What are the benefits of a diverse workforce?
Australia is a diverse nation. In the 2016 census, 75% of Australians identified with ancestry other than Australian. Additionally, 45% of Australians have a parent who was born overseas. But nationality is the tip of the diversity iceberg. Factor in gender, ability, sexuality, age, neurodiversity, socio-economic factors and more, and you’ll find that we’re a highly varied bunch. That’s why more than ever, it’s important to embrace a diverse workforce—it’s who we are.
Today, we’re exploring the many benefits of a diverse workforce. Turns out, there’s tangible benefits for organisations who champion diversity in employees.
Statistics show that companies with more diverse boards are more profitable and successful.
The benefits of a diverse workforce are tangible. A 2018 McKinsey study, titled Delivery Through Diversity found that:
Companies with the most ethnically/culturally diverse boards worldwide are 43% more likely to experience higher profits.
Companies in the top-quartile for gender diversity on their executive teams were 21% more likely to have above-average profitability.
For ethnic/cultural diversity, top-quartile companies were 33% more likely to outperform on profitability.
Additional studies have found similar benefits. Research by Hewlett, Marshall, and Sherbin showed that leaders with diverse backgrounds and experience helped companies innovate more. Meanwhile, global research from McKinsey found that ethnically diverse companies are 35% more likely to have financial returns above the national industry median.
In short: diverse workforces drive company innovation, growth and profitability.
Gender diversity is clearly beneficial in Australia
Companies with strong female representation, especially at the leadership level, are shown to outperform those without gender diversity. Research by the BankWest Curtin Economics Centre and the Workplace Gender Equality Agency found that:
In Australian ASX-listed companies, having a female CEO led to a five per cent increase in their market value. This is worth the equivalent of AUD$79.6 million on average.
An increase in the share of female ‘top-tier’ managers by 10 percentage points or more led to a 6.6 per cent increase in the market value of Australian ASX-listed companies, worth the equivalent of AUD$104.7 million.
An increase of 10 percentage points or more in female representation on boards led to a 6.0 per cent increase in the likelihood of outperforming their peers on three or more metrics.
The appointment of a female CEO led to a 12.9 per cent increase in the likelihood of outperforming the sector on three or more metrics.
But gender diverse workplaces are only the tip of the iceberg when it comes to benefits of a diverse workplace—for both the company and the employees.
Better retention and loyalty
Research from the Diversity Council of Australia found that Australian workers overwhelmingly support inclusion initiatives. In 2019, as in 2017, three out of four Australian workers supported or strongly supported their organisation taking action to create a workplace which is diverse and inclusive.
Attracting the best
Employees expect diversity and want to work for organisations that champion workplace diversity. Feeling safe to be yourself, and not pressured to fit into stereotypes is liberating for staff. If you want to attract the best and brightest employees to your team, a diverse workplace will help you do so.
Bringing in teams from different cultures, genders, abilities and lifestyle backgrounds gives you access to different experiences and perspectives. As an employer, you can tap into a variety of perspectives and experiences far beyond your own personal circumstances. That cross-section of diversity breeds more creative solutions, as different perspectives lead to creative problem solving.
A German study found a positive relationship between management diversity and innovation. Companies with higher levels of diversity tend to gain more revenue from new products and services. It found that companies with managers who are female, from other
countries, industries or even from other companies can increase innovation.
It also found that more complex organisations enjoy the greatest benefits in innovation, with the report stating that ‘Diversity’s impact also increases with company size.’
The takeaway: diversity means better ideas and the bigger your company, the more benefit you’ll enjoy.
When people are celebrated for their unique differences, their confidence can increase. They don’t have to pretend to be a certain way or fit into outdated expectations. When your team is free to be themselves, they’ll be more confident, more relaxed and comfortable in the workplace. It’s giving your team room to shine as their true selves. This leads to better staff retention, better engagement and more commitment to achieving company goals.
Research shows that companies with diverse management teams who are open to contributions from lower-level workers can encourage ideas. As such, creating an environment where employees feel free to speak their minds is crucial in fostering innovation.
Diversity helps you appeal to a broader population. Customers are looking for the humans behind the brands. Now more than ever, people want to connect with people, not faceless companies. Customers want to feel understood by brands. And what better way to understand your customers than to employ them as part of your workforce?
Harvard Business Review found that companies with diverse workforces are 45% more likely to report that they had captured a larger portion of the market. Furthermore, they are 70% more likely to have entered a new market in the past
The future of workplace diversity in Australia
Here in Australia, we’ve made great strides in workplace diversity over the past decade. But there’s still opportunity for improvement. We need more diversity across the board, including genders, race, abilities, neurodiversity and more. With numerous tangible benefits to workplace diversity, the future is looking bright.
We help Australian businesses build workplace diversity
We recruit and place diverse candidates across a broad range of industries. As a not-for-profit social enterprise, we invest the profits from our recruitment business back into important social impact initiatives. Work with us and you’ll be supporting the youth, education and training, and employment programs of MTC Australia, who help more than 20,000 people across the Greater Sydney region every year gain skills for employment and entrepreneurship, build self-worth, and enable possibilities for transformative change.