Diversity – The key to a skilled, data-driven organisation

As the corporate landscape undergoes a transformative shift towards greater diversity and inclusion, the results are becoming increasingly tangible.

In 2021, 43% of respondents of a Fortune/Deloitte survey of CEOs said that building an diverse, equitable, and inclusive (DE&I) workforce was high on the list of their challenges. The CEOs were evidently prioritising DE&I as they spoke, because that year, as revealed in an exclusive report published in 2023 by Bloomberg, S&P100 companies, including industry giants such as Apple Inc, Walmart and WellsFargo and Co, collectively created over 300,000 jobs. Notably, 94% of these positions were filled by individuals from diverse backgrounds, comprising Asian (22%), Black (23%) and Hispanic (40%) communities.

This shift in the employment landscape isn't just a statistical anomaly. It underscores a broader recognition of the value that diversity, equity, and inclusion bring to the table. More than just a buzzword, DE&I is an irrefutable fact that has been proven to enhance business productivity and profitability.

In this article, we will talk about what workplace DE&I is all about and how a diverse workforce is also a highly skilled workforce. We will also look at the connection between DE&I and two critical business functions – data-driven leadership and strategic workforce planning.

What is diversity, equity and inclusion?

‘Diversity’ refers to greater representation in an organisation/team. It means having employees from/of different races, ethnicities, religions, age groups, socio-economic/educational backgrounds, locations, beliefs, sexual orientations, and experiences. While some types of diversity (racial, ethnic, gender) are well-known, diversity is a much broader subject. As Nobel Prize winner Richard Thaler says, “it’s also important to have diversity in how people think”.

‘Equity’ is about fair treatment and equal opportunities for all. It isn’t enough to employ people from diverse backgrounds. It’s just as important to treat them equally and ensure they have the same opportunities in terms of representation, promotions, career advancement, and so on. This means companies must put in place practices and policies that promote equity.

‘Inclusion’ refers to the experiences of a diverse workforce. Do they feel valued and believe their voices are being heard and their contributions appreciated? Do they feel safe raising concerns and talking about themselves? Unfortunately, one in four employees do not feel valued, according to an International Labour Organisation study, showing that DE&I needs a greater commitment from employers and business leaders.

Why do you need DE&I in the workplace?

Diverse organisations are more innovative, productive, profitable, and resilient. Here are six business benefits of DE&I:

1. Innovation

Diverse teams have members with vastly different backgrounds, perspectives, and experiences. As a result, a diverse team is fertile ground for fresh ideas and creativity. Members are capable of coming up with unique and unconventional ways to solve problems. When Forbes Insights conducted one-on-one interviews with executives for a global survey, 56% agreed that diversity is a key driver of innovation. Similarly, a Boston Consulting Group study said organisations with diverse teams have 19% higher revenues, and credited this to diversity-driven innovation.

2. Productivity and profitability

Diversity is directly linked to productivity and profitability, and here’s the proof:

• Companies with more racially and ethnically diverse workers outperform their less diverse rivals by 35%, according to Fundera, a financial solutions provider targeted at small businesses. The study adds that companies that employ an equal number of men and women are likely to earn 41% more revenue.
• An International Monetary Fund working paper found that European companies with a large number of women in high-ranking positions perform significantly better financially. This study makes a strong case for gender diversity, given that only 19% of executive-level leaders in Europe are women and, worse, only 7% of European companies have a woman as CEO or managing director.

3. Decision-making and problem-solving

Diversity improves decision-making and problem-solving, which are the bedrocks of efficiency and productivity. A diverse team brings new ideas to the table, enriching the decision-making process. Diverse teams make better decisions 87% of the time, says a study by ‘decision intelligence’ platform Cloverpop. Similarly, diverse employees are known to propose unusual and uncommon solutions to challenges instead of the standard solution one would expect from a group of individuals belonging to the same culture.  

4. Market reach

A diverse workforce is naturally good at capturing a diverse customer base. By understanding what customers in different locations need and want, they can greatly help improve products and services and provide other valuable insights to their companies. For example, if a company uses advertising that depicts a specific country, culture, or demographic, the target audience would feel more connected to the company and be willing to buy its products. According to the Fundera study, diverse teams are 70% more likely to expand to new markets.

5. Cultural competence

Diverse organisations have a better understanding of cultures and customs. Cultural competence is key to communicating with different cultures. This not only creates rapport and trust among diverse colleagues but also helps companies handle diverse customers with sensitivity and tact. Cultural competence eliminates mistakes and miscommunication, opens new markets, and breaks down cultural walls. With strong cultural competence, even a small company can go global.

6. Skills

Diverse teams have a wider range of talents and skills than non-diverse teams. They possess a wide variety of knowledge and expertise shaped by each member’s lifestyle, experiences, and interests. A broad skill set is a huge asset given that the skills people need to perform a job today will be vastly different by tomorrow even if the job remains the same. As LinkedIn’s Future of Skills study says, skills for the same job changed by 25% between 2015 and 2021 globally. The study expects each employee’s skills to change by as much as 40% by 2025. A broad skill set becomes even more valuable as it allows team members to learn from each other, fostering a culture of continuous learning and self-improvement.

