Investing in an equitable work environment is immensely valuable to all employees. But apart from the obvious social and inclusion benefits, McKinsey has found that companies with more racial and ethnic diversity are 35% more likely to have financial returns that exceed their respective industry norms. The same study revealed that organizations that lack diversity are less likely to see above-average returns.
That’s because organizations that put a premium on Diversity, equity, and Inclusion (DE&I) recruitment prove their commitment to being a true reflection of society’s different genders, races, nationalities, sexual orientations, and identities. As a result, such organizations tend to earn the trust and loyalty of their employees.
To be clear, diversity and inclusion are not identical. Diversity is about how accurately an organization’s make-up reflects the wider society. Inclusion goes one step further, gauging whether and how the contributions and perspectives of different groups are valued and integrated into an organization’s culture.
However, COVID-19 has negatively impacted diversity and inclusion recruitment. This has something to do with many organizations putting a freeze on hiring and shifting to scouting existing employees to fill vacancies. But the high price of downgrading diversity will eventually become evident.
Below are the five costliest ways an organization suffers when it doesn’t implement HR policies that foster a more diverse and inclusive workplace.
Turnover tsunami: Men and women from diverse backgrounds who don’t feel safe, valued, or supported at work are much more likely to quit. This is especially the case in a post-pandemic working world when people are already rethinking their priorities and beginning to make new career moves. Turnover is a key HR-related metric that reflects the overall quality of the employee experience.No organization can survive this kind of brain drain. The good news is that people who believe their workplace values their uniqueness are much more likely to stick around.
Disengagement: A lack of diversity and inclusion also breeds a disengaged workforce. Engagement, meaning people’s motivation and commitment to performing high-quality work, is crucial to a company’s long-term viability. Deloitte’s Global Human Capital Trends report revealed a strong connection between diversity and inclusion in the workplace and employee engagement. And as the labor market continues to tighten, an HR team’s success in attracting and retaining top talents will increasingly be based on an organization’s ability to enhance the employee experience by fostering engagement.
Undetected tone-deafness: A workplace with people from various ethnic, cultural, and national backgrounds gains instant access to a treasure trove of insights and experiences. A truly diverse organization is empowered to learn from its own people about what they value and care about. On the other hand, a company that doesn’t see the importance of diversity and inclusion recruitment runs the risk of only knowing how to communicate to one demographic group and unintentionally using language or imagery considered offensive by many others.
Innovation stifled: There’s a growing body of research indicating that a workplace composed of a wide variety of different backgrounds and experiences is a hothouse for innovation. This is because diversity and inclusion catalyze the type of nonlinear, novel thinking and adaptability that innovation requires. Beyond merely listening to new ideas, however, HR’s role is crucial: to successfully harness the differences of their people in order to incorporate ‘outside the box’ points of view into the organizational DNA.
Decreased productivity: High levels of engagement and innovation, combined with low turnover and better decision-making, are the magic stuff of a more productive workforce. But to maximize productivity, an organization’s entire structure should ideally be diverse. Studies have found a link between the diversity of an organization’s upper and lower management and increased productivity. In contrast, organizations that lack diversity in upper or lower management are generally not as productive.
Diversity and inclusion starts with HR
People today are extremely selective about where they choose to work. Salaries, benefits, and job titles are no more important than the belief that someone’s work matters and that an organization’s mission, vision, and values are based on a commitment to diversity and inclusion recruitment.
That’s where HR comes into the picture. Gartner defines diversity and inclusion as a “…subfunction within the HR function.” To turn the lofty vision of diversity and inclusion into reality, HR needs to take the lead.
HR teams today are uniquely suited to create a culture that fosters a respectful, inclusive environment where each team member has the opportunity to learn, grow and contribute to the organization’s success. By hiring remotely to widen the talent pool, educating staffers about the importance of diversity and inclusion, creating transparent guidelines, and using data to monitor diversity, HR can help an organization ride out the uncertainty wrought by COVID-19 as well as thrive in a post-pandemic working world.
Adi Janowitz is VP of Customer Success at Hibob