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Workplace Diversity: Benefits, Importance, & Statistics (2024)

This article will dive deeper into workplace diversity, its importance, and its benefits...

Deepti Jain
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Diversity in the workplace is everywhere. Politicians tout it as a necessity, corporations push their employees toward it, and schools acknowledge they lack it. And not without reason. 

Being diverse as an employer or a business owner can lead to better decision-making, increase productivity, and help hire better employees in the long run. At the same time, there’s also a lot of confusion over what workplace diversity is and if it even matters.

This article will dive deeper into workplace diversity, its importance, and how it can benefit both the company and its employees.

In This Article

What Is Workplace Diversity?

Diversified board

Diversity and inclusion are the bedrock of workplace culture. Workplace diversity is the presence of a range of different people in an organization, including ethnic groups, racial groups, gender, age, sexual orientation, religion, and more. 

It refers to the composition and climate within an organization and helps provide equal opportunities for all people working in the organization irrespective of their race, gender, religion or political affiliation.

Of course, true workplace diversity is more than being inclusive of physical attributes, such as race and sex. An essential element of workplace diversity is making sure you also include people with varying levels of education, abilities/disabilities, socioeconomic status, and so forth.

A workplace can benefit immensely by having diversity in the workplace. Some researchers believe that workplace diversity acts as a spur to innovation, increased productivity, and a healthy bottom line. Research conducted by McKinsey & Company in 2019 reaffirmed this sentiment. 

What Does Good Workplace Diversity Look Like?

Diversity and inclusion aren’t as simple as putting more women, minorities, and people with disabilities in the office. 

A good place to work is where everyone feels included and important. Everyone should be able to bring their whole self to work, which means being yourself, dressed as you like, and being surrounded by co-workers and managers who accept you the way you are. 

All in all, the work environment should be free of discrimination, accepting, and equitable. 

Here’s a little case study of good workplace diversity in action. 

L'Oréal, one of the world's leading cosmetics and beauty brands, has pioneered workplace diversity. 

L'Oreal Diversity Advertisement

Named one of the world’s top 10 companies by the 2020 Refinitiv Diversity & Inclusion Index that ranks organizations globally based on Diversity & Inclusion metrics, the brand is the perfect example of diversity done right.  

Index Ranking for overall DEI percentage score

L'Oréal doesn’t just look at diversity in terms of race, language, and religion - they also encourage inclusion with regard to disability, LGBTQ+, age, and socio-economic and multicultural origins. 

Here’s a quick overview of some of L'Oréal’s initiatives toward achieving diversity, equity & inclusion:

  • L'Oréal has partnered with Capital Filles in France. They pair L'Oréal’s female employee volunteers with high school girls to provide mentorship and career guidance.
  • L'Oréal India’s Little Steps program provides pregnancy support (including a life coach, gynecologist, dietician, fitness expert, and case coordinator) to employees expecting a baby or planning for parenthood.
  • L'Oréal UK & Ireland runs the #BeatTheStigma initiative to raise mental health awareness in the workplace using Mental Health Think Tank, Mindfulness Workshops, etc.
  • L'Oréal Mexico’s FREE TO BE program aims to create a safe space and positive work environment for LGBTQIA+ employees.

L'Oréal also claims that its policy of welcoming people from all backgrounds augured positive results and benefits for its team and business. 

In L'Oréal’s own words, some of those benefits include: 

  • Reconciling differences in communication
  • Recognizing product opportunities in new markets
  • Preventing losses in translation 
  • Assimilating newcomers
  • Bridging the gap between subsidiaries and headquarters

For instance, L'Oréal’s Indian-American-French manager who led the team that launched a men’s skincare line in Southeast Asia explained, “I am able to do this because I have a stock of references in different languages: English, Hindi, and French. I read books in three different languages, meet people from different countries, eat food from different countries, and so on. I cannot think about things in one way.”

Their top management also duly credits their multicultural executives for taking product development to new heights in New York, Tokyo, Shanghai, Rio, and Mumbai.

What Does Bad Workplace Diversity Look Like?

In recent years, there has been a significant rise in the need for diversity and inclusion. From gender-diverse teams to people with diverse sexual orientations, respect and acceptance have become a passion of today’s society. 

The sad part is that most forward-thinking workplaces are still fighting to create an environment where underrepresented minorities can flourish.

If you look at the statistics, as many as 86% of the Fortune 500 CEOs are still white males. While this was a welcome change from the 2000s when they held almost 96% of the CEO positions, true diversity is still at the proverbial arm’s length. 

Line chart white male CEOs and New Fortune 500 CEOs

One may find these numbers surprising, considering how an overwhelming number of firms in Silicon Valley rely on diversity training. 

