The Ultimate Guide to Workplace Diversity: What It Is, Why It’s Important and How It Affects the Workplace

The need for diversity in the workplace is too important to get wrong, but too urgent to waste time wading through unreliable resources. At WORK180, we’ve used our expertise to create a one-stop guide that will answer all your workplace diversity questions quickly, easily, and help you get back to what really matters — making the working world a better place for all women.

• What is workplace diversity
• Why is workplace diversity important?
• Workplace diversity statistics
• Challenges to workplace diversity
• Focus areas to achieve workplace diversity
• History of workplace diversity
• How to promote diversity in the workplace

What is workplace diversity?

A diverse workplace is one that is not homogeneous; it consists of a combination of people from a wide range of backgrounds and experiences. This means employees differ from one another in ways that are visibly noticeable (such as age, gender, ethnicity, physical abilities) as well as non-observable differences (such as sexual preference, culture, neurological abilities, economic status, culture and beliefs).

To achieve diversity, organizations must create a workplace with a genuine sense of inclusion. This can be done by ensuring all employees are provided with equal and fair access to opportunities, support, and the tools they need to truly thrive.

What is “diversity and inclusion”?

To clarify, diversity means a wide range of people with varying traits and identities. Inclusion is the creation of an environment in which each of these people feels welcome, valued, and able to access the same opportunities with an equal level of ease.

While a workplace can be diverse without creating an inclusive environment, it will not last or be beneficial for anyone. In fact, this kind of diversity is called tokenism and — as detailed in The Business Case for Investing In All Women Properly — it can be seriously damaging and downright dangerous. As such, the interdependent nature of diversity and inclusion mean they are often talked about together.

“Representation is a marker of potential inclusion, but it does not dictate an inclusive workplace. Representation signifies that people may have been hired/promoted into roles, however, this does not signify their experience when they get there. What do attrition or retention rates look like for these groups?”

Sheree Atcheson, WORK180 DEI board member, writing for Forbes: Your Inclusion Strategy Is Biased. Here’s What You Can Do About It

What is D&I

• D&I stands for diversity and inclusion
• DEI stands for diversity equity* and inclusion
• DEIB stands for diversity, equity, inclusion and belonging

*Don’t we mean equality? Yes, as that’s what equity means, but the word equity also recognises the need for differing levels of support and assistance depending on specific needs or abilities.

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To learn more about the meaning of equity and other important terminology, head to our glossary of diversity and inclusion acronyms.

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What is cultural diversity?

Cultural diversity is achieved by the bringing together of people from varying backgrounds, experiences, and ethnicities, and therefore varying customs, traditions, ideas or beliefs. An example of a culturally diverse workforce is one made up of people from different races, religion, physical or neurological abilities, ethnicities, age, and gender.

Why is workplace diversity important?

For far too long, the workplace has been unwelcoming, unfair, or completely inaccessible for many people around the world. For example;

• 32% of Australian employees and 42% of American employees report to have experienced racism in the workplace, while over 70% of ‘ethnic minority’ workers in the UK say they have recently experienced racism in the workplace;
• research has suggested that leaders are still reluctant to hire women of childbearing age and people with disabilities;
• and it’s only in this decade that the American Supreme Court ruled it illegal to fire someone for being gay or transgender.

The moral need to address such inequalities should be motivation enough, but the harsh truth for many businesses is that there must be economic gains involved. Fortunately, data continues to prove that diversity in the workplace results in a multitude of benefits, all of which have a positive impact on a business’ bottom line.

Benefits of diversity in the workplace

A wider talent pool

By creating and promoting a genuinely inclusive workplace, organizations can attract a wider range of candidates. In fact, 67% of surveyed active and passive job seekers said that a diverse workforce is an important factor when evaluating companies and job offers. It’s also reported that 56% of women look at whether a potential employer publicly shares its progress on diversity.

As any HR and Talent Acquisition professional will tell you, this expansion of the talent pool is increasingly important for the many industries around the world currently facing a skills and labor shortage; in a recent McKinsey and Company study, nine in ten managers say their organization is currently facing or anticipating a skill gap. And of course, the wider your audience, the greater your chances are of finding the exact candidate your company needs.

How can you create a more diverse and inclusive recruitment process? That’s exactly what we asked three HR experts in our free on-demand WORK180 webinar.

