16 min read

How To Improve Cultural Diversity at Your Company in 7 Effective Steps

Searching for a way to boost your company’s profits? There’s one area you may not have thought to pay attention to. But it can have a significant effect on an organization’s productivity and performance. 

Diverse companies don’t just fulfill social responsibility by making the population of the workplace a better representation of the cultural makeup of society. They also bring with them significant tangible benefits to a business’s bottom line. 

Companies with the most culturally diverse leadership (the top 25%) make 36% more profits than the least diverse ones (the bottom 25%). Let’s say your business makes $2 million per year in profits. That’s a potential $720,000 in additional profits.

Specific types of diversity can bring notable financial benefits too. Companies with more than 30% women executives outperform those with fewer women executives.

Profits aside, cultural diversity can save you from lawsuits, and societal backlash. A lack of cultural diversity often leads to groupthink at work. And that can be a precursor for poor decisions that may affect brand image. 

For example, the backlash Pepsi faced after releasing a tone-deaf ad set at a Black Lives Matter protest. Or McDonald’s being forced to ban an ad in China that portrayed Chinese consumers as begging for a discount from the all-American brand.

Not having people from different backgrounds and cultures to question things, promote diversity, and demonstrate the value of a diverse and inclusive workforce is risky in the business world and can lead to mistakes like these. 

The most diverse companies will avoid the repercussions of a lack of cultural diversity while reaping the benefits of diversity. 

In this article, we’ll share the biggest benefits of creating a diverse culture at your organization, and offer tips on how to attract diverse employees, and increase your workforce diversity.

Diverse leadership improves profits
Companies with the most culturally diverse leadership make 36% higher profits than the least diverse ones, according to McKinsey & Company

What is cultural diversity in the workplace?

Cultural diversity is the existence of people of different ethnicities, races, religions, ages, political views, sexual orientations, or genders in your workplace. 

A diverse workplace is a workforce and environment that comprises of and accepts people whether they are:

  • White, Black, Asian, Hispanic, Latinx, or any other race or ethnicity.
  • Female, Male, or identify as gender fluid.
  • Lesbian, Gay, Bisexual, or another sexual orientation.
  • Millennial, Gen Z, Baby Boomer, or another generation.
  • Atheist, Christian, Muslim, Hindu, or another religion.
  • Deaf, Blind, Neurodiverse, or possessing another disability or cognitive condition.

Creating a culturally diverse workplace is more than hiring people from different backgrounds. It includes how you respond to those people’s cultures as well.

5 different types of cultural diversity
5 different types of cultural diversity

5 areas of cultural diversity that need improvement

Whether it’s a lack of career progression, not being encouraged to dress the way they want in the office, or simply not being hired at all, there are areas of workplace cultural diversity that require serious improvement. 

Here are five notable areas that need to be addressed by diversity efforts to create an inclusive environment for most workplaces, and avoid discriminatory practices.

1. Discrimination against people of different gender identities and sexual orientations

There’s still a high level of discrimination against women and members of the LGBTQIA+ community in the workplace. A survey of 2,300 organizations showed that women only hold 18% of senior leadership roles. And 79% of those organizations do not consider promoting women in leadership as a formal business priority. 

Women in leadership
Women hold only 18% of leadership, and 79% of organizations surveyed don’t consider promoting women in leadership as a formal business priority, according to IBM

46% of the LGBTQIA+ community have received unfair treatment at work at some point in their careers, including insensitive personal questions and assumptions being made about their identities. This causes unnecessary stress and tension in the workplace.

It’s not enough to hire more minority groups — they have to feel embraced by an organization’s culture. 

Unfair treatment of lgbtqia+ workers
46% of LGBTQIA+ workers have received unfair treatment at work, according to UCLA

2. Less career progression for people of minority races, ethnicities, and language backgrounds

Workers from particular cultural minorities and who speak different languages still face challenges being embraced in workplaces and can suffer career setbacks as a result. 

One in four black workers faces discrimination at work. And Asian Americans are least likely to receive promotions into management according to Harvard Business Review.

There’s work to be done here. If people from different racial backgrounds and ethnicities aren’t welcomed in your workplace, you risk your brand image and profits. The Pepsi and McDonald’s ad failures are just two examples of what could happen.

3. Followers of certain religions being targeted

Some managers and workers sideline target people in the workplace because of their religious beliefs. Muslims are the highest victims of this discrimination, followed by Jewish workers.  

Even companies that have considered the idea of religious diversity still find accommodating religious garments a challenge. The Muslim headscarf and Jewish yarmulke can still be controversial in some organizations. 

This discrimination affects a person’s self-confidence and can prevent them from fulfilling their full potential at work. It can even make them give up their faith and develop serious emotional issues. 

But religious diversity at work is beneficial. People with different religious views can provide unique perspectives that will resonate with their community. That means more potential to reach a new audience with your product.

