Workplace diversity: The statistics are in
When a company has a truly diverse workforce and an inclusive culture, employees feel comfortable bringing their whole selves – their unique ideas, perspectives, and experiences – to work. This translates into big benefits for employers as statistics and studies show that diverse companies are more profitable than their less diverse counterparts.
Organizations are taking note and continuing to prioritize diversity. But while gains are being made, there’s still a long way to go.
What is workplace diversity?
A diverse workplace mirrors society in that it includes people of different races, genders, ages, sexual orientations, religions, and those with a range of backgrounds, experiences, education, and beliefs. Hiring a diverse mix of people is the first step to achieving workplace diversity but eliminating institutional bias so that employees feel a sense of belonging and inclusion makes a diverse workforce powerful.
Workplace diversity and inclusion is critical because it is demonstrably better for business. A diverse mix of people leads to a diversity of thinking, which in turn leads to increased creativity and innovation. Inclusive companies are “1.7 times more likely to be innovative,” according to Josh Bersin, his research also shows that they get “2.3 times more cash flow per employee.”
Diversity in the workplace examples: Who’s included?
The goal of diversity in the workplace is better business outcomes, including increased innovation, revenue, employee engagement, and retention. This is predicated on providing equitable pay and representation for the entire workforce – no matter their gender, ethnicity, or religion – from the mailroom to the boardroom. When everyone feels included, has their opinions sought and valued, and has the opportunity to fulfill their professional potential, both companies and employees benefit.
Examples of different areas of diversity to focus on in the workplace include:
- Gender diversity: To achieve gender diversity, a company needs to work towards a representation of the people of the community in which it operates – including transgender and nonbinary individuals – across the whole company. Despite companies being firmly committed to gender diversity, 42% of women report having faced gender discrimination at work and 83% of transgender individuals report that discrimination has negatively affected their ability to be hired.
- Racial and ethnic diversity: Racial diversity focuses on hiring people of different races and ethnicities at all levels. In the U.S., racial discrimination may have been illegal since the passage of Title VII of the Civil Rights Act of 1964, but it’s still an active issue in the American workplace. Only four Fortune 500 companies have a Black CEO, for example.
- LGBTQ+ diversity: The LGBTQ+ workforce includes a range of generations and a spectrum of sexual orientations. While “5.1% of U.S. women identify as LGBTQ+ as do 3.9% of U.S. men,” according to McKinsey, they are underrepresented in the workforce and they can find it more challenging to bring their whole selves to work where they often face microaggressions and discrimination.
- Generational and age diversity: For potentially the first time ever, there are five generations in the workforce – Gen Z, Millennials, Gen X, Baby Boomers, and Traditionalists. While all generations can experience ageism, data shows that people “over 55 are more likely to feel discriminated against on the basis of their age than those below 30.”
- Religious and spiritual diversity: An increasingly global economy means that employers need to consider how they can accommodate and respect a wide range of religions and beliefs in the workplace. Offering holidays based on different religious or cultural affiliations, which 43% of companies now do, is just one way organizations are addressing religious diversity.
- Disability diversity: While one in four adults in the U.S. has a disability – whether visible or invisible – only about 18% of working-age Americans with disabilities are part of the workforce. Making the workforce accessible to those with disabilities so they can fully participate without barriers is key to achieving disability diversity.
- Socioeconomic diversity: While the prevailing myth is that anyone, regardless of their beginnings, can rise to great heights, the truth is that one’s background continues to determine their access to education and job opportunities. Statistics show that “U.S. workers from lower social-class origins are 32% less likely to become managers than are people from higher origins.”
Diversity, equity, and inclusion (DEI): A definition
Being genuinely valued and respected involves more than just feeling included. It involves having the power to help set the agenda, influence what – and how – work is done, have one’s needs and interests taken into account, and have one’s contributions recognized and rewarded with further opportunities to contribute and advance.
Diversity focuses on understanding that each person is unique and bringing people of all backgrounds into the workplace. When tracking diversity internally, it’s essential to break data down – rather than just looking at how many women or minorities are in an organization, for example, look at how many are in the C-suite and at what point in their career progression these groups are leaving the organization.
Workplace equity levels the playing field to ensure all employees have the resources and opportunities they need to reach an equal outcome, whereas equality assumes the playing field is already level and treats everyone the same way. When looking at equity in the workplace, tracking all the stages of the employee life cycle is helpful or spotting areas for improvement.
Inclusion in the workplace gives all employees a voice and room to thrive. It means that everyone feels comfortable and confident being themselves while also feeling valued, important, and heard. Gathering qualitative perception data anonymously from employees via surveys is key for evaluating if a company’s inclusion efforts are working.
5 benefits of workplace diversity
DEI is much more than nice-to-have, and the statistics bear that out. The business case for workplace diversity continues to grow as research continues to show its many tangible benefits, including increased:
- Profitability: Multiple studies show that diverse companies are more profitable. McKinsey research concludes that companies in the top 25% for ethnic and cultural diversity were 36% more profitable than those in the bottom quarter, and when women are well represented in the C-suite, profits can be almost 50% higher.
- Productivity: Over and over again, research shows that more diverse organizations are more productive. For example, the Academy of Management Journal research concludes that “racial diversity in upper and lower management results in greater employee productivity.” In addition, according to Forbes, inclusive teams “make better business decisions up to 87% of the time, and they make those decisions twice as fast within half as many meetings.”
