Organizational Wellness

Lack of Diversity: A Chronic Problem in the Workplace

Jan 18, 2023

Last Updated Feb 13, 2024

A lack of diversity is an unfortunate chronic problem in the workplace. More than half of employees believe that their employers aren’t doing enough about diversity and inclusion. And these employees that believe their companies aren’t doing enough, they also rank 10 points lower than average on the Workforce Happiness Index. Let’s dive deeper into this lack of diversity problem, why diversity is so important, what happens if you don’t focus on diversity, and how to improve diversity at your company.

Negative Impacts from a Lack of Diversity

Creating a diverse workforce can be extremely challenging for many companies. Diversity helps your organizational culture by creating a sense of unity among your employees, and not having diversity also actively hurts you. Here are some negative consequences for a lack of diversity.

Lack of help for discrimination victims

Discrimination unfortunately does happen in the workplace. But if it happens and the victim has no support and help, there’s social isolation, which makes them less likely to report. That breeds a toxic work environment, and toxic cultures are the number one reason people are quitting their jobs right now.

Restricted viewpoints in the workplace

In a homogenous workplace, you run a real risk of groupthink, where everyone just gets on board with the same limited ideas. Bad decisions and bad business follow groupthink and restricted viewpoints.

Lack of innovation

Innovation follows varied viewpoints. And 74% of Millennials think their organizations are more innovative when they’re more inclusive and diverse. So if you’re not actively making your workplace diverse and inclusive, you’re losing out on innovation opportunities.

Lack of consumer support

Seventy-nine percent of executives at companies that have made strides in diversity and inclusion have said their diversity initiatives are an essential driver of their company’s reputation. Basically, consumers want to work with and buy from companies that are diverse and inclusive. Forty-two percent of consumers reported they would pay more for products by companies that have made a commitment to diversity and inclusion. So no focus on diversity also hurts your reputation and consumer support.

Five Symptoms of a Lack of Diversity in the Workplace

So not having diversity is bad news for your company and your employees. But how do you know if you have a lack of diversity? Here are five symptoms to always keep an eye on to make sure you’re not suffering from a lack of diversity:

Difficulty attracting a diverse workforce

If you’re not attracting diverse candidates, there’s a problem in your hiring process and pipelines. Your recruiters might be looking in the wrong places, but there also might be biases and built-in biases in your hiring process that eliminate diverse candidates unfairly. The system problems are then what’s actually keeping you from increasing diversity in the workplace.

High turnover rate among diverse employees

If your turnover rate is higher among diverse employees than other employees, you have a problem. Something is happening in your company that’s really bad news because it’s disproportionately affecting certain groups of employees (plus high turnover and low retention is just generally bad).

Lack of diversity in the leadership pipeline

Here’s a fun fact: 10% more women in leadership could lead to 10% more revenue. You want more diverse leadership. But if you’re not seeing it, there’s a problem in your pipeline. Research has found that even companies that think they’re trying to have more leadership opportunities still have too few underrepresented communities in leadership positions because of advancement barriers. If you don’t have diversity up top and in the pipeline, there’s a problem.

Regular complaints of discrimination

If your employees are reporting discrimination, you have a problem. Regular complaints are a sign that there’s an issue with diversity and inclusion in your organization.

Diverse employees are less engaged

Work environment surveys are a great way to check-in with your employees. But if you’re hearing from diverse employees that they’re less engaged, it’s probably not them; it’s probably the lack of a diverse and inclusive environment.

Why Is Workplace Diversity Important?

Let’s look at why workplace diversity is so important and why not addressing it is a big problem in the workplace. Here are some key reasons why focusing on diversity is so important for your employees and for your company:

Employees feel seen

It’s important that your employees feel seen and heard at your company. After all, 88% of employees at high-performing companies feel that while only 62% of employees at low-performing companies do. Having a focus on types of diversity and inclusion will help people from underrepresented classes feel seen, heard, and understood. And ultimately that helps your company.

It increases productivity

Staying productive through a long day is hard, but on a whole, diversity actually helps with company-wide productivity. Improving employee diversity improves employee productivity. Employee engagement and productivity are important to keep your company thriving.

It enhances your company culture

Company culture can have a big impact. In fact, 77% of job applicants consider company culture before applying for a position, and 56% say that company culture is more important than salary when it comes to job satisfaction. Luckily, workplace diversity enhances company culture, which makes your company a better place to work.

It reduces employee turnover

Employee turnover is a big problem that’s costing US businesses $1 trillion. Plus you just don’t want your employees to leave. Diversity reduces employee turnover. It makes sense. When you create a workplace culture that’s inclusive and promotes diversity, people will feel more accepted and want to work for you.

It helps boost your talent acquisition

We’re in a candidate-driven market. People searching for jobs hold the power here. About 96% of US adults are already employed, so individuals get to choose jobs that they want and that align with their values. Two-thirds of candidates consider diversity a decisive factor when looking for a job. So providing a diverse and inclusive workforce can help you attract talent.

It increases profit

You’re a business, and you need to make a profit. We get it. Luckily, diversity is highly correlated with improved profits. Companies in the top quartile of ethnic and racial diversity are more likely to have 35% higher profit above the national average. With gender diversity, you’re looking at being 15% more likely to have higher profits than average. Diversity in your high-up leadership? Now we’re looking at 19% more revenue.

How to Improve Diversity at Your Company

If you’re seeing any of those signs (or you just want to make a real commitment to improving diversity and belonging), how do you actually improve diversity at your company? Here are a few beginning steps to help improve diversity:

Recruit from a diverse point-of-view

To be more diverse, you need to start at the beginning of your employees’ journey with your company: promotion and recruitment. Have a diverse hiring panel and recruiters to begin eliminating bias that could be blocking employees from progressing to promote workplace equity.

Conduct pay equity reviews

The pay gap between men and women is no joke, despite the Equal Pay Act being over 50 years old. Conduct formal reviews of pay to eliminate pay gaps and make sure everyone is being paid fairly.

Create a robust mentorship program

Mentorship programs can boost engagement and help employees be ready to be promoted. Creating a program that improves productivity and retention is a great way to work on diversity and inclusion.

Start an employee resource group

An employee resource group is an employee-led collective that aims to foster diversity and inclusion. Members gather together to discuss topics specific to their shared identity, and work together to solve company-wide problems or share experiences.

Consistently train employees on diversity and inclusion

Not all training is helpful, but the right training can be. It’s important to be consistent and make training part of the broader conversation within your organization, as well as to make training interactive.

Make sure benefits and programs are inclusive

Don’t let benefits fall by the wayside when you are working on improving diversity and inclusion. Benefits should be inclusive, and you should be actively working against biases and discrimination in programs and benefits.

The Bottom Line

Diversity and inclusion should be ongoing priorities at your organization. These are some starting points to consider for how to improve diversity and inclusion at your company. If you’re looking for additional guidance and ideas to improve diversity with your employee benefits, talk to a wellbeing specialist today.

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