Happier, healthier and more productive employees

Diversity can only be achieved when organizations create inclusive workplaces where everyone feels welcomed, valued, and able to access the same opportunities with equal effort. Unsurprisingly, this positive environment results in happier and healthier employees, which — studies continually show — provides a whole host of benefits. One such study conducted by the Limeade Institute and Artemis, found the following about employees in an inclusive workplace:

Greater innovation and ideation

Diverse companies are proven to be six times more innovative and agile, and 70% better positioned to capture new markets. That’s because a diverse group of people in an inclusive environment results in a diverse range of thought. These positive results are also because the presence of so many different thoughts, perspectives and opinions make it harder for people to form homogenous groups that often lead to groupthink*.

The argument for increased diversity resulting in increased innovation is also backed by science. A study into the impact of diverse perspectives and information processing (aka, cognitive diversity) within a team found that such variety correlates with better performance!

What is groupthink? Groupthink is when faulty decisions are made due to group pressures

According to the social psychologist who coined the term in 1972, Irving Janis, symptoms of groupthink include;

• An illusion of invulnerability;
• Collective rationalism;
• Belief that the rightness and righteousness of their cause allows ethical and moral consequences of their decision to be ignored;
• Negative views of people holding other opinions. They are viewed as “the enemy” rather than people who hold a different but valid view;
• Direct pressure on dissenters in the group to only hold and voice the views of the group;
• Self-censorship where doubts or deviations from the group consensus are not expressed;
• An illusion of unanimity where all members believe that everyone in the group holds the same views; and
• Self-appointed mind guards that protect the group by attacking any views or anyone holding views perceived to be contrary to the views of the group.

Improved brand value proposition

From those working within an organization to its customers and potential job candidates, people have needs and expectations from companies when it comes to diversity — an upward trend that promises to continue.

Why diversity matters to your Brand Value Proposition:

Firstly, a homogeneous group of people will lack the shared experience and insights to connect with customers beyond their dominant demographic. It’s therefore imperative to any business plan that a workforce reflects the diversity of the real-world. For example, people with disabilities are the third largest market segment in the States (yet only et wildly underrepresented in the workplace.

Customers also have an increasing expectation to see diversity both in your output and the team behind the work. For example, a survey by Accenture revealed that 41% of shoppers removed at least 10% of their business from a retailer for their lack of focus on DEI. Another study also reported that 65% of consumers would pay more for a product from a company that was vocal about issues like equality and diversity, and 88% of Generation X and 90% of Millennials say that diversity can improve a brand’s reputation.

Important note: When it comes to diversity, good intentions are not good enough, and companies will be called out and boycotted for tokenism and virtue-signaling. Damaging brand blunders include Pepsi’s now-notorious Live for Now campaign and ‘hypocritical’ responses from big brands like L’Oreal to the murder of George Floyd.

Why diversity matters to your Employer Value Proposition:

By creating and promoting a genuinely inclusive workplace, organizations can attract a wider range of candidates. Remember, 67% of active and passive job seekers in a survey said that they consider a diverse workforce an important factor when evaluating companies and job offers — a truth WORK180 can attest to — around 100,000 women a month visit our transparent job board to find a role with an Endorsed Employer for All Women (that’s an organization with a proven commitment to diversity, equity and inclusion).

It’s not just about attracting a wide range of talented people; the benefits and policies you put in place will serve to nurture and retain your team too. Here’s an example from our Australian Endorsed Employer NAB, who went against the grain and supported two employees to share a senior position. While one employee had been with the company for eight years, the other had been there for 16. That’s a total of 24 years experience that NAB managed to retain through their ‘why not’ approach to flexibility. And with the cost of rehiring reported to be around six to nine months of the respective employee’s salary, that saving also translates into a significant amount of money.

Increased profits

From reducing attrition costs to improving productivity, all of the benefits listed above positively impact a business’s bottom line. It’s therefore no surprise that reports consistently confirm diversity results in an increased profitability.

Workplace diversity statistics and facts

Prefer to see the benefits of diversity in the workplace as straight facts and figures? Here are the numbers stated so far, as well as some shocking statistics that go beyond the business case for diversity and bring the moral issue to light.

Facts and statistics about the benefits of diversity in the workplace

• Companies in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean.
• Companies with greater gender diversity performed 15% better than companies with lower levels of gender diversity.
• Research from Limeade has found that employees at inclusive organizations are 28% more engaged at work; experience a 19% greater sense of well-being; are 43% more committed to their company; 51% more likely to recommend their company as a great workplace; and typically intend to stay with their company three times longer.
• Diverse companies are 70% better positioned to capture new markets.
• Inclusive teams make better business decisions 87% of the time.
• 41% of shoppers surveyed by Accenture removed at least 10% of their business from a retailer for their lack of focus on DEI.
• 65% of consumers would pay more for a product from a company that was vocal about issues like equality and diversity
• 88% of Generation X and 90% of Millennials say that diversity can improve a brand’s reputation.
• 57% of people surveyed by Glassdoor think their company should be doing more to increase diversity in its workforce.
• 67% of active and passive job seekers said that a diverse workforce is an important factor when evaluating companies and job offers.
• 56% of women look at whether a potential employer publicly shares its progress on diversity.
• Groups that were once referred to as “minorities” will reach majority status by 2044.