However, that’s where they seem to be going wrong. 

Various laboratory studies indicate that such forced and perfunctory programs actually impinge on workplace diversity. 

For example, Harvard Business Review analyzed three decades’ worth of data from over 800 U.S. firms and interviewed hundreds of line managers and executives at length. They concluded that easing up on control tactics showed better results in facilitating workplace diversity and stamping out ingrained bias.  

Other than mandatory diversity training, job tests and grievance systems also end up making firms less diverse, not more. 

Percentage change of diversity among managers in five years

The Harvard Study also reveals that “Five years after instituting required training for managers, companies saw no improvement in the proportion of white women, black men, and Hispanics in management, and the share of black women actually decreased by 9%, on average, while the ranks of Asian-American men and women shrank by 4% to 5%. Trainers tell us that people often respond to compulsory courses with anger and resistance — and many participants actually report more animosity toward other groups afterward.”

Firms and HR managers may be well-intentioned while rolling out these diversity programs, but, clearly, the results don’t bode well for them. 

When making strides towards inclusion and diversity in the workplace, strong-arming employees and rolling out mandatory diversity programs are not the way to go. It’s best to avoid such tactics lest you may end up antagonizing your employees and triggering more bias. 

Why Workforce Diversity Works So Well 

These days, many companies want to promote diversity because they’re doing the right thing. And it makes sense - a mix of people with different backgrounds and experiences provides a broader range of perspectives that can improve performance.

Let’s discuss more reasons why diversity works well in an organization. 

Encourage Individual Contribution and Responsibility

Diversity in the workplace is not an end in itself; it has multiple benefits. One of those benefits is the promotion of individual responsibility and contribution to the organization. 

Individual responsibility is not just about following the rules but also taking the initiative and doing what needs to be done. It also gives birth to new ideas, taking your business to a whole new level.

As per findings published in the Academy of Management Journal, a diverse company is more productive than its less diverse counterparts. 

Understand Consumer Needs Better

As companies look for new ways to improve their view of consumers, workplace diversity will help them better understand how to keep up with evolving consumer needs.

L'Oréal’s story exhibits how workplace diversity plays a large part in a company’s success. A balanced workforce and a medley of multicultural executives are their most important assets - individuals who have helped them soar to new heights in global markets and understand customer needs to a greater extent. 

Another example is assimilating people with disabilities into the workplace.

As consumers, persons with disabilities represent more than US$1.2 trillion in annual disposable income, and, as societies age, this market for goods and services is expected to increase, says ILO. Moreover, organizations employing disabled workers or families of disabled individuals will have a better insight into the services and products that align with the needs of that customer base.

Types & Layers of Diversity in the Workplace

Lee Gardenswartz and Anita Rowe, two of the biggest votaries of diversity and inclusion in workplaces, identified 4 Layers of Workplace Diversity: Personality, Internal Dimensions, External Dimensions, and Organizational Dimensions.

Pie chart of the types and layers of diversity

They created a simplified model to discuss these four layers, with several subcategories within each dimension.

This model was developed to facilitate an understanding of diversity based on the context in which diversity exists, not just what diversity is. Moreover, these dimensions affect both the treatment of employees and the organization's productivity.

Here’s what each layer means: 

4 Layers of Workplace Diversity

1. Personality

Personality is the first layer of the diversity wheel, which tells you about an individual's values, beliefs, likes, dislikes, and more. It can be defined as the dynamic and enduring patterns of intelligence, perceptiveness, emotionality, and volition that organize a person's characteristic ways of thinking, feeling, and acting. 

In theory, the Big Five personality traits include:

  • Openness to experience (inventive/curious vs. consistent/cautious)
  • Conscientiousness (efficient/organized vs. extravagant/careless)
  • Extraversion (outgoing/energetic vs. solitary/reserved)
  • Agreeableness (friendly/compassionate vs. critical/rational)
  • Neuroticism (sensitive/nervous vs. resilient/confident)
Circle chart of the big five personality traits

Workplace diversity, therefore, can be seen from a personality-centered approach where the focus is placed on how people are different from each other in terms of personality traits.

2. Internal Dimensions

The internal dimension is the second layer of the diversity wheel, which represents characteristics an individual cannot choose. These characters include age, sexual orientation, ethnicity, gender, physical ability, and race.

Workplace discrimination exists from the reception area to the boardroom and is often based on these internal dimensions.  

In fact, the U.S. Equal Employment Opportunity Commission (EEOC) announced 84,254 workplace discrimination charges were filed during fiscal year (FY) 2017. And the majority of these charges were categorized as retaliation (48.8%), race (34%), disability (32%), sex (over 30%), and age (21.8%).