4. Assumptions about workers based on their age

Age-based (also called generational) discrimination affects both old and young workers across industries. People often think younger workers lack experience, and older workers lack creativity or need to retire soon. Two-thirds of workers above the age of 45 have witnessed age discrimination at work.

In fact, of all Equal Employment Opportunity Commission (EEOC) cases, 20-25% are age discrimination related.

Generational diversity will help you hire and promote based on performance instead of by assumed competence. 

Age discrimination at work
Two-thirds of workers over 45 have witnessed age discrimination at work, according to AARP

5. Low employment rates for people with disabilities

Over 60% of people living with disabilities are of working age. Yet the unemployment rate is 80-100% higher for that group than for people without disabilities.

Research shows that hiring managers hold reservations about the ability to perform for people with disabilities.

But those reservations are unfounded. Statistics show that people with disabilities are highly motivated to work. They show lower levels of absenteeism and employee turnover, and increased levels of innovation as well.

Unemployment rate for workers with disabilities
Although 60% of people living with disabilities are of working age, the unemployment rate among this group is 80-100% higher than for those without disabilities, according to the International Labour Office

Companies that invest in hiring and retaining people from this minority group experience higher profits as well. An Accenture study found that companies that “champion” disability inclusion had better financial profits than their peers.

Champions of disability
Companies that “champion” hiring people with disabilities perform better than their less inclusive competitors, according to Accenture

People with disabilities are an untapped pool of quality candidates for your workforce.

And it costs little to nothing to accommodate them as well. The Job Accommodation Network (JAN) revealed that a typical one-time cost for accommodation is $500. And there’s rarely ever a need for that.

6 benefits of nurturing cultural diversity in the workplace

There are many proven benefits of cultural diversity at work, including innovation, productivity, good brand reputation, and more.

6 benefits of cultural diversity
6 benefits of cultural diversity in the workplace

1. Increased innovation

Research from Rhine-Waal University found that multicultural companies show more creativity and innovation than homogenous ones. 

People see the world differently based on their cultures, religions, and personal and professional experiences. These different viewpoints lead to out-of-the-box ideas and drive innovation. 

The same research paper showed that because of innovation, those multicultural companies drive better business profits.

2. Improved job performance

When minority employees look around the office and see other people who look like them, they get a confidence boost.

Diversity increases their sense of belonging. And an increased sense of belonging improves job performance by 56%.

Improved job performance
Diversity increases people’s sense of belonging, and that improves their job performance, according to Harvard Business Review

3. Profit more from local markets

Employees from different cultures understand their local laws, customs and regulations better. The McDonald’s Chinese ad incident could have been avoided with increased cultural diversity.

Imagine your staff addressing a local market in their language, or offering diverse customer service. That’s already a win for the company. And it can provide a sense-check to alert you to things you may not have thought about in your ads, product, and more. 

4. Attract the best talent

76% of job seekers consider diversity as an important factor when evaluating job offers. Diversity increases your chances of attracting the best talent to your business. When job candidates see that your organization is open and embraces different cultures, genders, and more, they’ll feel comfortable joining, and may even share jobs with other talented people in their networks. 

Diversity helps attract talent
Diversity is an important factor for a majority of job hunters, according to Glassdoor

5. Reduced rate of attrition

A truly diverse workplace will provide equal growth opportunities for everyone, irrespective of their cultural background. 

Since 63% of employees consider leaving a workplace with no growth opportunities, that equal opportunity will encourage your minority employees to stay. 

Some minority groups are more inclined to stay longer at jobs too. People with disabilities show lower levels of turnover, for example.

Also, the enriched experience of working with people from diverse cultures may encourage your majority employees to stay longer with you.

6. Better profits for your organization

Hiring diversity helps your company learn about the concerns and preferences of different populations, and how to satisfy them better. 

With a diverse workforce comes better representation in your products and marketing. People bring ideas from their culture and backgrounds to your strategic planning sessions.

An ad design study found that one in three consumers consider a brand’s commitment to diversity when they buy. If two brands offer the exact same product, they’ll buy the one from the more diverse and inclusive brand.

7 ways to improve cultural diversity in the workplace

Inclusion efforts are often announced by companies but executing and implementing them can trip many organizations up and not end up improving workplace diversity. 

To truly impact the company culture and improve workplace diversity, start by measuring your diversity and inclusion to gauge where you’re at. Then look to the following seven tips to improve your ability to build diverse teams, improve your cultural competence, and gain a competitive advantage over your competitors. 

7 ways to improve cultural diversity in the workplace
7 ways to improve cultural diversity in the workplace

1. Train managers to create a more friendly workplace

Every worker should be comfortable working with their managers. Sadly, 84% of workers in the US blamed poorly trained managers for creating unnecessary stress.

Underrepresented groups may feel less comfortable speaking about their experience.