Curious about your organisation’s skills and competencies? With MuchSkills, you can build a modern skills matrix that visualises all your employees’ skills and talents and helps you get to know your teams and employees better.

Diversity skills: What are they?

Diversity and skills are closely related. In fact, there is a set of skills and competencies you require to build a more diverse and inclusive workplace. These are called ‘diversity skills’. Diversity skills help you become tolerant, accepting, and appreciative of a different mix of people in your team.

Here are three diversity skills that can make your organisation a DE&I champion:

1. Cultural awareness

A culturally aware organisation is one where each individual feels seen, heard, respected, and valued. Cultural awareness nurtures a sense of belonging in employees. Various studies of the Great Resignation have found that what makes people stay in a job is not just money and the prospect of professional growth but also feelings of acceptance, belonging, and inclusion. As we live and work in a multicultural world, we need to cultivate cultural awareness to be able to recognise, understand, and thrive in our differences. Cultural awareness helps employees understand their strengths and make meaningful contributions. It creates a space where diverse people can feel safe, treat each other without bias, and communicate freely.

2. Fighting bias, microaggressions, and stereotypes

Unconscious bias is when we make judgements and presumptions about certain groups of people based on our prior experiences and personal thoughts and assumptions. We often have no control over our prejudiced thoughts and may not even be aware of them. Sadly, unconscious bias can influence our actions, leading us to form stereotypes about our colleagues/employees and, worse, discriminate against them. Such discriminatory behaviour can take the form of microaggressions – subtle, everyday slights and insults (deliberate and unintentional) aimed at marginalised groups. In order to fight bias, we need to become more empathetic. Empathy – the ability to understand and share the feelings of others by putting yourself in their shoes – is arguably the most sought after soft skill today. It is only when we acquire the ability to confront and fight workplace bias, stereotypes, and microaggressions that we can create a truly diverse and inclusive workplace.

3. Lifelong learning

Most skills can be taught. Constantly educating yourself and your employees about DE&I topics and strategies is critical to creating a diverse and inclusive organisation. Many companies today offer diversity training, helping participants become aware of workplace diversity issues such as gender gaps and under-representation. According to PwC’s Global Diversity, Equity and Inclusion Survey 2022, 75% of respondents say DE&I programmes are a priority. Diversity training helps employees understand how their diverse colleagues feel and what motivates them. It teaches individuals to communicate and collaborate effectively in diverse teams, confront and mitigate bias, and learn about the importance of equal opportunities.

DE&I and data-driven leadership: What is the connection?

One of the most effective ways of eliminating bias and discrimination is by taking decisions and actions based on facts (data, in other words) rather than on instinct and intuition. Data-driven decision-making is vital to creating a diverse and inclusive organisation. For any serious diversity effort, gathering data on DE&I within the organisation is the first step. As decision-making lies largely in the hands of leaders, data-driven leadership is essential for DE&I initiatives. In fact, leadership buy-in is absolutely necessary for any effort towards strengthening company culture or managing change.

Here are four ways in which data-driven leaders can promote diversity:

1. By rewriting hiring practices

A diverse and inclusive organisation hires talent from a variety of backgrounds. Data-driven leaders can help the process by studying the organisation’s DE&I data, spotting diversity gaps (the under-representation of a particular race or gender in the company’s hiring history, for example) and taking steps to close those gaps. A data-driven approach to hiring is also good for creating balance in the workforce – say, by hiring more young people if your staff is made up predominantly of older employees. Apart from creating a diverse pool of employees with varied skills and experiences, this will also ensure that when the older generation reaches retirement age, their younger colleagues are ready to take their place.

2. By forming talent marketplaces

A talent marketplace is a data-driven platform within a company that connects people with jobs, assignments, and projects, both long-term and short-term. By helping employers identify the skills and competencies their employees possess and those they lack, an internal talent marketplace gives companies the opportunity to correct critical skills gaps. It also benefits employees, helping them grab opportunities that suit their skill sets and grow in their careers. Given that a talent marketplace is technology-enabled, the matching of skills and opportunities is entirely objective, without room for personal feelings and biases to creep in. Employees are picked solely for their skills and talents and not because of who they know or how they are perceived. By pushing for talent marketplaces in their companies, data-driven leaders eliminate the chance of biases influencing who they form relationships with. They inspire others to do the same, leading by example to create a culture that accepts and appreciates diversity.