3. External Dimensions

External dimensions are the third layer of the diversity wheel, which includes the aspects of life we can control. It encloses religion, marital status, personal habits, educational background, recreational habits, income, geographical location, appearance, parental status, and work experience.

An individual exercises a higher level of control over these facets as compared to the other layers of the diversity wheel.

4. Organizational Dimensions

The organizational dimension is the fourth and the outermost layer of the diversity wheel. It consists of union affiliation, management status, seniority, work location, work content, divisional department, functional level classification, and field. 

An individual does not have complete control over these facets, as these decisions are taken mainly by the higher authority of the organization.

However, the organizational dimension has a lower level of control than the external dimension but has higher control over the internal dimension.

Types of Workplace Diversity

Diversity has many aspects and dimensions, depending on how you approach it. While there are many types of diversity in the workplace, here are a few of the most common ones: 

1. Age Diversity 

Age diversity is a term that refers to the mixed ages of people within a workforce. It is often carried out by combining young and old workers in the same work environment.

The concepts of age, ageism, and age discrimination are discussed when the notion of older workers (often used interchangeably with senior workers) is brought up in an attempt to justify age diversity efforts. 

To quote Maria-Francesca Spatolisano, Assistant Secretary-General for Policy Coordination and Inter-Agency Affairs at WHO, “Ageism towards younger and older people is prevalent, unrecognized, unchallenged and has far-reaching consequences for our economies and societies.” 

The research report “Ageism Amplifies Cost and Prevalence of Health Conditions” resonates with this sentiment. The report found that the 1-year cost of ageism was $63 billion, or one in every seven dollars spent on the 8 health conditions (15.4%), after adjusting for age and sex and removing overlapping costs from the three predictors. 

Diversity Layer: Internal Dimensions.

2. Generational Diversity 

Generational Diversity is a term used to describe the different generations that have worked together or are currently working together. 

The workforce is categorized into five generations at present, including:

  • The Silent Generation - born 1928 to 1945
  • Baby Boomer - born 1946 to 1964 
  • Generation X - born 1965 to 1980
  • Millennials - born 1981 to 2000
  • Generation Z - born 2001 to 2020

Different generational cohorts have distinct cultures, values, mindsets, expectations, and worldviews they bring to the workplace. 

For instance, when it comes to health benefits, only 47% of millennials want support for their health, juxtaposed to 67% of baby boomers. 

Generational health needs

On the other hand, 39% of millennials are more likely to want extra holidays as compared to 41% of generation X and 30% of baby boomers.  

Diversity Layer: Internal Dimensions.

3. Gender Diversity 

Gender diversity allows for a business to utilize the skills of all their employees, regardless of their sexual orientation or gender. The most common definition for this concept is “equal representation of genders in any given workplace.”

Over the past half a century, many women have made significant strides in the workforce. And if you look at the statistics by Deloitte, there are good chances that women will make up 47.2% of the workforce by 2024. 

This is a positive development for women and great news for companies that want to improve the way they work together. Researchers have established that women are capable of forging stronger collaboration, owing to their knack for reading non-verbal cues. 

Cosmetic giant Sephora seems to have understood this well, which is apparent from their various gender diversity initiatives. The Wall Street Journal reports that at 62%, most of Sephora’s technology workers are women.

A diversified group of women

The major credit for them making strides in gender equality goes to their propensity to hire women for their “potential” rather than their current “skillset.” This helps women joining Sephora gain higher skills, and, in turn, the organization gets to retain highly qualified female candidates. 

Employees at Sephora also claim that they find the work culture empowering, especially when compared to their previous experiences at other less inclusive Silicon Valley companies. Naturally, the decision to establish gender diversity in the workplace helps an organization’s bottom line and provides a positive environment for everyone.

Diversity Layer: Internal Dimensions.

4. Gender Identity & Expression

Gender identity refers to a person’s individual experience of gender, which can be different from the sex assigned at birth. Many people think of gender as binary – male or female. However, gender exists on a continuum, and there are more than two genders.

For the uninitiated, this guide to gender identity provides helpful insights into the glossary of gender identity terms and pronouns. 

Diversity Layer: Internal Dimensions.

5. Race and Ethnicity 

While race and ethnicity are used interchangeably, both terms have different connotations. 

For example, racial diversity is the categorization of human ancestral populations. In this sense, "race" is the classification of humans into groups based on physical traits, ancestry, genetics or social relations, or the connections between them. 

Johann Friedrich Blumenbach (1752–1840), a prominent German anthropologist, first divided humans into five races in 1779. 

