More diverse businesses have better financial results
Embracing diversity and inclusion is, of course, the right thing to do for a fair and representative workplace. However, there is also a very compelling business case for embracing diversity, with numerous studies highlighting it as a direct way to improve business performance.
We’ve pulled out some of the highlights of research on the benefits of diversity and inclusion conducted in recent years:
- Companies in the top quartile for racial and ethnic diversity are 35% more likely to have higher financial returns than the average of their peers. When it comes to gender diversity, companies in the top quartile enjoy 15% higher returns on the same measure. (McKinsey, 2015)
- This is backed up by a study which found that the most diverse enterprises were also the most innovative, as measured by the freshness of their revenue mix. In fact, companies with above-average diversity had 19 percentage points higher innovation revenues. (Harvard Business Review, 2018)
- Profit (EBIT) margins for businesses with the most diverse leadership teams were 9 percentage points higher than those of companies with below-average diversity on their management teams. (Boston Consulting Group, 2018).
So, the research is clear – businesses that reflect society as a whole, with more diversity of leadership are more successful.
Diversity is key to attracting talent
If that’s not enough to make businesses sit up and take notice, it’s also shown that job seekers really do pay attention to the diversity & inclusion policies of potential employers.
The Glassdoor Diversity Hiring Survey reports that 67% of “active and passive job seekers said that a diverse workforce is an important factor when evaluating companies and job offers.” A separate study backs this up, with almost 50% of American millennials citing a diverse and inclusive workplace as an important factor in their job search.
So, by not adequately addressing diversity, employers could be losing out when it comes to competing for talent.
How to put diversity & inclusion at the heart of recruiting decisions
It’s clear that greater workplace diversity benefits the bottom line, helps employers attract the right candidates and, at the heart of it, is simply the right way to do business. So, where should companies start when it comes to keeping diversity and inclusion at the heart of how they recruit?
Here are some ideas to keep in mind…
Look to the top
In order to be truly effective, a focus on diversity and inclusion has to start with the leadership team and be prioritised alongside any other major business initiatives.
According to the Harvard Business Review, less than 40% of the firms studied prioritised what they called the ‘enabling conditions’ for diversity – these included fair employment practices (such as equal pay), participative leadership and top management support for diversity. Unsurprisingly, firms that did have such practices in place had better diversity scores, and as a result, better performance.
Communication is also key. Bain found that employees’ feelings of inclusion nearly double when leaders make inclusion and diversity a visible priority. This is important – employee engagement may sound like an intangible measure but it is a key driver of business success.
Make sure you’re set up to be inclusive
Before even thinking about recruitment, it pays for businesses to do an internal audit on their existing internal diversity and inclusivity progress. Are there sufficient programs, resources or networking groups to support all employees? Is flexible working a real option for staff? Listening and responding to existing employees will create a strong base for growing a business with diversity in mind.
Beware of unconscious bias
Unconscious bias is a well-known phenomenon in hiring decisions, with people innately, albeit unintentionally, driven to hire in their own image.
One area where unconscious bias might be slipping through the net is in job descriptions. CPL makes a good point that even the language used in a job advert can impact who applies for a role, so using descriptive and neutral language can be a way of preventing this.
Another factor to consider is to ensure the interview panel itself is sufficiently diverse and ideally has received inclusivity training on how to avoid biases.
Embrace recruiting practices that encourage a diverse range of candidates
Consider actively targeting your recruitment efforts
To avoid championing diversity in name only, it’s worth ensuring that recruiting efforts are reaching a wider talent pool. Companies could review where they’re advertising jobs, consider attending specialised summits and conferences to target specific talent pools or look into offering targeted internships or scholarships.
Review existing referral programs
Candidate referrals by existing staff remains a popular recruiting source. However, as pointed out by CPL, if a business already has a diversity problem, referrals could be exacerbating the issue and they suggest restructuring referral bonuses to reward diversity.
The evidence is clear – Companies that take the initiative and make diversity a core principle in how they do business have more engaged staff, can attract a broader talent pool and produce better financial results. At Spot Recruitment, we’re always happy to talk to you about your hiring strategies in order to help your business succeed.