Why Diversity Really Matters for Today’s Business

Diversity article masthead
by Mike McCurdy
Executive Director, Georgia Employers’ Association

Government Contractors understand the requirements for including diversity in their applicant flow, hiring process, and the percentage of actual new hires. Equal Opportunity Programs and affirmative action are built into the Department of Labor’s Federal Contract Compliance Programs. It’s the Law!

What about those of us that are in the private sector? Do we really believe that equal opportunity and diversity are important at our companies or is it just another box to check? And what do we mean when we talk about diversity?

Today, Diversity Relates to Business Success

Let’s consider the real value of a diverse workforce. First, the practical aspects. In the extreme, a non-diverse workforce would presumably be comprised of white men. As I go around our great state and speak to HR professionals and business leaders, there’s one topic that seems to always come up first. Hiring qualified employees is becoming a major business hurdle. Finding and hiring great people requires increased time and resources. A business that tried to limit their candidate pool to caucasian males between the ages of 20 and 40 would quickly run out of options.

Women have been the largest growth component of the labor force. In 1948, only 31.3 percent of the female population was employed. By 2016, 54.1 percent of women was employed and women comprised nearly 47% of the U.S. labor force.1 Minority populations make up 22% of the total U.S labor force, but labor force demographics also change according to state and local populations.2  In Georgia, 41.5 percent of the total labor force is non-white, according to 2010 census data.3

Those are large groups of potentially great candidates to ignore, but there are other compelling reasons for the people who represent an organization to resemble the communities where the organization does business. In Georgia, it’s not unlikely that customers might prefer to do business with companies who hire employees who look like them, who are involved in the same communities – people they know.

Row of diverse employees

Other Diverse Advantages

There are other advantages to a diverse workplace. 2015 research by McKinsey & Company indicates that there is a direct relationship between diversity of leadership and company performance. Their ongoing Diversity Matters research makes some interesting correlations:

  1. Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above average for their industry.
  2. Companies in the top quartile for gender diversity are 15 percent more likely to have above average financial returns.
  3. In the U.S., there is a linear relationship between diversity and better financial performance – for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise .8 percent.4

Building an Inclusive Workplace

Are there good female and minority candidates for the positions you’re trying to fill? Absolutely, but it takes more than “embracing diversity” to actually build a workforce that looks like the communities we live in. Attracting diverse candidates will require efforts that go beyond policy statements that inclusivity is “the right thing to do.”

Are you attracting diverse candidates? If not, you may have a “Catch-22” problem.  According to Glassdoor, two-thirds of active and passive job seekers say that a diverse workforce is an important factor when evaluating companies and job offers.5  In other words, diversity attracts diversity. Their Guide to Diversity and Inclusion in the Workplace makes the simple observation that employers should hire for diversity and manage for inclusion to ensure continued access to the best talent and enhance employee retention:

Diversity and inclusion go hand in hand. A culture cannot be diverse and successful if employees outside of a dominant group do not feel included. People hired from diverse backgrounds are more likely to remain employed with your organization if they feel that their perspective and contributions are valued by the organization, their team, and their manager.6

Improving the diversity of the candidates you are able to attract will go hand in hand with a persistent  focus on inclusivity within your company culture.

Here are a few tips and suggestions to get you started:

  1. Define the goals – make an honest assessment of the current state of diversity and inclusion and how your organization looks from the outside. Set specific targets and measures for change.
  2. Complete a recruiting audit – Check for biases built into the recruiting process. Look at employment advertising. Make sure that all internal and external recruiters are on board and understand diversity goals.
  3. Define objective hiring criteria – Everyone involved in hiring decisions should be on the same page. This can help to prevent the tendency to hire “people like me.” You may also want to consider “blind hiring” techniques that shield personal information from recruiters and hiring managers.
  4. Walk the talk – Make sure that your behavior reflects your stated commitment to diversity. Involve your diverse employees in recruiting efforts, interviewing, and developing an inclusive company culture.

Pew Research Labor Force Graph

Looking to the Future

Planning for diversity should be a key focus for executives, HR professionals, and managers. Baby boomers are retiring rapidly and the prevalent attitudes of that generation are fading fast. The millennial generation is now the largest segment of the US labor force and their expectations of diversity and inclusion are different.  The next generation of corporate leaders understands the benefits that come from inclusion of a broad spectrum of people, ideas, and perspectives.

Organizations that focus on diversity and inclusion now will gain benefits that ultimately go beyond a larger pool of candidates in a tough job market. A diverse and inclusive culture can produce a thriving workplace experience for employees that drives ideas, builds the brand, and produces business gains.

Sources:

1 U.S. Bureau of Labor Statistics, BLS Reports: Women in the Labor Force – a databook

2 U.S. Bureau of Labor Statistics, BLS Reports: Labor Force Characteristics by race and ethnicity, 2016.

3 Georgia Department of Labor, 2010 Labor Force Data for Affirmative Action Plan.

4 Hunt, Vivian, Why Diversity Matters, McKinsey.com, January 2015.

5 Guide to Diversity and Inclusion in the Workplace, Glassdoor.com, March 2017. P.2.

6 Ibid., p. 14.

Images:

Labor Force Graph, Pewresearch. Org.

Summary
Why Diversity Really Matters for Today's Business
Article Name
Why Diversity Really Matters for Today's Business
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The value of a diverse workforce and a culture of inclusivity goes beyond the right thing to do. There is a correlation between diversity and business success. Tips for building and managing a diverse and inclusive workforce.
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Georgia Employers' Association
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By |2018-04-01T11:46:39+00:00April 1st, 2018|GEA Blog|Comments Off on Why Diversity Really Matters for Today’s Business
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