These days, the U.S. Office of Management and Budget (OMB) identifies five minimum racial categories: White, Black or African American, American Indian or Alaska Native, Asian, and Native Hawaiian or Other Pacific Islander. 

On the other hand, ethnicity is divided up mostly by common heritage, religion, culture, and language, e.g., Latinos.

An increasing number of companies agree that both ethnic diversity and inclusion improve the workplace and lead to a higher overall return on investment. 

Statistics by McKinsey & Company show that in the United States, better financial performance is directly correlated to the relationship between racial and ethnic diversity. For every 10% increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) grow by 0.8%.

A high degree of racial diversity in the workplace also helps minority employees gain equal access to career advancement opportunities, improving their work-life and promoting greater levels of affinity in their working relationships.

Diversity Layer: Internal Dimension.

6. Family and Upbringing

Most people don’t consider family and upbringing diversity because it is a personal topic, but this doesn’t mean that it isn’t as important as the other forms of diversity. 

Being “different” in how you were raised can have significant implications, such as differences in leadership styles, the way you make decisions, and even how you present yourself to the world.

Similarly, family structure has a major impact on workplace performance. For example, 38% of the working class parents said that it is harder to be a good parent with their job and career.

Working and parenting chart

The statistics also suggest that women are more likely to reduce their working hours to care for their families. To be precise, 34% of the women, as compared to 23% of men, cut back on their work hours. 

Today’s workplace is still primarily associated with a big-city lifestyle. Modern employees are often asked to give up a great deal of their time and neglect their families to perform well at work. 

Employers also shy away from hiring mothers with young toddlers, wary of extended absences and lack of flexibility. However, this doesn’t have to be the case.

Businesses must have policies in place to accommodate employees coming from different family backgrounds. For instance, permitting maternal and paternal leaves or giving greater leeway to parents with children that have special needs.  

Diversity Layer: External Dimension.

7. Education and Income

Diversity of education and income can also affect how people feel about their workplace and co-workers. 

In fact, statistics suggest that the relationship between education and income is strong. People with more education have a lower average unemployment rate than those with less education. 

Financial outcome based on education

Besides race and gender diversity, employers should be mindful of education and income levels when creating the best possible workforce. People from all walks of life bring their fair share of experiences and skillsets, making educational diversity a critical facet of workplace diversity. 

Diversity Layer: External Dimension.

8. Neurodiversity 

Neurodiversity encompasses ways in which the nervous system functions outside the “norm.” The concept of neurodiversity is meant to help people understand autism, ADHD, dyslexia, bipolar disorder, schizophrenia, and other developmental/intellectual/learning differences rather than seeing them as something “wrong” with the individual.

Many companies, such as SAP, JP Morgan, and Microsoft, have improved their HR processes to access neurodiverse talent. As a result, these companies saw an increase in productivity and improvement in quality, innovative capabilities, and employee engagement.

JPMorgan, for instance, noted that after autistic employees worked for three to six months in the Mortgage Banking Technology division, they were performing the work of employees who took up to three years to perform. They were also 50% more productive.

Diversity Layer: Personality.

9. Sexual Orientation 

Sexual Orientation diversity is the understanding and appreciation of the fact that human beings do not all fit into neat categories as far as their sexual and affectional feelings are concerned. Thus, a workplace should make room for different sexual orientations, including bisexuality, pansexuality, heterosexuality, asexuality, and other positions.

Unfortunately, over the past five years, 31% of LGBTQ+ employees have experienced mistreatment in the workplace, and 57% experienced discrimination or harassment.

Diversity Layer: Internal Dimension.

10. Personality Types 

A workplace with a wide mix of personalities results in a better balance of strengths and weaknesses and better decision-making. 

As per statistics, a collective decision made by diverse teams provided better results than those made by individuals, 87% of the time.

Diversity Layer: Personality.

11. Physical Disability

Deaf people, individuals with visual and hearing disabilities, physical, mental, and intellectual disabilities strive for success in the workplace like everyone else. The only thing that hinders them is workplace barriers.

Luckily, many conglomerates are now gearing up with huge drives to make workplaces more accessible to people with disabilities. 

For example, Microsoft’s Disability Employee Resource Group (ERG), with over one thousand members worldwide, represents employees with different conditions, including blindness, visual impairments, hearing loss, mobility disabilities, ADD, and dyslexia. The tech giant claims that it would stop being innovative without workplace diversity.

What’s more, as per a study conducted by the U.S. Job Accommodation Network, 59% of people with disabilities hired needed no additional costs for accommodation needs. This also belies the pre-conceived notion that hiring people with disabilities will incur extra costs.  

