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Why Is Diversity Important in the Workplace?

Diversity in the WorkplaceDiversity in the Workplace
min read
August 21, 2023

No matter what industry you’re in, creating a diverse workforce should be a top priority. That’s because it’s good for your community, your business, and your employees. 


In fact, 78 percent of workers consider diversity in the workplace to be important. And, employees of businesses that don’t focus on diversity are continuously less happy and less satisfied than those that do. 


That proves that diversity has a big impact on your brand and reputation. But, what other benefits do diverse teams bring to your business? From increased productivity to lower employee turnover, let’s talk about why diversity should matter to every leader and manager.

What Is Diversity in the Workplace?

When you’ve heard people talk about a diverse workplace, ethnicity was probably the first thing that came to your mind. And that’s a big part of the story in the U.S.


According to the U.S. Census Bureau, the United States is predicted to become a majority-minority country by 2043, with nearly 60 percent of employees identifying as ethnic minorities by 2060. 


This means that, in the coming decades, your workforce will be a group of people from different backgrounds with a whole range of life experiences.


And that’s before we even take globalization into account. The number of people moving to new countries for work continues to grow each year. In 2020, the Bureau of Labor Statistics estimated that around 17 percent of the U.S. workforce, or roughly one million people, were born in foreign countries. The talent pool is rapidly filling with diverse employees from all walks of life.



But diversity doesn’t only mean hiring people from different ethnic and cultural backgrounds. Diverse groups also take into account:



As a leader, it’s up to you to protect your team members from discrimination, bullying, or harassment as diverse individuals. Regardless of how your employees choose to identify themselves, recognizing and celebrating their differences should be part of your company culture

The Importance of Diversity in Business: Why Does It Matter?

Here’s the truth: Diversity has always been important. But, it’s attracted even more attention in recent years, especially as the world of work continues to drastically change.


Between a global pandemic, economic instability, shifts toward flexible and remote work, and even “the Great Resignation,” it’s no longer enough to have diversity on your priority list—it needs to be near the top. 


The good news is that this level of focus on diversity in the workplace will pay off. There are so many ways your business can benefit from hiring people from different cultures, many of which can directly impact your bottom line.


Here are the ways diversity can benefit your business:

1. Inclusive Workplaces Have an Easier Time Recruiting

When you’re open to hiring new people from a range of diverse backgrounds, the talent pool becomes virtually endless. This means that you have an even greater chance of finding the perfect employee for your company. 


A diverse workplace also makes recruiting easier from the prospective employee’s viewpoint too. According to Glassdoor, over three-quarters of millennial job seekers say they make application decisions based on whether or not a company has diversity in the workplace. 


And, you might already know this instinctually, but before applying for positions, four in five job seekers will spend time searching Glassdoor, LinkedIn, and Indeed for reviews of a company by current and former staff. 


If they see that your business has plenty of diversity initiatives and diverse talent making up the team, they’ll be more likely to apply for positions at your company.

2. Diversity Strengthens Employee Engagement and Confidence

Employee engagement is the level of commitment and enthusiasm employees feel toward your business and their roles. Obviously, you want engagement to be high.


Diversity can help you get there—especially if you have a younger workforce. Eighty-three percent of millennials are more likely to be engaged in their work when they work in an inclusive environment.


It’s important to remember that inclusion looks different for everyone. For some employees who identify as minorities, seeing other team members who look like them and have a similar background can make them feel more at ease and open to sharing ideas with the team. 


For others, having the opportunity to collaborate with and learn from team members who have completely different experiences can be enlightening and make employees excited to come to the office every day. 


Diversity is made up of many different factors. But when your workplace becomes more open and inclusive to people from a variety of life circumstances, you’ll see happier, more confident employees.

3. Diverse Teams are More Productive and Profitable

Building a team is tough. Making sure they’re productive is even more difficult. While no team will ever be productive every moment of the day, a diverse group of employees can help keep productivity as high as possible. 


When people feel included, they have more of an incentive to work harder and help the whole team succeed. And from that success usually comes an increase in profitability too.


Studies by McKinsey and Company have found that companies in the top 25 percent for gender and ethnic diversity continually see above-average profitability, compared to companies in the bottom 25 percent. 


Research by Deloitte in 2018 also showed this to be the case, with inclusive work environments two times more likely to meet or exceed their financial goals. As the evidence suggests, a diverse team really can pay off.

4. Diverse Companies See Lower Employee Turnover

Of all the business metrics that matter, your employee retention is definitely up there. With recruitment costs increasing and plenty of jobs for prospective employees to choose from, finding ways to keep the best members of your staff is super important.


To do so, you can’t just build a diverse team—you need to emphasize that everybody should treat each other with respect. This shared understanding leads to a more supportive and positive work environment for everyone, along with greater job satisfaction.


It makes sense: When employees are happy in their place of work, they’re significantly less likely to walk out the door for a new opportunity. 

5. Different Perspectives Lead to Creativity and Innovation

The more creative your business is, the faster you can stand out from the pack. Working with a team full of people with different worldviews, education, and experiences means that there’s even more opportunity for unique ideas to come to the table.


If different people on your team identify with various subsets of your customer base, they’ll have firsthand insights about your customers’ goals and challenges. You can use that information to grow your products, services, and whole business in a way that’s most relevant to your customers (and maybe even unrealized for your competitors).


Not only does this give your business a reputation boost among your audience, but it also means more money in the bank thanks to new product or service launches.

6. Diversity Leads to Faster Problem-Solving

You might think that a bunch of different opinions will lead to endless deliberation and drawn-out conclusions. But, the opposite is true. Diverse perspectives can get you out of a rut when you’re trying to solve a problem. 


If you have a bunch of people trying to solve a problem in different ways, someone’s bound to think of the best solution. That can speed up the decision-making process and even lead to better decisions.


A 2017 study by Harvard Business Review found this to be the case. Their research shows that cognitively diverse teams solved unfamiliar, complex problems much faster than groups that were made up of similar people. 


If your business needs a competitive advantage, a diverse workforce is the way to achieve it.

7. A Diverse Workforce Provides Learning Opportunities

Employees with different backgrounds will inevitably bring skills and talents that are unique to them. With this comes an opportunity for learning as a company, where each individual employee has room to teach others in the business what they know.


This is particularly the case when hiring staff from different generations or even from different countries. Older employees have a wealth of knowledge about the industry and even your company if they’ve been with you for years. This is invaluable information that can be passed down to the younger generations.


Alternatively, younger workers often come into their first jobs full of ideas and excitement. They’re the perfect addition to a team that needs a new perspective or some fresh thinking. Both generations are equally as valuable in a business and can make positive changes.

Diversity Means Nothing Without Inclusion

Building a diverse workforce is important, but you can’t forget about the other piece of the puzzle: inclusion.

Diversity is the varied makeup of your team, but inclusion is about making sure all members of your staff feel a sense of belonging. As diversity advocate Vernā Myers says, “Diversity is being invited to the party. Inclusion is being asked to dance.” 


Inclusion doesn’t just happen as a byproduct of diversity. Building an inclusive culture requires effort, including:


Making Diverse Teams Work at Your Company

Building a diverse company isn’t a one-and-done strategy. It requires constant effort to hire staff from all kinds of backgrounds and experience levels. 


But, the work is more than worth it. As the team grows, you’ll reap the benefits of investing in a diverse group—both in terms of profit and employee satisfaction.

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