Why Workforce Diversity is a Huge Competitive Advantage

The United States labor force is more diverse than ever. For employers, this change in demographics can offer substantial benefits.

Per multiple studies, organizations that embrace diversity have a higher chance of sustaining a competitive advantage than those who don’t. In 2015, Forbes reported that racially and ethnically diverse companies are “35 percent more likely to have financial returns above national industry medians”—which reinforces the business case for diversity.

In this post, we’re going to examine how the workforce is expected to change in the near term, how diversity is defined, and how properly promoting a diverse workforce can produce a significant payoff.

Diversity is Always Changing

Just because workforces are always changing does not mean that they consistently change in the same ways. Diversity will be reflected differently today than in 5, 10 or 25 years. Recent studies strongly indicate the following shifts in the US labor pool:

–Women now comprise nearly 47 percent of the U.S. force, according to the U.S. Department of Labor. This percentage is expected to grow moderately by 2020.

–The white working-age population was predicted to drop from 82 percent to 63 percent from 1980 to 2020, according to The National Center for Public Policy and Higher Education (NCPPHE).

–From 1980 to 2020, the minority portion of the labor force is expected to increase from 18 percent to 37 percent, with the Hispanic portion projected to rise from 6 percent to 17 percent, according to the NCPPHE.

–In 2015, Millennials became the largest generation in the American labor force, according to Pew Research Center. Additionally, 44.2 percent of Millennials reportedly belong to a minority race or ethnic group, according to the US Census Bureau’s 2015 report.

Notably, many employees and job seekers want to work for a diverse organization. A survey by corporate research website Glassdoor revealed that 67 percent of job seekers view a diverse workplace as important, and 57 percent of employees would like their workplace to be more diverse.

Diversity Defined

Esty, Griffith, and Hirsch (1995) defined diversity as acknowledging, understanding, accepting, and valuing people’s differences with regards to race, age, class, gender, ethnicity, disability, education, sexual orientation, spiritual practice, and more.

In a diverse workplace, competitive advantage is realized not by merely acknowledging diversity but also by creating an environment of inclusion, where employees work toward a common objective while feeling supported—resulting in greater productivity and employee commitment.

The clear benefit of a diverse and inclusive workplace is that it allows employees and employers to embrace the backgrounds and perspectives of different individuals. As we noted in our last blog post on multi-generational workforce challenges, different perspectives and experience typically produce better business solutions. Each new way of looking at a problem presents a new way for that problem to be solved.

It is important to remember that diversity is reflected inwardly and outwardly. External physical, geographic or socioeconomic traits are not the only elements to a diverse workforce. While these attributes are sometimes the most obvious, they can be primarily extrinsic. Diversity of thought, personality, professional experience and education can all revive a stale business with fresh insight and perspective.

Considering each employee’s whole background is crucial, especially when matching them to specific roles (not only when considering them as part of the overall workforce). Regional businesses can struggle to break outside of a typical candidate profile, ultimately creating a workforce with very similar personalities and backgrounds (even if they are outwardly different).   

What Can Diversity do For You?

Harnessing the power of diversity requires business owners to understand its potential properly, and promote the right kind of environment. In 2016, Thomson Reuters conducted a study of over 5,000 global companies on diversity and inclusion. Part of the study involved speaking with key executives who shared their understanding of how to leverage workplace diversity. Based on their responses, Thomson Reuters concluded that workplace diversity is most likely to create positive financial performance when executives and owners understand the following:

  1. Workplace diversity breeds a more creative and innovative workforce
  2. Hiring a diverse workforce for the sake of diversity will not work
  3. Diversity isn’t just about amassing a certain number of different people; it’s also about treating people authentically, in a holistic way.
  4. Diversity and inclusion go hand in hand; one cannot exist without the other.

Aligning understanding of diversity at the executive level and hiring a varied workforce can payoff significantly. According to an article in Business Insider, diverse teams are more likely to:

  1. Re-examine facts in the case of a disagreement or unexpected outcome. This is compared to homogenous teams, which may focus on personal disagreements or emotional tensions more than factual disputes. This focuses group effort on the real problems at hand, and reduces the likelihood of error while increasing productivity.
  2. Produce more innovative solutions, creating clear competitive advantages.
  3. Relate to different types of customers, providing superior service and building customer loyalty.
  4. Financially outperform their competitors!

Diversity Management

It bears repeating that managing diversity is about more than recognizing that people are different. It’s also about seeing the value of those differences, combating discrimination, and fostering an inclusive workplace in which employees feel valued, supported, and respected.

Negative perceptions and behaviors are obstacles in a diverse organization because they can impede employee relationships and hurt morale and productivity.

Effective managers have a keen grasp of discrimination and its ramifications, are aware of their own biases and prejudices, and are willing to change the organization in order to facilitate diversity and inclusion. They understand that because each individual is unique, there is no single solution to an inclusive workplace. They know that diversity management is a comprehensive process that requires ongoing training because people generally do not change their attitudes and behaviors overnight. Lastly, they are willing to promote a safe place for employees to communicate their ideas and opinions.

If you are interested in learning more about how to unlock the power of a flourishing and diverse workforce, we’d love to start a conversation. You can contact us by clicking below! Stay tuned this month for more articles on developing successful company cultures.

 

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Date

January 4, 2018

Author

AXIOS HR

Category

Article Attraction Blog Entries Culture Uncategorized