Diversity Layer: Internal Dimension.

Why Diversity Is a MUST-HAVE in the Workplace

What makes it so essential for companies and organizations to have diverse employees? You’ve heard how great you can be at diversity in your workplace. But how do these benefits manifest into the overarching goals of your business or organization?

Let’s find out: 

1. Greater Financial Returns

Diversity is not an advantage; it’s a necessity. This is especially important in an increasingly globalized economy, where the strengths of its workforce directly impact a company’s productivity.

Diversity is not only good for equality but also for economic growth and productivity. As Columbia Business School Professor Katherine Phillips notes: “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”

Several pieces of research have also determined that financial returns in companies that promote diversity and inclusion are far higher than their non-diverse counterparts. In fact, according to a study by McKinsey and Company, companies with diverse employees are 35% more likely to outperform competitors in terms of financial performance. 

2. Helps Businesses Tap into Global Markets  

While the similarity of the English language allows us to communicate with people from around the world (no matter their native tongue), our differences in culture, upbringing, and education can hamper communication efforts.

Hence, workplaces with a diverse set of employees are able to alleviate communication barriers and tap into global markets effortlessly. 

In fact, a 2013 report concluded that diverse corporations are 70% more likely to gain a foothold in new markets. And as discussed earlier, L’Oréal also attributes its success in global cities like New York, Tokyo, Shanghai, Rio, and Mumbai to its team members consisting of multicultural executives. 

3. Access to Top Talent 

Diversity helps you recruit top talent because it results in a workplace that is more capable of tapping into the strengths of different types of people.

And that’s not all. People want to work for companies that practice diversity. As a matter of fact, a 2016 survey shows that 47% of millennials consider workplace diversity when sizing up potential employers. And millennials will account for 75% of the global workforce by the year 2025. 

DEI recruiting statistics

This underscores that HR managers and company executives are likely to miss out on top talent if they fail to meet the demands of a diverse workplace.

Related: Best Diversity Recruiting Software

4. Fosters Creativity and Innovation 

According to research by the World Economic Forum, companies with above-average diversity scores generate an average of 45% revenue from innovation, whereas companies with below-average diversity scores generate only 26%. 

Pie chart showing DEI promotes creativity

Rosalind Hudnell, Intel’s director of global diversity and inclusion, attributes their boost in productivity to their diverse workforce. Hudnell opined, “When you can move people to contribute to their fullest, it has a tremendous impact.” 

The evidence is clear that diversity hiring does indeed improve your odds of producing innovative solutions. The reasons for this are also fairly obvious. People from varied backgrounds will bring a diverse set of viewpoints, thereby solving a problem from different angles.

5. Facilitates Problem-Solving 

Diversity of personalities, opinions, and backgrounds enhances the team's ability to find solutions typically outside of their normal thought process. The more diverse the people in a group, the more likely you’ll encounter individuals who will come up with unique ideas and ways to solve a problem.

Studies also show that diverse groups are able to solve problems better than homogeneous groups. 

For instance, a study by Wharton University indicates that diversity in the workplace can result in faster problem-solving and untangling complexity. The study further underscores the need for multidimensional leaders to tackle multidimensional challenges, which is only possible by adopting workplace diversity. 

6. Increase Motivation and Employee Retention

When all workers look the same, they tend to be less motivated, which is another form of turnover. Diversity brings talent, motivation, goodwill, different perspectives, and outlooks on life.

According to a recent study, when employees of different ages were together, it increased motivation for both older and younger employees. They were also keener to stay with the organization.

7. Better Decision-Making 

Businesses are now rightfully waking up to the value of having a team with varied perspectives, experiences, and backgrounds. When we talk to people with different life experiences and backgrounds, we can consider a broader range of possible solutions to the problem we’re working on together. 

A recent report, Hacking Diversity with Inclusive Decision-Making, proves something we’ve all known for some time: diverse teams make better business decisions. The study concluded that businesses with inclusive teams make better business decisions up to 87% of the time than their non-inclusive counterparts. 

Another study states that gender-diverse teams are especially effective, outperforming individuals 73% of the time, compared to 58% for all-male teams. As evident, cognitive diversity is a powerful business driver, and organizations embracing it are financially rewarded. 

8. Boost Company’s Reputation and Brand

In this day and age, there's a lot of conversation about whether diversity and inclusion initiatives are worth the investment. But there's another perspective to consider in terms of benefits and measurable ROI. That is, diversity initiatives have also been shown to boost a company's reputation.

As per a study, companies that embrace diversity are perceived as friendlier and more socially responsible. After all, your customer base incorporates people, and as we all know, people with different backgrounds and beliefs see things differently.

