The Business Benefits of Diversity, Equity, and Inclusion

Attracting, engaging, and retaining great talent is key to business success. Over the next decade, the most competitive businesses will be those that attract the best talent from all backgrounds and create high-performance cultures where people can do their best work. Increasingly, diversity, equity, and inclusion are core competencies for building a future-ready workforce. 

Here’s just a few examples of the business benefits of diversity, equity, and inclusion:

Meet the Needs of an Evolving Workforce

The workforce is increasingly diverse. Organizations that build skills around diversity, equity, and inclusion will be more successful at hiring and keeping the best people.  

• GenZ is the most diverse generation on record, and the 2020 U.S. census showed a population that is diversifying faster than expected. That growth is driven by groups that are currently underrepresented in many organizations.  
• Deloitte found that 69% of millennial and Gen Z employees are more likely to stay for 5+ years at a company with a diverse workforce, and Glassdoor research shows that 76% of jobseekers cite DEI as “non-negotiable.”
• Paradigm’s data shows that 72% of employees want their employer to invest in inclusive work environments, and this is most important to employees ages 35 to 44. 

For more insights on meeting the needs of an evolving workforce, download our latest research.

Deliver Greater Financial Results 

A wealth of research shows that more diverse organizations outperform across a range of financial metrics.

• The Wall Street Journal found that the stock prices of more diverse companies outperform those that are less diverse.
• McKinsey found that companies in the top quartile for executive gender diversity were 15 percent more likely to experience above-average profitability than those in the lowest quartile; companies with higher racial/ethnic diversity had a 33 percent likelihood of  outperformance on EBIT margin. 
• The Boston Consulting Group found that the innovation revenue from companies with above average diversity was 19 percentage points higher than those with average diversity. 

Create a High Performance Culture 

Prioritizing inclusion doesn’t just help people from underrepresented backgrounds, it creates cultures where everyone feels and performs better. 

• Research from BetterUp found that belonging is linked to a 56% increase in job performance, a 50% drop in turnover risk, and a 75% reduction in sick days.
• Data from Paradigm shows that when organizations invest in fostering belonging for underrepresented groups, belonging for all employees increases by 8 percentage points. 
• Paradigm has found that employees are 153% more likely to be engaged when they believe their company values diversity. 
• The Harvard Business Review found that companies with a psychologically safe “speak up” culture are 3.5 times as likely to contribute their full innovative potential.
• Another Harvard Business Review study found that diverse teams are 58% more accurate in problem solving as compared to homogenous groups.

Advancing diversity, equity, and inclusion is critical for companies that want to deliver greater financial performance, harness employees’ potential, and meet the needs of a rapidly changing workforce.  The sooner organizations start, the more successful they will be. 

August 30, 2024

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