- Employee recruitment and retention: Workplace diversity may be even more important for employees than employers. Glassdoor reports that 76% of employees and jobseekers say that diversity “is an important factor when evaluating companies and job offers.” And a Gallup poll found that engaged employees are “more likely to say their company values diverse ideas.”
- Job satisfaction and performance: A Forrester report shows that when employees feel a sense of belonging at work, it leads to a 56% increase in job performance. That sense of belonging, feeling represented, and feeling respected creates a sense of satisfaction and improves performance – 91% of employees who feel they belong are engaged, compared to 20% of those who feel they don’t.
- Innovation and creativity: Inclusive decisions are better decisions. Forbes found that 85% of business leaders believe that “a diverse and inclusive workforce is crucial to encouraging different perspectives and ideas that drive innovation.” Another study found that people need to feel safe and supported to contribute innovative, creative ideas. And companies with higher diversity levels see 19% higher innovation revenues.
Workplace diversity stats: A reality check by the numbers
Despite the clear benefits of workplace diversity – and despite 69% of executives saying diversity is one of their top priorities – there’s still a long way to go to achieve true diversity. These numbers tell the story:
- According to McKinsey, companies with greater than 30% female executives tend to outperform those with fewer female executives. And yet, McKinsey’s research also showed that women aren’t being promoted to mid-level management positions at the same rate as men, with 85 women promoted for every 100 men promoted.
- Coqual research shows that in 2019, Black professionals were “nearly four times as likely as white professionals to say they have experienced racial prejudice at work (58% versus 15%).”
- When all else is equal, résumés from people with “white-sounding” names got callbacks almost 50% more than those with “black-sounding” names, according to SHRM.
- A recent study by the Williams Institute at the University of California, Los Angeles, School of Law found that “46% of LGBTQ workers reported receiving unfair treatment at some point in their careers because of their sexual orientation or gender identity.”
- Like many types of workplace discrimination, age discrimination is illegal, yet 78% of older workers report witnessing or experiencing age discrimination, according to AARP research.
- People with disabilities are extremely underrepresented in the workplace. The Bureau of Labor Statistics reports that only 20.6% of people with disabilities work in the U.S., while 68.6% of those without disabilities are part of the workforce.
- Not one of the companies on Diversity Inc’s “Top 50 Companies for Diversity” mentioned social class in their DEI goals or programs in 2020 SHRM reported.
Accountability, transparency, training, commitment, and action are just some of the ways companies can work towards greater diversity in the workplace.
Potential hybrid workplace inequalities
As businesses transition to a hybrid workplace model, they need to be aware of the potential barriers and inequalities that a mix of remote and in-office workers creates. The main risk is that not being seen in person could create barriers to advancement for those who work from home. And since those who work from home tend to be working mothers, minorities, and those with disabilities, this could further exacerbate existing discrimination.
As an example, a joint study from Qualtrics and the Boardlist showed that during the pandemic women and men working remotely with children at home had very different experiences:
- 9% of women reported receiving a promotion; 34% of men said the same
- 13% of women received a pay raise compared to 26% of men
- 10% of women took on additional leadership, whereas 29% of men did
And that’s just statistics about gender diversity. According to the New York Times, “with fewer connections and less extensive networks than white colleagues, to begin with, Black and Hispanic workers can find themselves more isolated than ever in a world of Zoom calls and virtual forums.”
But it’s not all doom and gloom when it comes to diversity in a hybrid work environment. Gartner research shows that “organizations that effectively manage the transition to a hybrid work environment and employ sustainable initiatives can boost inclusion by 24%.” The forced working from home precipitated by the pandemic already had organizations shifting to thinking about how to foster DEI online, and that thinking can also be honed and applied to hybrid arrangements.
To boost DEI, a hybrid workplace model needs to be explicitly designed with diversity in mind. HR departments can support eliminating bias by tracking promotions, bonuses, pay raises, and more. And managers can be trained on how to recognize and avoid bias and how to create and track bias-free KPIs to ensure employees are being assessed on the same criteria.
There is an opportunity to use hybrid work opportunities to shape more equitable workplaces, but it needs to be done intentionally and mindfully, and it needs to be tracked.
Using HR technology to support workforce diversity
Technology can be a powerful tool for combatting bias and creating diverse, equitable, and inclusive organizations, especially artificial intelligence (AI), which can help spot and reduce conscious and unconscious bias throughout the employee life cycle.
Starting with the recruitment process, AI for HR can be used to proactively identify gender-biased language in job descriptions and automatically screen candidates based on their qualifications rather than names, genders, and other bias-prone information from applicant profiles. This helps:
- Increase the diversity of applicants
- Address unconscious bias
- Drive actionable insights from analytics and metrics
On an ongoing basis, data from an organization’s human capital management (HCM) platform can be used throughout the entire employee life cycle to track promotion rates, retention rates, employee engagement, and more.
However, AI systems need to be built without human bias creeping into them. Using a broad range of data is imperative, as is eliminating bias at the point of data collection. The Amazon experience is a cautionary tale; gender bias was built into their AI hiring tool because they used biased data to build their AI model.
When used intentionally, technology can imbue the HR process with a more diverse approach to everything from talent acquisition to employee development. HR technology can also drive better employee engagement and help close gender and racial wage gaps.
Tools that support DEI
Build a diverse, future-ready workforce with SAP SuccessFactors HXM Suite.
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