The Cost of Ignoring Diversity in the Workplace

Many businesses think diversity and inclusion don’t impact them significantly, so they can afford to ignore the issue. This is a mistake — and it might cost your company the business, clients, or contracts it needs.

Here are some significant downsides of ignoring workplace diversity. 

1. You Might Get Sued for Discrimination 

Organizations that fail to take diversity in the workplace seriously might be putting themselves at risk. The environment you create at your company affects the way employees see and treat each other. Undermining this can put your company at risk of litigation for discrimination.

And even large conglomerates aren’t exempt. Despite having policies and programs to promote diversity and protect them from legal claims, Coca-Cola was accused of discriminating against African-Americans in pay, promotions, and evaluations. After a very public lawsuit, the company had to spend over $190 million to resolve its class action court case in late 2000.

Interestingly, even Harvard had to bear the brunt for its non-inclusive policies and condescending attitude towards gender-based diversity. In 2005, Harvard's president Lawrence Summers came under the radar for suggesting that the under-representation of women in science and engineering could be due to a "different availability of aptitude at the high end."

Following the controversy and severe public ire, the acclaimed academic institution had to shell out $50 million to revamp its diversity policies. 

2. Missed Financial Opportunities

Homogeneous workplaces are not only devoid of innovation, but the financial cost of not having diverse leadership is also enormous. 

Some estimates put it at about a trillion dollars globally. In fact, as per a report from Accenture, in the US alone, companies are out 1.05 trillion dollars as a result of not being more inclusive.

3. Repelling Top Talent

Not being inclusive at the workplace could repel top talent. Businesses that refuse to embrace diversity are likely to miss out on talented individuals by hiring from the same homogenous pool of leaders. 

There are real leaders out there that can lead you into the future of business, but you might be overlooking them if they don't look like those in the current power demographic. 

The shoddy treatment meted out to women and people of color may also result in acrimony and the exit of talented employees. 

In fact, over 1,500 Google employees - primarily women - staged protests and walked out after witnessing Google’s careless handling of sexual harassment issues. 

Protesters at Google

Claire Stapleton, a product marketing manager at Google, accused the company of “not even meeting the basics of respect, justice, and fairness for every single employee.”

Also, as per a Glassdoor survey, 76% of job seekers cite a diverse workforce as crucial in their decision to accept a job offer. About 1 in 3 employees and job seekers would also be averse to applying for a job at a company lacking diversity. 

A workplace that doesn’t pay heed to cultural inclusivity is also perceived negatively by job seekers. More than one-third of U.S. employees say they would turn down the perfect job if they found a clash in culture. 

In a world where inclusiveness isn’t just a fad - or a buzzword - it makes good business sense to embrace workplace diversity.

Related: Best Diversity Job Boards

4. Fostering Cultural Insensitivity 

Failing to embrace diversity in your company may lead to cultural insensitivity, albeit unknowingly. After all, not everyone is well-versed in the multicultural nuances of business etiquette. 

Talking of cultural insensitivity, Dolce & Gabbana’s recent gaffe springs to mind. The world-famous luxury fashion brand released its “Eating with Chopsticks” commercials ahead of the Shanghai fashion show - which showed an Asian model attempting to eat Italian food with a pair of chopsticks.

Culturally insensitive ad by Dolce Gabbana

While the brand intended to be funny, the Chinese called it offensive and branded it as a mockery of their culture. The advert was deemed racist, insensitive, and sexist.  

Dolce & Gabbana immediately pulled off the ads and issued a public apology to offset damage to the reputation. However, the damage was already done. 

Companies can avoid such foot in the mouth incidents by giving charge to people from their respective cultures. A workforce that represents the diversity of the community can create a deep understanding of local markets, consumption patterns, and other local factors that should be considered when developing products and advertisements. 

Challenges of Diversity in The Workplace

A diverse workplace leads to higher employee satisfaction and overall productivity. Not to mention, it engenders a more attractive image for companies that want a wider range of customers. Studies prove that wealth is better to spread out when everyone has equal access, so why aren't businesses taking further steps in this direction? 

Let's dig deeper into the major challenges HR professionals and business leaders face while promoting diversity in the workplace.

1. Communication Barriers

As per the Communication Barriers At The Workplace: A Case Study, the communication barriers faced by employees working in a diverse workplace environment include the inability to understand the foreign accent and the failure to understand the foreign colleague while communicating.

Bar graph of the communication barriers in the workplace

2. Workplace Discrimination

As per Glassdoor’s Diversity & Inclusion Study, over seven in ten adult employees across the United States, United Kingdom, France, and Germany have witnessed or experienced ageism, racism, gender, or LGBTQ discrimination in their workplace.

