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Diversity and inclusion: Why it is important your company success

By Sebastian Heinz
Published 01.09.2021

Today, diversity and inclusion are important issues in our everyday lives, and in our society. Lively discussions are being held in companies within HR departments and at the management level, regarding measures to improve employee and team diversity within the organization. Although the topic of “gender and ethnic diversity” still met with derision in many contexts even just a few years ago, the facts paint a clear picture: numerous studies, such as ones by top management consulting firm McKinsey from 2015 and 2018 show a clear, positive, and stable correlation over time between the ethnic and gender diversity of management within an organization and its financial performance. What's more, the consulting firm's most recent study from 2020 shows that the gap between more and less diverse organizations within the panel continues to expand. Diversity and inclusion today are not simply nice to have, they are must haves that play a key role in the commercial success of corporations.

Diversity and inclusion: A definition of terms 

Often, diversity and inclusion are spoken of jointly and in the same context. Diversity means variety, heterogeneity, or dissimilarity. The term originated in the United States in the 1960s, during the debate surrounding equal opportunities for women and racial minorities. Today, in a professional context the term includes the push to value employees within a company equally, regardless of their age, gender, origin, religion, physical limitations, education, and identity - to name just a few factors.
Inclusion (or integration) in an HR context, in contrast, means that all employees are valued for their differences, treated equally, and that diversity among employees is understood as a general benefit for the company. In addition to sociodemographic factors, the focus is also on considering the different ideas and opinions of employees, and focusing more on individuals, regardless of their place of origin or worldview. Today, managers are expected to create a diverse and inclusive culture within their organizations, where everyone feels like they belong, like they are included, and like they can make a difference.


As indicated above, many studies have shown that diverse and inclusive teams are more motivated and perform better. In addition, interactions between people with different personalities and viewpoints tend to produce more creative, long-term solutions. In a representative study by Stepstone and Handelsblatt on the topic of diversity from 2020 which surveyed over 10,000 respondents, 70% indicated that diverse management teams improve employee motivation. 77% of participants stated that they would prefer to apply with companies that presented themselves as tolerant, diverse, and open-minded. An even greater percentage of respondents said they wanted to work in a heterogeneous working environment. This is a clear indication of the growing importance of diversity and inclusion for recruiting new, talented employees on the labor market. Generation Y and Z workers, in particular, value a diverse and inclusive corporate culture, and proactively look for diversity-focused signals and measures by companies.

A world of diversity 

Not only markets and customers have become more diverse; companies themselves are developing into more heterogeneous and more multicultural entities. This is due partially to increasing global cooperation, mergers, and growing diversity within their own ranks. On the political level, migration and integration processes are boosting ethnic diversity. The demographic shift continues, and the percentage of older workers has multiplied in recent years. This is augmented by social developments such as individualization, digitization, and changing values among the population. More and more women are joining the workforce, and the self-image of persons with physical disabilities has changed, as they become more emancipated.
Germany still is not taking a leading role in these areas, compared with other nations. According to the Stepstone and Handlesblatt study from 2020, diversity management in France and England already plays a much larger role. The study concludes: “Two thirds of British respondents believe that their employers have made great progress in the last three years in the areas of diversity and equal opportunity. Half of respondents in France feel the same way. In Germany, in contrast, only just over a third shared this opinion. Despite overall positive development in Germany, therefore, there is still plenty of room for improvement.”

Inclusion takes time

Radical changes like increasing diversity and inclusion don't just happen overnight. A diverse team takes time, to fully develop the potential of its own heterogeneity. Change is a process. Building a more open and respectful culture and recognizing and understanding the diversity and potential among employees, in order to truly utilize the company's advantages, is an ongoing task for the entire organization - not a one-time project.


In this context, the job of HR is to create an awareness of diversity among both employees and managers, cultivating willingness among everyone involved to treat one another with greater respect over the long-term. Managers must commit to standing behind these changes.
 

How FLOWIT supports a culture of diversity and inclusion

FLOWIT helps HR teams and managers to anchor diversity and inclusion within a company, making these issues accessible to all employees in an intuitive manner. An active culture of feedback is the core of every diversity, equal opportunity, and integration initiative. FLOWIT supports HR teams, managers, and employees alike in anchoring feedback, learning, and development in their everyday work. By using human-centered AI technology, we support joint development and deliver targeted results you can implement right away.

Sources 

  • Paivand Sepehri/Dieter Wagner, Diversity und Managing Diversity, S. 122
  • Sibylle Adenauer, Laura Geiger, Ifaa/Betriebspraxis und Marktforschung, S. 42