There is no doubt that diversity and inclusion is a hot workplace topic, which seems to only be expanding in terms of interest and approaches. Recently, one of our clients responded to our infographic “How Culturally Diverse Teams Win in the Workplace” with some excellent questions about diversity and inclusion. We thought these questions were so compelling and applicable to our clients, that we decided to dedicate a blog post to answer them.
There are several studies that demonstrate diversity and inclusion having a positive impact on individuals in a number of ways.
One study demonstrates that being exposed to diversity in the workplace can positively impact an individual’s level of creativity. The study found that employees on teams with high levels of cultural diversity share divergent information with one another, leading to greater team creativity and individual creativity.
It is important to note that the positive relationship between cultural diversity and creativity is stronger for teams when the climate for inclusion is stronger. In other words, when companies have inclusive leaders as well as systems and practices in place that create an open, supportive and fair work environment, the benefits of diversity are more apparent. In fact, when an organization has a truly inclusive culture that demonstrates value for all employees, research shows employees are happier and more loyal and productive.
Short-term benefits of diversity and inclusion for organizations include attracting top diverse talent (although not necessarily retain this talent—that is a more complex matter which will be touched on in the next question). Two-thirds of job seekers consider a company’s diversity when making decisions about where to work.
As for what diversity and inclusion can do for organizations in the long-term, the research is plentiful: it can boost organization’s bottom lines, create a competitive advantage, drive innovation, and creativity,⁶ and promote growth in overall market share.⁷
This is a rather complicated question, and it really depends on how we approach it.
On the surface, diversity and inclusion should help retain employees, given it is what many employees communicate they want in the workplace. However, the employees that organizations have the hardest time retaining are typically the underrepresented groups necessary to create a diverse workforce.
This is likely due, at least in part, to organizations failing to understand how diversity differs from inclusion. While diversity refers to individual characteristics inherent to each employee (such as race, gender, age, and sexual orientation), inclusion refers to the “lived experiences employees bring to their day-to-day work and how those experiences are accepted, valued, and welcomed”.⁸
There appears to be a trend of some organizations focusing on diversity with paying no mind to inclusion. Companies are investing heavily in changing their recruiting, hiring, and onboarding guidelines to appeal to a more diverse talent pool, yet many are failing to actually value what these diverse recruits have to offer. An inclusive work environment is a critical component to keeping diverse hires satisfied. Underrepresented groups need to feel they are valued and being treated fairly at an organization, and systems and practices must be put in place in order for this to occur.
Companies that have practices to promote inclusion are able to retain underrepresented talent longer (surprise, surprise). For example, Dell has a flexible working option and a women’s network to help retain female talent.⁹ Leadership also plays a large role in retaining diverse talent. Employee turnover can be significantly reduced (and employees retained longer) through quality inclusive management and relationships.¹⁰
However, members of underrepresented groups tend to leave their employers at higher-than-normal rates in industries that include hospitality, finance, business services, and manufacturing,¹¹ to name a few. This retention gap is largely due to a lack of structures to support diversity and inclusion. For instance, in the United States, women, as well as African Americans, Hispanic Americans, and Native Americans are represented in the information technology workforce in percentages that are far lower than their percentages in the population as a whole. Research shows these groups are further marginalized in promotion and salary raises, which “negatively affects stress, performance, productivity, satisfaction, and cohesion while positively increasing turnover rates.”¹² From this point of view, it is not so much diversity and inclusion that drive retainment—it is an organization’s inability to support diversity and foster inclusion that drives turnover.
One could argue that diversity and inclusion within an organization could be an indicator as to whether a company has the ability to retain a diverse talent pool. For example, in the tech industry, unfairness is the single largest driver of turnover affecting all groups (and most acutely underrepresented individuals).¹³ Nearly one quarter of underrepresented men and women of color report experiencing stereotyping in this industry; almost one-third of underrepresented women of color are passed over for promotion—more than any other group. Underrepresented men of color are most likely to leave due to unfairness (40%). It would be logical to draw the conclusion that companies that treat underrepresented employees unfairly are left with a homogenous group of individuals (and a lack of diversity and inclusion).
Research indicates that in North America, the more diverse an organization’s workforce is, the more happy, productive, and loyal employees tend to be.¹⁴ Research conducted in Japan and South Korea also demonstrates that diversity management practices have a positive effect on loyalty and organizational commitment in this region,¹⁵ too.
Granted, this is assuming successful diversity management is in place. Dr. Kristyn Scott, the lead researcher of the North American study, states, “By weaving diversity into the very fabric of the company, not only does this embrace its employees, it makes for a happier and more productive workforce.”
