We’ve all heard the statements that diversity and inclusion matter in all walks of life, be it healthcare, an IT startup, or anything else for that matter. However, is there any scientific evidence behind the claims like “diversity can boost your team’s performance” or “inclusive workplace maximizes productivity”?
In this blog post, we’ve decided to find out the evidence-based research that can confirm or refute those allegations.
Claim: Diversity is Critical for Innovation
Evidence: According to researchers from Harvard Business Review, who performed a nationally representative survey of 1,800 professionals, as well as conducted numerous interviews and focus groups, concluded that companies with diverse and inclusive culture out-perform other companies with a less inclusive workforce. Moreover, the diverse companies were 45% likelier to increase their market share and 70% likelier capture a new market.
Without the culture that promotes diversity and inclusion, women were reported to be 20% less likely to share their ideas, people of color — 24% less, and LGBTs — 21% less. Without enabling your team to contribute to the discussion freely and openly, you’re obviously losing on new ideas that can potentially lead to innovation.
Moreover, according to the researchers from the Clayman Institute for Gender Research at Stanford University, when the culture is more heterogeneous, people are more likely to contribute their unique perspectives. However, it’s not enough to just add diverse workforce to your organization, you need to create the sense of “ambient belonging” and productive team dynamics by educating and surveying your staff to figure out weak parts of your management.
Claim: Inclusion Increases Team Performance
Evidence: According to the research conducted and published by McKinsey&Company, there’s a clear and straightforward relationship between diversity and business performance. In their report, Why Diversity Matters, researchers found a positive, statistically significant correlation between diversity and financial performance. Companies with more diverse teams were 21% more likely to experience above-average profitability. Inclusive workforce and diverse culture signified a 33% likelihood of outperformance on EBIT margin. Moreover, for gender diversity, the executive teams showed even stronger correlations.
Scott Page, a professor of complex systems at the University of Michigan and an author of The Diversity Bonus: How Great Teams Pay Off In The Knowledge Economy in his talk with Knowledge@Wharton business radio show, confirms that having people from different backgrounds on your team brings incredible value to the organizational performance by uncovering different perspectives and tools.
Claim: Diversity Means Higher Quality Targeting
Evidence: This one is a little obvious, don’t you think? People who come from the same background will have higher rates of success in communicating and understanding each other’s needs, values, emotions, etc. Cross-cultural understanding, knowledge of local markets, appreciation of historical and ethical values are critical if you want to win new markets.
In their article on benefits and challenges of diversity, Hult International Business School’s writers give several examples of how brands get wildly lost in translation if they happen to lack input from the culture where they are advertising. Thus, KFC’s “Finger lickin’ good” was turned to “eat your fingers off” in China, and McDonald’s preposterous print ad in Finland was discerned as bizarre by foreign audiences.
Claim: Inclusive Companies Are Better at Retaining Talent
Evidence: According to the research published at the Human Resource Management Journal which involved data on 198 organizations, companies with higher diversity ratios had lower turnover. Increasing diversity is, therefore, suggested as a remedy for lowering the turnover rates and boosting employees’ satisfaction.
Another relatively recent research published by Harvard Business School suggests that creating an environment where people are free to express themselves without trying to wear masks or cover their true identities is critical for the success of an organization in a global marketplace. The key to inclusion, the writers argue, is understanding your employees.
There are a few ways you can achieve better awareness of your team members’ needs: conduct surveys and independently evaluated focus groups, engage in one-on-one conversations, or just simply let your employees know that you truly care. That way, you’ll keep your talent engaged and committed to your company’s goals, vision, and ultimately, to you.
Claim: Diversity Reduces Groupthink
Evidence: According to the research published in the journal Perspectives on Psychological Science, homogenous groups are under greater risk of groupthink and narrow-mindedness. Diverse groups, thanks to empirical evidence, have shown better productivity, increased rates of innovation, and as a result — more intelligent decisions. Diverse and inclusive teams have access to a greater variety of perspectives, are more ready to embrace change, more prepared to hear different opinions and points of view, as well as make fewer inaccurate statements.
An article published at MIT News also suggests that “homogeneity may be one underlying cause of “groupthink,” in which people fall into an unwarranted consensus.” However, the researchers argue, there’s another side of the coin: similar people feel more comfortable with each other and are more prepared and willing to share their ideas among themselves. So lack of diversity is not, therefore, the only culprit hiding behind groupthink. Managers need to tackle other organizational issues to find out the root causes of the unwanted phenomenon.
Conclusion
It might be argued that working remotely can eliminate the need for a diverse team since people are not working together face to face. However, we’re confident, that’s not the case.
Remote teams can also benefit from embracing diversity, and HR managers should make everything possible to incorporate diversity and inclusion in their hiring practices. As confirmed by the research showcased above, diversity plays a critical role in the success of any organization.