While the seminar was related to bringing DEI values to the workplace and about programs that actively made their workplace more diverse, equitable and inclusive, it got me thinking about how DEI efforts benefit a company from a business standpoint as well as the overall economic benefits of DEI efforts.
But what is Diversity, Equity, and Inclusion? Simply put, Diversity is “the condition of having or being composed of differing elements, i.e., variety”, or the presence of differences within a given setting. In the workplace, Diversity includes factors such as gender, race, age, ethnicity, sexual orientation, and socioeconomic background. Meanwhile, Equity is ensuring that workplace practices, programs, and policies are impartial and provide equal possibilities for every individual. Finally, ensuring that all employees feel a sense of belonging in the workplace and feel supported when it comes to being their true authentic selves is Inclusion.
From observing the existence of millions of plant and animal species, it is evident that nothing is more natural to our planet than diversity. Every living being has a role and contribution to make in the world. Similarly, our country and workforce are also diverse, and becoming more so. Various studies have shown that more people of color, women, and other minorities are entering the workforce. Census data suggests that by 2050 there will be no racial or ethnic majority in the US, and that new immigrants and their children will account for 83% of the growth in the working-age population.
The business case for diversity is self-evident. To be competitive, companies need to be aware and plan for major macro trends that point to an increasingly diverse population. A diverse workforce brings together experiences that nurture a more creative, innovative, and productive workforce. Studies have shown that a diverse workforce can more effectively address market opportunities comprising different backgrounds and improve their market share and profitability. Further, by hiring from a diverse talent pool, companies have a better shot at being able to hire the best, particularly in tight labor markets. In fact, companies that are in the top 25 percent for diverse genders in the executive team are 25 percent more likely to have greater-than average profitability. Diverse hirings are especially beneficial in competitive industries where talent is critical to the bottom line.
To take it further, talent retention is a huge challenge for companies. Equity and Inclusion in the workplace is critical for retention. When employees don’t feel truly valued or treated fairly, they are likely to leave sooner than later. The economic costs of hiring and onboarding a new hire is expensive and therefore directly impacts profitability. Various studies have shown that an inclusive and discrimination-free environment helps businesses avoid these employee turnover costs; when employees trust that they will be treated fairly regardless of race, gender, sexual orientation, or age, they are likely to be more productive and engaged.
With increased globalization, the market opportunity for US companies continues to expand. In a global economy, people from hundreds of countries interact daily and there is an incredibly beneficial exchange of ideas between billions of diverse, unique people. However, to benefit from increased access to worldwide markets and to grow the economy, businesses need to be able to cater to diverse people across the world. It is natural that a more diverse workforce is more effective.
Diverse needs keep the economy moving forward and furthers innovation around the world. Good ideas come from all kinds of people, regardless of who they are, which is why inclusion continues to help push boundaries and take strides in the economy. Our economy can grow by addressing the needs of diverse workers and consumers, and businesses are becoming increasingly aware and have learned the positive impacts of a diverse workforce on their bottom lines. By extrapolating individual businesses and workplaces to a national level, from a macroeconomic perspective, diversity is a key factor to building a strong, sustainable, and inclusive economy.