Organize seminars and training sessions to educate your managers on how to establish equity in their units. Create practice scenarios to help managers know what discrimination looks like. 

You can also run question-and-answer sessions, or small group dialogues to share ideas on how to improve diversity. 

If possible, choose a specialized HR person for the managers to contact if they have challenges implementing diversity initiatives or want to learn more.

2. Create safe places with employee resource groups

Employees who share a common identity need safe spaces to talk about their challenges, experiences, and wins. That’s what employee resource groups.

Employee resource groups or ERGs support underrepresented groups in the workplace. They comprise employees and are also led by an employee, mostly from an underrepresented group.

ERGs can advocate for its members and influence decisions in the workplace that may affect their well-being, career progression, and inclusion.

3. Update diversity policies for better inclusion

Nothing truly changes in the workplace until the policies change. Create policies that accommodate cultural differences in the workplace.

Consider diversity when setting rules around:

  • Recruitment
  • Holidays
  • Leaves
  • performance evaluation
  • Promotions etc

For example, some workplaces have a 5-day family bereavement leave. “Family” in the US is usually considered to be a child, partner, parent, sibling, or grandparent/grandchild. In some other parts of the world, family can include a brother-in-law’s parents too. In that case, ‌define family as whoever the individual employee’s culture determines it to be.

4. Create employee-led task forces to enforce diversity policies

Employees see the workplace better than you do. They’re also better positioned with their colleagues to help influence them and enforce diversity initiatives on a social level. 

Employees will also feel more confident telling other employees about any discrimination they recieve without the worry of upsetting their bosses. 

Assign a volunteer in every department or team to police bias and discrimination. Then request feedback from them regularly to know how well your policies are working on the ground.

5. Train employees to recognize their unconscious biases

Everyone has biased thoughts about people — and we may not realize we have them. This form of bias is called “implicit or unconscious bias”. And there are many different types. 

From beauty bias to ageism, unconscious bias can lead you to judge employees of certain groups more harshly than others, depriving them of opportunities for career-progression, highly sought-after job opportunities, and even depriving them of a job by choosing not to hire them over someone who’s a better “culture fit”.

Use Havard’s Implicit Association Test to discover your biases and encourage your employees to do the same. 

  • Organize diversity training to teach your employees how to value other races, ages, religions, and backgrounds. 

This training will also help you get feedback from employees on how the company can adopt a more inclusive culture.

6. Offer targeted scholarships and internships to attract underrepresented groups

The cost of college is high and many minorities can’t afford it because of financial constraints. Still, only 25% of minorities win scholarships, with Caucasians winning 75%. Providing scholarships and valuable internships, especially for minorities, can attract them to your company and improve diversity.

  • Use diversity job boards like Diversity.com, iHispano, Black Career Network, etc. to reach a more diverse audience. 
  • Create attractive compensation packages for internships and mention them on your job listings.
  • And, show your interest in working with a diverse audience in your job postings to attract more candidates.

If your company cannot sponsor scholarships or internships, improve diversity by hiring diverse candidates. Also, work with external resource groups like those dedicated to women in leadership, young professionals, or LGBTQIA+ groups.

7. Hire a DEIB expert for best diversity practices

DEIB (diversity, equity, inclusion, and belonging) experts ease the work of diversifying your workplace. Their experience across a wide range of industries will help you avoid mistakes and create the best diversity strategy for your company.

  • Hire a DEIB expert as a consultant or, if you can afford it, make them part of your in-house staff. 
  • Ask for referrals to get the best DEIB experts and look at their accomplishments. 
  • Consider your company goals before choosing a DEIB expert.  

DEIB experts specialize in many fields, including conducting cultural audits, workshop facilitation, and broad leadership and strategic planning. 

4 risks of not embracing cultural diversity

Diversity is good for business and company culture, and a non-diverse workplace itself is discrimination. That can lead to the following dangers:

  1. Increased hostility and higher turnover from discriminated employees
  2. Financial loss from continually hiring and training new workers to replace former employees
  3. Low morale in employees, leading to low productivity
  4. Lawsuits and employer brand reputation damage

Cultural diversity may be hard, but it’s worth it.

The average out-of-court settlement a company pays an employee for an employment discrimination lawsuit is $50,000. It could be higher depending on your company size. Why risk that much when you can capitalize on the difference and make more income?

Eliminate bias from your hiring process with a skills assessment tool. Then once you hire, create inclusive policies and supportive workplace culture to retain underrepresented employees. 

If you can do that, you’re a significant step closer to better business profits and a stellar employer brand. Learn how Vervoe can help you improve diversity at work.

Lily Ugbaja

Lily Ugbaja

Lily Ugbaja is a Content Writer and Strategist for SaaS brands in the Martech, HR tech and future of work space. A niche blogger, she creates content with the buyer's journey top of mind. Mom of 5. Sucker for persuasive, data-driven, simple-to-read, and easy-to-understand content.

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