Such instances of workplace discrimination are contrary to diversity efforts and can be argued to be a challenge to diversity in the workplace.

3. Women Feel Left Out of the Decision-Making Processes

In recent years, women have become a major force in the workplace. There are as many women as men in some fields, but this doesn't stop women from feeling left out of the decision-making processes. 

A recent survey revealed that only two-thirds of women have the conviction to voice a contrary opinion without fear of negative repercussions. At the same time, 8 in 10 men feel they can express contrary views. 

Bar graph of women's thoughts of decision making

4. Varied Expectations 

People have different religious beliefs, food habits, living patterns, and cultural traditions. And with the diversity of the workforce increasing in today’s workplace, handling varied expectations becomes a considerable challenge. 

For instance, an employee undergoing post-traumatic stress disorder will look for mental health benefits, while parents with toddlers at home might expect a daycare on office premises.  Sometimes, it can be challenging to keep up with these varied expectations and demands. 

5. Cultural Differences

Cultural differences are a massive challenge to workplace diversity. It's important to remember that people join a company because they feel they will fit in with the culture. 

However, if someone from another country joins your company, it may be hard for them to remain with your company if there is a cultural difference. And unfortunately, cultural differences in workplaces are still prevalent, and incidents of stereotyping aren’t entirely obscure either. 

Hult International Business School’s Katie Reynold identifies challenges associated with cultural differences in a workplace as follows: 

  • Negative stereotypes; 
  • Professional communication can be misunderstood or misinterpreted across cultures and languages;
  • Varying professional etiquette across cultures, and
  • Conflicting working styles across teams

6. Employers Failing to Embrace Diversity

Employers face a plethora of challenges in their pursuit of diversity. For one, inherent discrimination and unconscious bias undermine diversity and inclusion initiatives. The absence of employee-focused diversity strategies also leads to an imbalanced workforce and low employee morale. 

Even employees fear retaliation if they take a stand against harassment. Many even feel undervalued and marginalized due to a lack of access to training and development opportunities or career recognition programs.

In fact, a recent Glassdoor survey revealed that 71% of Black and 72% of Hispanic employees feel that their employers should be doing more to increase workplace diversity. Compared to this, 58% of white employees also echo the sentiment. Regrettably, 41% of managers say they are “too busy” to implement diversity inclusion programs.

Workforce Diversity Statistics You Need to Know

Here’s a list of relevant workforce diversity statistics and trends, aiming to highlight and shed light on some common perceptions about workplaces worldwide.

Companies with ethnically/culturally diverse boards worldwide are more likely to generate higher profits.

A report published by McKinsey in 2018 shows that companies that boast ethnically and culturally diverse boards of directors are 43% more likely to generate higher profits.

Chart of the likely financial performance above industry median by diversity quartile

The research further states that a high proportion of ethnic and cultural minorities on the company’s boards indicate that the organization truly values the community and customers that they serve.

A majority of survey respondents say that employers should be doing more to improve workplace diversity.

According to a recent Glassdoor Diversity and Inclusion Workplace survey, many American businesses are still not making the most of their diverse talent pools.

While employers are making perceptible strides to weed out discrimination and embrace diversity, there’s still a long way to go. 

Nearly half of Black (47%) and Hispanic (49%) employees had to quit their jobs after experiencing discrimination at work. Surprisingly, white job seekers aren’t entirely exempt from workplace discrimination, with 38% of them leaving their jobs for the same.

Workplace diversity survey results

Millennials gravitate towards organizations that foster a diverse and inclusive culture. 

Millennials represent the largest wave of new hires in the workforce. Still, their primary concern moving into a new position is making sure an organization fosters a diverse and inclusive culture that reflects who they are.

​​A CNN money report shows that the millennial and GEN Z generation is more diversified than the baby boomer generation. According to the report, only 56% of the millennials in the country are white, in stark contrast to 70% of the baby boomer generation being white. 

Diversity of the Millennial generation

These statistics alone demonstrate Millennials' power in influencing how diversity in organizations will play out. 

No wonder 83% of the millennials claim they’re actively engaged when they believe the organization fosters an inclusive culture. In contrast, only 60% of millennials are actively engaged when they believe the organization does not have an inclusive culture.

Inclusiveness engages Millennials

There are only 25% women CIOs in America’s top 500 companies. 

No matter how you feel about the gender gap, it is something that all businesses face: only 25% of women serve as Chief Information Officers in Fortune 500 companies.

