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Diversity & Inclusion can Boost Employee Engagement

8/29/18 10:28 AM

Research shows that diversity and inclusion in the workplace causes more employee engagement, better performance, and higher profits. Response to Deloitte’s Global Human Capital Trends report regarding the importance of diversity and inclusion has increased by 74% in the last three years. The idea of diversity and inclusion in the workplace is not a new one, but surprisingly it is an initiative that many companies struggle to implement.

Recent research has found that diversity among employees often goes hand-in-hand with improved employee engagement. Today’s employee is concerned with more than just the monetary gains that having a career lend, they want to know that the work they are doing matters and that the company that they are a part of cares about creating a diverse and inclusive environment. Today’s employee is concerned with making a difference, and this ideal extends to how they would like their work environment to be. This includes being part of a diverse, and inclusive work environment.

“Inclusion is the ability to engage diversity in your workforce, so that everyone has equal opportunities to contribute.”-Shirley Davis Sheppard, Ph.D., vice president of diversity and inclusion and workplace flexibility at the Society for Human Resource Management (SHRM).

  • 83% of millennials are more actively engaged when they believe their company fosters an inclusive culture.

Organizations are beginning to realize the importance of creating a work environment that is diverse and inclusive, because of the positive impact that these initiatives have on their overall employee engagement. A McKinsey study found companies in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean. In fact the combination of employee engagement and gender diversity results in 46% to 58% higher financial performance for business units with above average engagement and gender diversity. By creating an environment focused on diversity and inclusion you are making sure that your company stands out above the competition.

However, even though there have been many great strides taken in making sure that many companies have diversity and inclusion initiatives, there is still much work to be done.

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To nurture diversity and inclusion, companies must first become great listeners, running meaningful, 'always-on' voice of employee programs. Companies with more racial/ethnic or gender diversity are proven to have financial returns above their national industry medians. In addition:

  • Companies reporting the highest levels of racial diversity in their organizations bring in nearly 15 times more sales revenue than those with lowest levels of racial diversity.
  • Research shows that companies with more diverse teams are more innovative, engaged, and creative in their work.
  • Gender-diverse companies are 15% more likely to outperform their peers and ethnically-diverse companies are 35% more likely to do the same.
  • For every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.


So, what does having a diversity and inclusion initiative have to do with employee engagement?

Gallup’s extensive research has identified a link between diversity and employee engagement: Employees who feel strong social connections at work have higher levels of well being and engagement than those who do not. On the other hand, actively engaged employees are more likely to agree that their company regards diversity as important.

The ability to attract and retain a diverse pool of talent is paramount to an organization’s success, according to research by Bersin by Deloitte. Part of that strategy? Engagement. Increased retention rates can be directly correlated to high levels of employee engagement, and diversity can boost employee engagement.

Read more about the benefits of engaged employees here.


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