Why Diversity and Inclusion is Important

RoleMapper Team

September 12, 2022

The business case for creating a more diverse and inclusive organisation

Diversity and Inclusion has the ability to transform an organisation. Gender-diverse companies are 25% more likely to see above-average profitability, with ethnic-diverse organisations 36% more likely.

What matters is how an organization harnesses diversity, and whether it’s willing to reshape its power structure. Robin J. Ely and David A. Thomas

But research has shown that progress is slow and this will only prove to get worse post-pandemic. Out of 1,000 large organisations surveyed, the representation of ethnic minorities on UK and US executive teams stood at only 13% in 2019, a growth of just 7% from 2014.

Using an example, just to put this in context; without change, companies in the US and UK won’t achieve gender parity in leadership for at least 24 – 29 years.  

The business case for diversity and inclusion gets more compelling by the day, but global events and the pace of change means organisations need to be more agile, responsive and fleet of foot.  

Building a case for D&I

There are three core elements when it comes to building the business case for diversity.

     

  1. Increases Innovation

There is strong evidence that increased diversity in organisations leads to greater innovation.

Scott Page, Professor of Complex Systems, University of Michigan, has looked at the link between team diversity and innovation and used mathematical modelling and case studies to demonstrate how diverse employees can produce organisational strength.  

His key finding was that when teams comprise people with different perspectives and backgrounds, namely education, experience or identity, their collective intelligence is greater than that of homogeneous teams, even when these homogeneous teams are judged to be more capable.  

“Diversity jolts us into cognitive action in ways that homogeneity simply does not”. Katherine Phillips, Columbia Business School

Where there are differences, each member of the team is more likely to anticipate, explore and evaluate different viewpoints. There is likely to be more discussion before reaching a consensus, which will take more time, but will ultimately be more beneficial in the long run, in terms of breadth of thinking, new ideas and organisational innovation.

Boston Consulting Group found that companies with above-average diversity on their management teams reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity.  

In their study they looked at the impact of six different diversity characteristics and found that some seemed more impactful than others.  The most significant gains came from changing the makeup of the leadership team, such as the national origin of executives, the range of industry backgrounds, gender balance, and career paths.

 

Debiasing job descriptions, embedding flex and nurturing skills-based hiring are some critical ways to improve D&I.  

  1. More Productive, Engaged and Motivated Employees

A more diverse organisation can also result in more engaged, motivated and productive employees.

Research by Opportunity Now and Shapiro Consulting showed that when leaders are perceived by their teams as being inclusive, 84% of employees reported feeling more motivated, while 81% indicated it had a positive impact on their productivity. Organisations with high employee engagement levels report 3.9 times the earnings per share (EPS) growth rate compared to organisations with lower engagement in their same industry.  

  1. Widens talent pools

Diversity hiring is a real stumbling block for so many organisations that are currently restricting diversity through their recruitment processes.  

According to a study by Harvard Business Review, there are around 27 million ‘hidden’ workers in the US alone. Untapped talent that wants to work but failing at the first part of the process. The reason why? Outdated algorithms that fail to be inclusive, as well as poor job descriptions.  

It is estimated that there are more than 27 million ‘hidden’ workers in the United States alone. (HBR)

Summary

When building a case, it’s important to keep transformation front of mind, because in order to be a truly diverse organisation, change has to happen at the core.

Traditionally, inclusion often starts at the end of the hiring process with organisations looking for ‘quick fix’ with job ad copywriting tools, and, although these may attract diverse candidates it may not get them to interview.

To drive innovation, created a more productive environment and to tap into wider talent pools, it’s key organisations look at their job architecture and job descriptions. Are they doing what they should be doing? Are they fit for purpose? Are they agile and ready for future ways of working?

To learn more about driving inclusion at the core to help build a business case, book a demo or download our resources on creating inclusive cultures.