Percentage of women CIOs in Fortune 500s

With only one-quarter of women heading Silicon Valley’s top 500 companies, it looks like Silicon Valley isn’t as egalitarian as it seems. While the number is up from 6% in 1995, the progress is still abysmally slow. 

It’s an unfortunate truth that there are very few women who ascend the corporate ladder to become CEOs. It’s not that women aren’t capable of being CEOs; it just seems as though the odds are stacked against them. Because if you look at the McKinsey Global report, global GDP can rise by $12 trillion by 2025 if businesses work towards advancing gender parity.

Stats showing gender parity increases GDP

How Workplace Diversity Helps the Bottom Line

2019 McKinsey Analysis: Diversity Wins

McKinsey regularly investigates the business case for diversity, and Diversity Wins is the third in the series. The first investigation was Why Diversity Matters (2015), followed by Delivering through Diversity (2018).

The latest report showed that the link between diversity in executive teams and the probability of financial outperformance is currently even stronger than before. 

The study, encompassing 15 countries and over 1,000 enterprises, found that companies in the uppermost quartile for gender diversity on executive teams were 25% more likely to perform well financially than companies in the bottom quartile.

Statistics on diversity in executive teams

Similarly, companies in the top quartile for ethnic diversity were 36% more likely to have stellar profitability than companies in the bottom quartile.

Lenovo’s Diversity + Inclusion in the Global Workplace

Lenovo is a Chinese-American technology company specializing in consumer electronics, personal computers, software, and related services. 

In a bid to learn more about the diversity of its employees and customers all over the globe, Lenovo carried out a diversity survey of 5000 people (of different ages, gender, and cultural backgrounds) from different countries. These countries included the UK, Germany, China, Brazil, and the US.

Here’s Lenovo’s methodology overview: 

Lenovo's DEI methodology

The survey helped Lenovo uncover four key findings essential to the evolution of D&I in the workplace, including: 

  • Employees today expect the workplace to align with their values and conform to their ideas. 
  • People view workplace inclusion as multi-dimensional and actionable.
  • An inclusive workplace should allow employees to thrive and foster long-term career ambitions. 
  • Technology has the potential to facilitate workplace D&I. However, there are concerns that it may overlook the voices of some underrepresented communities.

The survey also highlights the significance of diversity in attracting top talent. More than half of survey participants across all markets say that a company’s diversity and inclusion policies are “extremely” or “very” important when accepting a job offer. The numbers are highest in the US (75%), China (89%), and Brazil (88%). 

However, many employees feel that their workplaces can “Do More” to promote DEI (Diversity, Equity, and Inclusion). This is especially true for China, Brazil, and the US. 

Global survey on DEI

Paying heed to the survey results, Lenovo re-evaluated its own practices and rolled out several initiatives to promote diversity and inclusion in the workplace. The goal was to ensure they were meeting the needs of current and future generations entering the workforce.

For starters, they launched the Supplier Diversity Program to promote the procurement of goods and services from businesses owned by women, LGBTQA+ individuals, veterans, and other minorities. 

The company also recently built the Lenovo Foundation to empower underrepresented communities with access to STEM education and the Product Diversity Office to instill diversity and inclusion into their product design and development process. 

And before long, the company’s efforts paid off. As of 2020, the company hires 20% female executive representation worldwide and 28% under-represented racial/ ethnic executives across the U.S. 

Yolanda Lee Conyers, Chief Diversity Officer for Lenovo, also credits diversity for the company’s growth. 

Innovating for a diverse world requires a diversity of perspectives. As such, diversity is a business imperative at Lenovo. It ensures that we not only embrace the best, most disruptive ideas. It also allows us to better understand and address our customers’ needs,” stated Conyers. 

The tech company even received accolades and recognition for its extraordinary diversity and inclusion achievement - which includes getting featured as one of the Best Places to Work and finding a place in Bloomberg’s 2020 Gender-Equality Index.

Final Thoughts

Imagine a workplace without diversity where everyone is the same - everyone looks the same, talks the same, and has the same opinions. The prospect of such workplaces not only sounds bland but also lacking in innovation and a different worldview. 

There are benefits to having women in the workplace, people who speak other languages, older individuals working side by side with nimble-fingered Millennial techies making entry-level wages. 

The reasons to increase diversity hiring in the company culture extend beyond political progressiveness - and it is those economic benefits that are especially attractive to employers looking at ways to cut costs while increasing performance and productivity.

Want to know more about diversity and inclusion?

Deepti Jain
Data-driven technical writer
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Deepti has over three year's experience in researching software and writing data-driven, engaging content for marketing, SaaS, HR, and e-commerce brands. When she’s not working on a project, you'll find her exploring wildlife, reading about Roman history, and devouring Sushi.

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