The moral and ethical benefits of having a diverse team are well known, but diversity can do even more. How does diversity recruiting impact the bottom line of a company? Do diverse companies report higher profits? Better innovation?
The Financial Benefits of Diverse Teams
According to a 2018 article from the Harvard Business Review, diverse companies actually report higher innovation revenues. Subsequently, companies can expect various other results to occur when revenue increases.
“In fact, companies with above-average total diversity, measured as the average of six dimensions of diversity (migration, industry, career path, gender, education, age), had both 19% points higher innovation revenues.”Harvard Business Review, How and Where Diversity Drives Financial Performance
In studying the venture capitalist industry, HBR found that homogenous investing practices resulted in lower returns:
“Along all dimensions measured, the more similar the investment partners, the lower their investments’ performance. For example, the success rate of acquisitions and IPOs was 11.5% lower, on average, for investments by partners with shared school backgrounds than for those by partners from different schools. The effect of shared ethnicity was even stronger, reducing an investment’s comparative success rate by 26.4% to 32.2%.”Harvard Business Review, The Other Diversity Dividend
Therefore, the results are clear. Building a diverse team doesn’t just alter the morale of your company, it affects the financial success of your company.
What other benefits can companies expect by prioritizing diversity recruiting?
There are few things as important as employer branding in the Talent Acquisition industry. That is to say, people want to work for companies whose work they care about. Moreover, they want to work for companies that care about the wellbeing of their employees. In the same vein, surveys have found that an overwhelming 78% of employees want a workplace where everyone is treated equally. By being transparent about your diversity and inclusion efforts, you are better able to reach those who need that from their workplace and subsequently fill the pipelines you need at the ready.
Further, the vast majority of employees believe in the importance of strategic diversity and inclusion work. A Quantam Workplace study found “61% of employees believe diversity and inclusion strategies are beneficial and essential.” In short, diversity recruiting plants the seed that companies need to foster inclusive, productive, and financially viable environments.
What Your Team Can Do
Diversity recruiting isn’t a task that can be marked off with one simple action. That is to say, it’s an ongoing process of learning, iterating, updating, and getting better.
We created the Diversity Recruiting Scorecard to help clarify where your company’s Diversity Recruiting efforts stand. Take the quiz at the link below and be well on your way to becoming a leader in the Diversity Recruiting space!