller companies. These companies will need to look for creative solutions, such as employee-led diversity groups or partnerships with external organizations, to keep initiatives moving forward.

Creating true inclusion

Many companies are “going through the motions” when it comes to DEI without holding themselves accountable for making real change. While 64% of organizations describe DEI as important or very important, 62% of companies devote little to no resources to promoting the fair treatment and full participation of all people in their workplace.

Far too many companies start with diversity but stop at inclusion. When people from different backgrounds don’t feel genuinely valued and included, diversity efforts fall short. Ultimately, putting in the work to foster an inclusive culture – where every voice is heard and respected – is just as important as meeting your diversity targets.

Building a successful diversity and inclusion strategy

Reaping the benefits of workplace diversity requires thought and intention – and that’s where your strategy comes in. Here are three steps to build a DEI strategy that’s impactful (and not just lip service).

Define your diversity goals

While there’s plenty of debate about the merit of diversity targets, this simple fact remains: you can’t improve what you can’t measure. So, start by defining exactly what you want to achieve and then set your specific, measurable goals.

Whether it’s increasing the number of underrepresented groups in leadership roles or building a more diverse recruiting pipeline, clear goals and DEI metrics will set your finish line and help you track your progress along the way.

Establish inclusive hiring practices

Your hiring process is another area where you can make a big impact. Review and improve your existing hiring practices by:

• Revising your job descriptions to eliminate biased language
• Using anonymous resume reviews to reduce bias in the screening process
• Build diverse interview panels to incorporate diverse perspectives into hiring decisions

Even seemingly small changes like these can help you attract a more diverse pool of candidates and provide a more fair recruitment process for them.

Provide relevant training

DEI training isn’t just for managers – it’s for everyone. Offering regular workshops and training sessions will help all employees understand the importance of diversity, recognize their biases, and contribute to a more inclusive workplace.

For managers specifically, offer training related to being an inclusive leader. Touch on topics like how to give feedback, tips for managing diverse teams, and how to foster a team culture that emphasizes belonging.

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Measuring the impact of diversity on business outcomes

A successful strategy matters, but monitoring how well it’s working is just as important as creating it in the first place. Tracking your progress through measurable data helps you understand the impact of your efforts, spot improvement areas, and take action when you need to.

With data, you can identify patterns and trends, measure the effectiveness of your programs, hold your organization accountable for diversity goals, and fine-tune your diversity initiatives.

Key metrics to track diversity success

• Employee demographics: Tracking the representation of different groups across all levels of the company
• Hiring and retention rates: Monitoring the diversity of new hires and the retention rates of underrepresented groups
• Promotion rates: Measuring how diverse candidates are progressing through the organization and if there are any obvious disparities in who’s moving up the ladder
• Employee engagement and satisfaction: Conducting employee engagement surveys to gauge how inclusive employees feel the culture is and whether they feel respected and valued at work
• Pay equity: Analyzing salary data to confirm there’s no pay gap between different groups for similar roles and experience
• Training participation and feedback: Tracking how many employees are engaging with your diversity training and reviewing their feedback to improve your training options
• Diversity in leadership: Measuring the diversity of leadership teams and board members to confirm varied voices are guiding your company’s decision-making

The benefits of diversity go beyond buzzwords

Why is diversity important in the workplace? Well, a list of why it isn’t important would be a significantly shorter one.

Today, diversity isn’t a buzzword, a marketing ploy, or a box to check. It’s fundamental for shaping a company culture that attracts top talent, increases employee engagement, and generates meaningful results.

But keep in mind that diversity is only the first step. You won't reap the many benefits by simply having diverse perspectives on your team – you also need to cultivate an environment where those perspectives are heard, considered, and valued.