Decoding Diversity Part 1: The New Business Case for Workplace Diversity

Comparing the start of 2016 to the start of 2015, diversity has exploded in the news. It is now a global concern, and companies are worried; many are taking action, some getting positive reviews, some drawing backlash.

Despite the near global push for increased diversity, there are some who still question whether it really is a business tool, social good, or even a useful policy. In 2016, there is a new business case for diversity that stretches beyond profits and into the idea that diversity might be the key to unlocking and creating new markets.

The Old Business Case: Profit

This is still a pretty strong one for many people.

  • McKinsey found that organizations in the top 25% of gender equality are 15% more likely to have above average financial returns.
  • Similarly with ethnic diversity, the most ethnically diverse companies are 35% more likely to earn above average revenues than the least ethnically diverse companies.
  • When it comes to LGBT diversity, this study found that the workforce could be 10-30% more productive if all LGBT employees could be out at work.

The benefits of diversity are obvious when considering studies like these. The evidence only grows from here, with many studies being published in 2015 that say roughly the same thing: diversity pays. However, with that benefit there is a cost – diversity recruiting can be expensive and cultural change is slow to take in many firms. Harvard Business Review claims that this disconnect, along with a tendency for diversity training to err on the side of “make white men feel bad” reduces the overall benefits of diversity; the net effect is people are unsure if the profit motive is enough to justify the efforts required.

The New Business Case: Innovation and Market Capture

In 2016, companies still want to make a profit and diversity is a tool to get there. However, in today’s competitive landscape it is innovation and capturing (or creating) new markets that will ensure a corporation’s survival, not just profits. Of course, with innovation and new markets come more profits (in most instances), so money is still part of the equation. The best part? Diversity helps increase innovation and capture or create new markets, too.

  • A study by Sylvia Hewlett found this astonishing fact: when a client team has a member that shares a client’s ethnicity, they are 152% more likely to understand that client. True understanding of a client leads to a better issue-match, which furthers product innovation and sales capabilities.
  • The same study noted that companies “2-D” diversity (defined as both “inherent” and “acquired” diversity) were 45% more likely to say they captured more of their current market share and 70% more likely to say they captured a new market.

Capturing more market share, capturing new markets, and (significantly) better understanding clients come from diversity because someone from a diverse background (or with diverse experiences) will inherently see the world differently. Just as a mathematician will think differently than a painter, people from different genders, races, and sexualities will think differently from each other. When you harness these different thoughts – and bounce them off one another in a respectful way – the result is far more innovation. In diversity, the whole is greater than the sum of its parts.

So when you are thinking about diversity and how to make a business case for it – whether that be to hire more people in your organization or to explain diversity to a friend or colleague who is unsure of why it’s important – remember that money isn’t the only reason. With diversity comes innovation, unlocking markets and opportunities for all that were previously untapped.

This is part 1 of a 4 part series on Decoding Diversity. Check back for part 2 on the Downfalls of Diversity.

This post originally appeared on


Stefan is a diversity and inclusion consultant and Founder of Ziversity. He has a number of years of experience in the HR/diversity recruiting space, starting with his research at Yale University and continuing through numerous non-profit positions. He blogs about diversity, inclusion, tech, startups, and cultural commentary. Connect with him on LinkedIn and follow him on Twitter @stefanpalios. Business inquiries can be sent to

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