As indicated in response to the previous question, without successful diversity management and an inclusive environment, “diverse employees may choose to leave an organization because they are isolated from their majority-group colleagues, and the experience of isolation, rather than diversity, may influence turnover.”¹⁶
Another U.S. study focusing on the health sector showed that diversity practices in the workplace are associated with a trusting climate and that, in turn, is positively related to employee engagement. The research concluded that organizations that seek to promote employee inclusion are likely to reap the well-established benefits of a high trust workplace, “including effective working relationships and increased employee performance and well-being.”¹⁷
Individuals are generally happier, more productive, more loyal, more satisfied, and more engaged at work when they are a part of an organization with high levels of diversity and inclusion.
Inclusive leadership behaviors have been proven to positively impact employees’ feelings as well. Inclusive leadership increases the likelihood an employee experiences feelings of fairness, respect, value, belonging, psychological safety and inspiration by 70%.¹⁸
While more research is needed to explore the short-term and long-term impact of diversity and inclusion on employees, the current literature suggests that diversity and inclusion have a highly positive effect on individuals.
Do you have a question about diversity and inclusion in the workplace? Submit your questions in the comment section and we might feature it in an upcoming blog post!
Ready to continue learning about inclusion? Download a free chapter from our new book, Inclusive Leadership, Global Impact.
¹ Li, C., Lin, C., Tien, Y., & Chen, C. (2015, June 4). A Multilevel Model of Team Cultural Diversity and Creativity: The Role of Climate for Inclusion. Journal of Creative Behavior, 51(2), 163-179. Retrieved here; Shin, S. J., Kim, T., Lee, J., & Bian, L. (2013, October 28). Cognitive Team Diversity and Individual Team Member Creativity: A Cross-Level Interaction. Academy of Management Journal, 55(1). Retrieved here.
²,¹⁶,¹⁷ Scott, K. A., Heathcote, J. M., & Gruman, J. A. (2o11). The Diverse Organization: Finding Gold at the End of the Rainbow. Human Resource Management, 50(6), 735– 755. Retrieved here; Saxena, A. (2014). Workforce Diversity: A Key to Improve Productivity. Procedia Economics and Finance, 11, 76-85. Retrieved here.
³ Glassdoor. (2014, November 17). Two-Thirds of People Consider Diversity More Important When Deciding Where to Work. Retrieved here.
⁴ World Economic Forum. (2019, April 29). How Gender Diversity at the Top Can Boost the Bottom Line – and Improve the World. Retrieved here.
⁵,¹⁸ Bourke, J., & Dillon, B. (2018). The Diversity and Inclusion Revolution: Eight Powerful Truths. Deloitte Review, Issue 22. Retrieved here.
⁶ Yang, Y., & Konrad, A. M. (2011). Diversity and Organizational Innovation: The role of Employee Involvement. Journal of Organizational Behavior, Volume 32(8), 1062-1083. Retrieved here.
⁷ Hewlett, S. A., Marshall, M., & Sherbin, L. (2013). How Diversity Can Drive Innovation. Harvard Business Review. Retrieved here.
⁸ Mackey, Z. (2019, March 8). Here’s How Workplace Diversity Impacts Employee Retention. Berrett-Koehler Publishers. Retrieved here.
⁹ Lowther, R. (2006, September 1). Embracing and Managing Diversity at Dell: Introducing Flexible Working and a Women’s Network to Help Retain Key Employees. Strategic HR Review, 5(6), 16-19. Retrieved here.
¹⁰ Nishii, L. H., & Mayer, D. M. (2009). Do Inclusive Leaders Help to Reduce Turnover in Diverse Groups? The Moderating Role of Leader-Member Exchange in the Diversity to Turnover Relationship. Journal of Applied Psychology, 94(6). Retrieved here.
¹¹ Diversity Primer. (2009). Chapter 8: Recruitment, Retention, and Advancement. In Diversity Best Practices (pp.112-134). Retrieved here.
¹² Tapia, A. H., Kvasny, L., & Trauth, E. M. (2004). Chapter Seven: Is There a Retention Gap for Women and Minorities? The Case for Moving In Versus Moving Up. In Strategies for Managing IS/IT Personnel (pp. 143-164). Hersey, A: Idea Group Publishing. Retrieved here.
¹³ Ford Foundation & Kapor Center for Social Impact. (2017, April 27). Tech Leavers Study. Retrieved here.
¹⁴ Ryerson University. (2011, December 13). Diversity in Workplace Enhances Bottom Line. Communications of the ACM. Retrieved here.
¹⁵ Magoshi, E., & Chang, E. (2009). Diversity Management and the Effects On Employees’ Organizational Commitment: Evidence from Japan and Korea. Journal World of Business, (44) 1, 1-40. Retrieved here