3. By prioritising employee engagement

A data-driven approach helps leaders identify and eliminate inequalities that might not always be obvious. Data-driven leaders can use company information to check if marginalised employees are being paid equally and track disparities in promotions and other development opportunities. Data sourced from employee engagement surveys and questionnaires is a great way for leaders to get a real picture of the company culture – whether diverse employees are comfortable speaking their minds, whether they feel safe reporting incidents of discrimination without the fear of being targeted or further marginalised, etc. Studies show that organisations looking to attract a diverse workforce must pay attention to the employee experience they offer. After all, one in three job seekers wouldn’t apply to a company that lacks diversity, according to Glassdoor’s 2020 Diversity and Inclusion Workplace Survey. Among the young generation of workers, the belief that business must take the lead in improving society – by reducing inequality, working for employee mental wellbeing, being environmentally responsible, etc – is growing. According to the Deloitte Global 2023 Gen Z and Millennial Survey, more and more young people are letting personal values shape their career decisions. The survey reports that 44% of Gen Zs and 37% of Millennials turned down assignments due to ethical concerns while 39% and 34%, respectively, rejected employers who didn’t align with their values.

4. By evaluating DE&I efforts

Diversity, equity and inclusion isn’t a one-time programme. It requires commitment over a long period of time to make any real impact. An organisation with data-driven leadership will certainly use data to identify disparities, use the data insights to suggest improvements, and implement those steps as part of its DE&I initiative. 

However, that’s not the end of the process. Organisations and leaders must continue to monitor their DE&I efforts meticulously, tracking their progress and seeing if they meet stated goals. Take, for example, a company that has hired more people with disabilities and created an ideal environment for them with ramps that allow them to move freely and assistive technologies that enable them to work efficiently. But is the company also tracking the promotion and retention rates of such employees over the years? 

With an evaluation process in place, leaders can spot if an initiative isn’t working, devise ways to improve it, or suggest taking an altogether new approach. Measuring the success of your DE&I efforts is crucial if your organisation is committed to meaningful change. This is extremely important given that employers’ and employees’ perceptions on DE&I efforts are often at odds, as PwC’s Global DE&I Survey shows. According to the survey, 54% of the business leaders surveyed said diversity was a priority area in their organisations whereas only 39% of employees held this view.

Strategic workforce planning as a driver of DE&I

We now know that diversity is crucial to become globally competitive. Do you know what else is necessary to successfully do business on a global scale? Strategic workforce planning.

Strategic workforce planning ensures a business has the right mix of people with the right skills for the right jobs at any given time. Identifying the types of employees a workforce needs is very much a part of this process. As such, strategic workforce planning can be a key contributor to workplace diversity. When an organisation makes diversity an integral part of its strategic workforce planning process, it gains the ability to reach ‘hidden’ pools of talent – under-represented groups (such as caregivers, veterans, those with physical disabilities or relocating partners and spouses, and those without traditional qualifications) that are largely overlooked by employers due to long-standing recruitment practices.

A recent study conducted by the Harvard Business Review estimates there are more than 27 million ‘hidden’ workers in the US alone, and similar proportions across the UK, and Germany. This is criminal at a time when the world is facing a massive labour crunch and skilled talent is becoming increasingly hard to find. What if organisations were to tap these hidden talent pools? The study found that businesses that purposefully hired hidden workers are 36% less likely to face skills shortages than companies that don’t. It further reported that hidden workers outperform other workers on six counts – productivity, work quality, attendance, innovation, engagement, and work ethic.

Conclusion

In conclusion, Diversity, Equity, and Inclusion (DE&I) are integral components for crafting a proficient, data-driven organization. DE&I encompasses more than just visible diversity; it also embraces diverse ways of thinking. Ensuring equity and fostering inclusion are vital elements in nurturing a work environment where each individual is not only recognized but also empowered.

The significance of DE&I in the workplace cannot be emphasized enough. It acts as a catalyst for innovation, amplified productivity, enhanced profitability, and more astute decision-making. Diverse teams not only stimulate innovation but also cultivate a profound cultural competence that resonates with a diverse customer base, facilitating global expansion. Furthermore, the multifaceted skill sets within diverse teams fuel continuous learning and self-improvement, both critical in an ever-evolving skills landscape.

Within this context, "diversity skills," which encompass competencies promoting tolerance, empathy, and cultural awareness among employees, serve as the bedrock of a genuinely diverse and inclusive workplace.

Harmoniously, data-driven leadership complements DE&I endeavours seamlessly. By harnessing data, leaders can reconfigure hiring practices, institute internal talent marketplaces, augment employee engagement, and critically evaluate DE&I initiatives. Data-driven leadership proves indispensable for making well-informed decisions and eradicating bias.

Lastly, the powerful synergy between strategic workforce planning and DE&I cannot be overstated. Recognizing and tapping into hidden talent pools empowers organizations to combat skills shortages, and as research indicates, harvest the numerous advantages of a more diverse workforce.

In an era of relentless change, survival and prosperity are contingent not only upon data-driven decision-making but also upon a steadfast commitment to diversity, equity, and inclusion. When these elements unite, they pave the way for an organization that is truly adept and data-savvy, adequately prepared for the challenges and opportunities of the future. So, always bear in mind, DE&I is far more than just a buzzword – it is the key to a triumphant and sustainable future.