It’s an interesting phenomenon: the vast majority of people agree that diversity is good for businesses. And yet, so many organizations struggle with hiring a more gender and ethnically-diverse workforce. Even age tends to be fairly consistent, especially in new tech startups, which often hire mostly young people. Hiring managers just aren’t making diversity a priority, and we find ourselves reading statistics like those in Google’s diversity reports: two percent of the company’s employees are African-American, three percent are Hispanic, and under a third of all employees are women. Those aren’t uncommon numbers within the tech industry, and many other industries have similar problems.
This lack of diversity doesn’t just reflect poorly on companies from a social perspective, it hurts their innovation and competitiveness in the market. Time and time again we’ve seen examples that show diversity promotes innovation, revenue, and employee retention. But how?
There are two types of diversity: inherent and acquired. Inherent are the diverse traits you’re born with: like race/ethnicity, gender, and sexual orientation. Acquired diversity refers to the perspectives you gain throughout life. A study found that companies with “two-dimensional diversity” (that is, with leaders who have at least three different inherent and three different acquired diverse traits) were overall more successful and innovative. They were 45 percent more likely to grow their market share year by year, and 70 percent more likely to expand and grow into new markets. Seventy-eight percent of companies surveyed needed to work on their two-dimensional diversity in their leadership, to ensure their employees’ voices were heard. It is unequivocal that leaders have emotional intelligence to ensure that all voices are heard from the correct perspective.
What drives innovation? Having a range of opinions and insights based on diverse perspectives. Diversity ensures that some team members will spot gaps, solutions, and opportunities the company may otherwise ignore. Differences in age, cultural experiences, and opinions help teams avoid groupthink, and ensure that nothing is overlooked. After all, if a business has the potential to tap into another market, doesn’t it make sense to bring on employees who identify with those demographics? People who can identify with the mindset of those customers and help overcome obstacles in gaining ground in these new markets? Of course it does—this is how to effectively market and bring products to potential clients that weren’t accessible before.
Even if a company has diversity in their workforce overall, diversity in leadership is often less prevalent than in organizations overall. This is a problem, because employees with diverse ideas may not have leaders who will endorse and push for their team’s ideas to be heard and used in the organization. White men’s ideas are still favored over others’, partially thanks to a lack of diversity in upper management. Companies that wish to become more diverse and drive innovation should look to increasing the diversity in the leadership team first, to avoid great ideas slipping through the cracks.
It’s clear that companies prioritizing and implementing diversity initiatives simply do better financially. Companies with high racial and ethnic diversity were found to be more likely to outperform non-diverse companies by 35 percent, and companies with gender diversity were 15 percent more likely to outperform. Those two factors combined can give businesses a serious competitive edge. Diversity also encourages collaboration, and helps retain top talent—all important for long-term growth of a business.
The data speaks clearly: diversity matters, no matter what industry an organization is in. Businesses often say they prioritize hiring a diverse team, but never actually follow through. Be the difference and get some diversity in your office—it’s not just the right thing to do, but it will have an obvious impact on your business’s finances and innovation, and help you gain a competitive edge.
Every startup has big dreams. Every startup wants to become a “unicorn” (valued at over $1 billion and under 10 years old), but only 1.28 percent of startups ever gain that status. Want to become one of those unicorns? Make sure you’re hiring a diverse and dedicated workforce to ensure ongoing innovation. It won’t guarantee you success, but it will help drive innovation and growth you need to work toward your dreams.
By Ryan Ayers