Facts and statistics about the current state of diversity in the workplace

• The opportunity pay gap: Overall, women make only $0.82 for every dollar a man makes, which is one cent more than they made in 2020.
• The controlled pay gap: Women with the same job and qualifications earn only $0.98 for every dollar a man makes.
• The Global Gender Pay Gap score in 2021 is 67.7%. On its current trajectory, it will now take 135.6 years to close.
• The pandemic saw US unemployment rates almost double in one year, exacerbating inequality among race and gender:
  • 11.4% unemployment rate for Black or African Americans
  • 10.4% unemployment rate for Hispanics (women have the higher unemployment rate within this group)
  • 8.3% for Asian workers (women have the higher unemployment rate within this group)
  • 7.3% for White workers (women have the higher unemployment rate within this group)
• Young adults from underrepresented races and/or ethnicities in the UK are 58% more likely to be unemployed than their White British peers. to the White group
• Despite an estimated 5.1% of US women and 3.9% of US men identifying as LGBTQ+, their representation in corporate America is much lower; while LGBTQ+ women make up 2.3% of entry level employees, they comprise only 1.6% of managers, and are even more underrepresented at senior levels.
• 32% of Australian employees and 42% of American employees report to have experienced racism in the workplace, while over 70% of ‘ethnic minority’ workers in the UK say they have recently experienced racism in the workplace
• Out of all Fortune 500 companies, just five have African American or Black CEOs.
• Around 15% of the world’s population live with some form of disability and, yet;
  • people with disabilities are are four times as likely to be unemployed as others in the UK;
  • 77% of the companies in the States have failed to meet the U.S. Department of Labor target of 7% disability representation in the workforce.
  • 88% of people with invisible disabilities have been made to feel negative towards disclosing their disability.

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Want to find even more facts about diversity in the workplace? Take a look at our regularly updated DEI resources and reading list.

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What does diversity look like?

While traits like people’s race, gender, age or physical ability are often visible, a diverse workforce is also made up of invisible factors. These include traits such as sexual orientation, neurological abilities, religion, culture, and economic status.

So how can you tell whether a workplace is truly diverse? As diversity is so complex and nuanced, it’s important to look beyond visible differences (also known as surface-level diversity), and find clues that a company is supportive of individuals with differences that cannot be visibly identified.

Clues of a workforce with a wide range of invisible differences (also known as deep-level diversity) include the company’s targets, employee resource groups (ERGs), benefits and policies. While this information was once buried in the bottom of an HR filing cabinet, leading employers are proudly displaying this information on the WORK180 transparent job board. While they may not always be perfect, their transparency is proof they’re taking steps towards progress and this is enough to attract, nurture, and retain a diverse workforce.

“It’s not about organizations being perfect. It’s about equal opportunities and letting candidates know what to expect before they spend time applying.”

Gemma Lloyd, Co-Founder and CEO of WORK180

What is surface-level diversity?

Surface-level diversity describes diversity that is instantly visible due to people’s appearance. Examples of indicators of surface-level diversity can include people’s age, gender, physical abilities, and race.

What is deep-level diversity?

Deep-level diversity describes diversity that cannot be identified through people’s appearance. Examples of invisible traits that make up deep-level diversity include people’s religion, sexual preference, experiences, and neurological disorders.

Challenges to workplace diversity

With many girls still being born into a world in which they are not taught to read and 69 countries still yet to fully legalize homosexuality, we’re just at the dawn of diversity. As such, DEI expertise is relatively new, lessons are yet to be learnt, and there are many challenges to overcome. Here are just a few of the biggest challenges that workplace diversity champions will need to prepare for:

Diversity issues in the workplace

• Unconscious biasThe saying goes; if you have a brain, you have a bias. This means that your company is inevitably impacted by stereotypes, prejudices, and other preconceptions. If these are not recognized, addressed, and mitigated, sustainable diversity is impossible to achieve.
• PrivilegeIn the context of DEI, privilege is the exemption from difficulties simply because of the group you belong to. For example, an able-bodied individual will never have to request adjustments to be made to their workspace. These privileges can make us ignorant to the barriers others are facing and, therefore, fail to play our part in removing them.
• IntersectionalityDiversity efforts and strategies are all for naught if they don’t consider that, for many identify groups, disadvantages overlap and compound. Put simply, this truth means that companies can’t resolve problems such as the gender pay gap by focusing solely on the barriers women face in the workplace.

