Despite growing evidence that diversity is beneficial to business, many companies cling onto the notion that diversity does more harm than good. They cite increased conflict and decreased productivity, lack of job applications from qualified underrepresented minorities, etc. This kind of exclusive mindset is exactly what makes diversity and inclusion so hard to make a reality. In fact, a lack of diversity can even be detrimental to a company—even costing them greatly.
A company that lacks diversity also lacks the inclusive environment that makes employees want to stay long term. More and more employees (especially millennials which now make the largest portion of the workforce) see diversity and inclusion at a company as something they look for and expect in companies.
Feeling excluded and/or undervalued for skills they do have, becomes a huge push factor that can lead to low retention rates and higher turnover. One in ten of LGBT employees left a job because they felt unwelcomed, and women in tech cited the discrimination and exclusive culture as a factor on why they left the industry. Financially, this can be costly as replacing an employee can go up to 50-60% of an employee’s annual salary.
Another issue that is relevant in today’s volatile business environment is innovation. Game-changing disruptive technologies can change an entire industry and companies that are slow to adapt are quick to become irrelevant. They might even become obsolete and go under completely. A lack of diversity in a company means they are less likely to be able to innovate and adapt to changing environments. There are many cases of this happening—think Blockbuster or Kodak—where companies were slow to change.
Let’s look Kodak more closely. Kodak ended up failing as it lost out to the emerging reality of digital photography. In fact, the technology behind digital photography was first developed by a Kodak engineer. Even when they assigned a team to research the adoption curve of digital photography, they ignored the findings—digital photography did have the potential to replace film, but the good news was the change would be gradual enough that Kodak would have time to adapt. However, they didn’t because the prevailing notion that film photography would win out in the end was more dominant in the company. This could have been avoided had there been a diverse range of people on the board, mainly people who saw the value of digital photography and how to integrate it in future business plans.
Diversity in a company leads to what is known as cognitive diversity. The presence of minds that come from different backgrounds and think differently makes it more likely for a team to come up with better solutions and contributes to error detection. They focus on facts, process them more carefully and are more innovative as a result.
Being responsive towards changes in the business environment and disruptive technologies is vital and can be made more likely with diversity. Companies that continue to fight against progressive change will see themselves getting left behind—and at great cost.