Imagine if we all liked the same things, looked the same and acted the same. Life would be pretty dull, right?
The same goes for your workforce - diversity is fundamental for maximum productivity and overall business success.
If every employee made the same decisions, had the same experiences, skills and opinions, you'd kiss goodbye to your strong team dynamic and working relationships - which most likely took you a lot of time and effort to achieve.
In this article we're going to take a look at what a diverse workforce actually looks like and why you should definitely encourage diversity if you're running a small business.
What is a diverse workforce?
A diverse workforce is made up of people from a wide variety of people from a wide variety of different backgrounds and levels of experience. These may include:
- Religious & political beliefs
- Physical abilities
- Sexual orientation
And you only need to look at the numbers to see why businesses strive for diversity.
For example, a recent McKinsey report revealed that companies who focus the most on racial and ethnic diversity are 36% more likely to have financial returns that are above average for their industry. It’s strong evidence that building a diverse workforce can directly boost business success.
Why is diversity important in a small business?
There's a solid case for founders of small businesses to encourage a diverse working environment right from the start - not just later down the line.
"It's important that a startup is inclusive from the beginning, as it ensures that all employees feel valued and appreciated in the workplace," says Jonathan Richards, CEO and co-founder of Breathe.
"Setting this norm at the start will ensure that the company culture goes from strength to strength and the company's values are at the centre of it."
And whilst it may seem like an odd priority when a new venture is still trying to ensure its own survival, getting equality right will have long-lasting benefits.
Here are just some of the reasons that small business employers should be actively building a diverse workforce.
Feed the growing workforce
The workforce in general is growing all the time with more women, ethnic minorities and members of the LGBTQ+ community providing valuable skills and experience.
People are increasingly open about who they are. Businesses who embrace this will thrive in the longer term.
Greater employee retention
If you fail to create a diverse work environment, you'll potentially create a more hostile environment.
If the workplace atmosphere isn’t great, it can foster a toxic company culture and push employees to pack up their desks and look elsewhere for work.
Increased staff turnover then leads to higher recruiting costs. If your employees feel comfortable, included and valued they’re less likely to look for jobs elsewhere.
There is a fear among some managers that having too diverse a workforce will create more arguments and reduce productivity.
But in reality, however, increased diversity brings a broad range of experience, skills and backgrounds which can certainly have a positive impact.
In an inclusive environment, teamwork and co-operation can thrive, driving a much more productive workforce. As well as finding that ethnically diverse workforce's are more financially successful, McKinsey also found that companies with a more even gender balance are 25% more likely to outperform those who do not.
Wider talent pool to pick from
If you only pick from one section of society, you’re automatically limiting your access to some super-talented candidates.
By opting for diversity, you're opening the business up to a much wider talent pool and a much better chance of getting the right person through the door for a role.
Great innovation and creativity
Effective problem-solving often involves working with others. And if those people all have different experiences, backgrounds and educations, then it can lead to new and innovative ideas (which might not otherwise have come up).
Scott E. Page describes in his book, The Difference, the addition of diversity in teams as 'super-additivity'. With a diverse collection of people working together, one can make an improvement, then others in the group can improve on that and so on.
Essentially, Page says that improvement builds on improvement in a way that it would not if everyone had similar backgrounds, skills and experience.
It’s a point reinforced by Rocío Lorenzo and her team of researchers who surveyed 171 companies. Watch her TED talk to find out how.
Increased boardroom leverage
There are plenty of stats which show that boardrooms are still dominated by white males.
For example, in America’s 500 biggest companies, there are fewer women than there are men named John on the boards, which is a pretty sobering statistic.
Yet, boardrooms need to reflect the changing demographics of our world, and by having a diverse boardroom a company can benefit from a much wider range of experience.
Better understanding of your customers
If you have a more diverse workforce you can market your business more effectively to different ethnic and racial backgrounds.
Staff with similar backgrounds can also help promote better understanding between your business and your different customers, as well as help increase your market share.
They can also help your business to understand cultural differences which may actively hamper business growth.
Did you know, for example, that in China and Japan the business card holds special importance and should be given with a much greater reverence than in the UK, and with two hands. You should also receive the card with two hands and have it printed in Chinese or Japanese.
Positive employer brand
It’s no longer enough to merely carry out your business function – if you want your business to thrive then you need to create a positive employer brand.
One with a diverse workforce will feed into that brand, showing you as an inclusive and forward-thinking employer. You’ll be considered a brand people want to work with which in turn can boost staff recruitment and business growth.
Taking steps to becoming a more diverse and inclusive business is an ongoing commitment but can transform your business. You can take some of the pressure off by working with an HR expert. Take a look at our network of accredited HR partners to find someone who can help your SME.