“If I’m a [B]lack woman, I have some disadvantages because I’m a woman and some disadvantages because I’m [B]lack. But I also have some disadvantages specifically because I’m a [B]lack woman, which neither [B]lack men nor white women have to deal with. That’s intersectionality; race, gender, and every other way to be disadvantaged interact with each other.”

A popular definition of intersectionality from Amarkov in the “Explain Like I’m 5” subreddit

• MeasurabilityWhat gets measured gets done. Unfortunately, the multifaceted nature of diversity has made it difficult for organizations to ascertain meaningful metrics, which makes gaining buy-in and sustaining momentum almost impossible.

  Note: The WORK180 Gender Equity Index is here to tackle this universal problem by offering organizations a way to measure, track, and prove their commitment to gender equity.

Please note, the WORK180 website has been updated since the recording of this guide. 

• PrioritizationWith benefits taking a long time to realize, measure, and prove, diversity efforts are often not afforded the level of respect required to have a lasting impact. For example, the responsibility of diversity is often allocated to passionate but poorly prepared members of the team or, worse, thrust upon individuals from underrepresented backgrounds.

“For many Black professionals, the experience of being asked — or even required — to lead or participate in a company’s diversity and inclusion work simply because of their race is an uncomfortable ritual.”

Source

Focus areas for workplace diversity

The complex nature of diversity and inclusion makes it difficult for workplace champions to know where to focus their efforts. At WORK180, we believe it’s important to do your best with the resources you have, until you can do better. That means identifying and addressing your core workplace issues , with the confidence that your progress will begin to have a positive impact on wider issues as well. As Audre Lorde once said,

“There is no such thing as a single-issue struggle, because we do not lead single-issue lives.”

Workplace diversity and gender

With women representing a mere 27% of all managerial positions and earning a global average of just $0.82 for every dollar a man makes, it’s clear we have a way to go when it comes to supporting women in the workplace. But with the empowerment of every woman who wishes to work holding the potential to add 10% (over £180 billion to our GDP by 2030), gender equity is in everyone’s best interest.

“When women do better, economies do better.”

Christine Lagarde, Managing Director of the International Monetary Fund

Workplace diversity and age

While ageism (aka, age disciminiation) is illegal in many countries, the World Health Organization (WHO) states that over half the world’s population is ageist. In Europe, younger people report more age discrimination than other age groups.

Whether it’s deeming an employee too young or old for a certain role or failing to support team members through life stages like menopause, far too many employers treat people unfairly due to their age. This is not only morally wrong, according to the WHO, it’s costing our societies billions of dollars each year.

*It’s important to note that Europe is the only region for which data is available on all age groups.

“Ageism towards younger and older people is prevalent, unrecognized, unchallenged and has far-reaching consequences for our economies and societies.”

Maria-Francesca Spatolisano, United Nations Assistant Secretary-General for Policy Coordination and Inter-Agency Affairs in the Department of Economic and Social Affairs

Workplace diversity and race

While complex, race broadly refers to groups of people born with shared physical traits. Despite being undoubtedly abhorrent and illegal, the discrimination against people based on these physical traits (aka, racism) is still prevalent in the workplace and impacts people’s careers.

Whether it manifests as a lack of opportunities due to the remains of institutional racism or blatant preducidsm in the workplace, the impact of racism is instantly identifiable in the global lack of diversity at senior leadership level.

• Almost 90% of the Fortune 500 CEOs are White males
• Over 96% of the UK’s Financial Times Stock Exchange 100 director population are White British.
• Over 90% of Australian Stock Exchange 200 board members in 2020 were from an Anglo-Celtic background.

Workplace diversity and ethnicity

Ethnicity is a broad term that refers to groups of people that share cultural expression and identifiers, like language, practices, or ancestry.

While illegal in almost all cases, many employees suffer unfair or negative treatment due to unjust prejudices, stereotypes, or a lack of respect and understanding of their ethnicity. For example, varying studies in Australia, America, and the UK all indicate that those with names from underrepresented backgrounds are forced to send out significantly more job applications than other people.

“I was sending on average around 35 applications before I’d even get an interview. I very nearly changed my Nigerian surname.”

Miriam Animashaun, a London graduate interviewed by the BBC

Workplace diversity and religion

84% of the world’s population identifies with a religious group. Yet many organizations are ill prepared to foster an inclusive environment that harnesses the benefits of so many varying viewpoints. What’s more, employees around the world are experiencing discriminations as a result of their religious beliefs.

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Workplace diversity and education

People from areas with lower school funding, books, technology, and access to prestigious educational institutions are already at a disadvantage before they even commence their careers. This educational inequality is one of the core problems prohibiting full, fair, and equal participation in the workplace.

This is a global issue that has been recognized and promoted by the United Nations in the form of its Sustainable Development Goal 4, which promotes inclusive and equitable quality education for all.

The UN Sustainable Development Goals are a clear “blueprint to achieve a better and more sustainable future for all” — a mission both WORK180 and 193 Member States of the UN are firmly committed to.

Workplace diversity and LGBTQ+

LGBTQIA+ stands for Lesbian, Gay, Bisexual, Transgender, Queer, plus (+) all other identies. While it may seem that the world has progressed in the fair and equal treatment of those who identify as LGBTQIA+, global research from Accenture tells us there’s still a long way to go until everyone is able to bring their full selves to work.

• 57% of LGBTQ+ employees believe their gender identity and expression or their sexual orientation has slowed their progress at work.
• Only 14% of LGBTQ+ employees feel fully supported by their employer when it comes to issues like welcoming those who identify as LGBT+.

Workplace diversity and socioeconomic status

Someone’s socioeconomic status is based on a multitude of factors, but primarily their social class and financial position. Due to a multitude of workplace barriers for those of ‘lower’ socioeconomic status, senior teams are still predominantly made up of those from already privileged positions — this is proven to negatively impact performance.

One study has also found that social transitioners (defined as those who are able to progress between socioeconomic classes during life) offer particular value to the workplace. However, the study also reveals the isolation and exhaustion such individuals can feel when faced with a homogeneous workplace.

Workplace diversity and disability

Around 15% of the world’s population live with some form of disability. This makes these individuals the world’s largest ‘minority’ and yet, according to Scope’s Guy Chaudoir, disabled people are four times as likely to be unemployed as others in the UK. What’s more, only 13% of the American companies have met the U.S. Department of Labor target of having 7% disability representation in the workforce. These facts are despite the fact that this untapped pool of candidates are proven to increase creativity and productivity.

History of workplace diversity

They say if we don’t acknowledge the past, we are doomed to repeat it. For this reason, it’s a good idea for anyone involved in diversity in the workplace to have some understanding of its origins and how it has developed over time.

When did diversity start?

The concept of diversity in the workplace is nuanced and complex, which means pinpointing a start date for the concept is difficult; it will vary depending on your country, perspective, and the area of diversity you are discussing. However, there are plenty of great resources that can help us gain an understanding of it’s evolution:

• A timeline of significant moments impacting workplace equity in the UK
• A timeline of diversity in Corporate America
• A brief human rights timeline in Australia

Fast Company Magazine also produced a short but informative podcast episode on the brief history of diversity and bias training.

What causes a lack of diversity?

More and more companies are claiming a commitment to DEI. However, a recent LinkedIn report shows this commitment largely ebbs and flows with the trends, proving that DEI is not afforded the level of respect and severity it requires to have a real and lasting impact. It’s therefore no surprise that the gender pay gap is taking too long to close, the gender ethnicity pay gap is barely budging, and companies are not seeing results.

To learn more about this and discover the solution, read The Business Case for Investing in Women Properly.

Workplace diversity trends

At the beginning of 2021, WORK180 interviewed trailblazing employers around the world known for their commitment to diversity, equity, and inclusion. From the policies they’re continually improving to the new additions from 2020, they kindly shared the latest employee benefits and policies they wouldn’t be seen without.

How to promote diversity in the workplace

“If companies look at diversity and inclusion as a business opportunity, and an opportunity to make staff feel more included, then you can create sustainable long-term impact. But if you see it as an issue and as something you need to fix, then you’ll never make change.”

DEI expert Asif Sadiq MBE in discussion with Sophie Wheeldon for Startups Magazine

WORK180 has created a free Business Case For DEI Toolkit to help you gain the buy-in you need to get diversity initiatives right from the very beginning. You’ll find the resources you need to understand and explain what it takes to achieve true DEI, implement policies and — for HR teams lacking the crucial expertise and support for such initiatives — you can use the ready-made template to pitch for a strategic partnership with WORK180. Download your free DEI toolkit today.