“In diversity, there is beauty, and there is strength.” – Maya Angelou
The need for diversity and inclusion in the workplace has grown in prominence recently; likewise, many organizations are increasingly compelled to embrace diversity and inclusion across their ranks.
The argument is that if you serve a diverse client base, the same diversity should be reflected in your company.
Moreover, the future is diverse and forward-looking companies must ensure that all aspects of diversity, from age to racial to gender diversity and beyond, form part of the company DNA.
But how is the American workplace fairing on diversity and inclusion?
This article explores the diverse workplace statistics in today's corporate America.
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Companies with a more diverse management team and workforce are likelier to outperform companies with less diverse boards and management teams. As a result, companies have realized the need for workplace diversity.
A McKinsey & Company study supported this argument, showing that when a company values diversity, its profits improve. The analysis found that 25% of gender-diverse companies recorded up to 25% more profit than less diverse companies. About 30% of companies with women executives were more likely to outperform those with even fewer women executives or those without women in leadership.
Additionally, diverse teams, including racial and ethnic diversity, recorded more profits by about 35%. The statistic has been improving slowly, but the results are clear: inclusive companies are doing better.
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Even though we say that businesses are making inclusion efforts to promote gender diversity in the workplace, there still is much room for improvement, especially for women in leadership positions, including upper and lower management. Diverse and inclusive companies have realized the problems and are trying to level up.
As of 2023, the number of women executives in America has reached new heights. However, at the very top, the numbers are still low. For example, only about 10% of Fortune 500 companies have women as their CEOs.
Gender-diverse companies are improving their hiring practices to employ women and men equally and broadly represent gender identity diversity in hiring. This hiring process has led to about a 40% increase in revenue.
Furthermore, with an inclusive culture in companies, more women occupy management-level positions. Even with racial and ethnic minorities still being left out, more women have been employed, allowing for greater gender diversity in the workplace.
For instance, in the U.S., about 50% of Asian women, 36% of Black women, and 27% of Hispanic women work in management positions.
With all that said, women still face challenges in the workplace. Women employees feel under-appreciated regarding aspects like pay, and rightfully so, since as of 2022, the gender pay gap was still high. Full-time working women earn about 82% of what a full-time working man earns, and the disparity is even worse for working women of color.
Women also continue to face sexual harassment in the workplace. About two-thirds of American women have reported they have experienced some form of discrimination in their workplace, and some have even reported it. There are many reasons why women may choose not to report harassment, including fear of retribution that may include loss of employment or demotion.
Nevertheless, the United States Equal Employment Opportunity Commission received reports from women who have been sexually harassed in their workplace, and companies that prioritize diversity would do well to implement policies and procedures that protect women and minorities in the workplace.
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Racial and ethnic diversity in the workplace is something companies are pushing for as part of creating and sustaining inclusive workplaces. Racial and ethnic minorities, especially in the U.S., are now getting opportunities to work and occupy management positions.
To get some context, we will further break it down.
Racial workplace diversity in the U.S. does not reflect U.S. demographics regarding the racial diversity of the workforce compared to the population. A majority of American workers are white, with only a small percentage of minorities in workplaces. About 75% of U.S. workers are white, 15% Hispanic and Latino, 8% Black, and 2% Asian.
Even with increasingly diverse workspaces, few people of color or minority groups have positions in executive teams. As of 2023, only nine Fortune 500 companies had Black CEOs, and the number has since only risen to six as of 2022.
Additionally, all racial and ethnic groups in the global workforce still face workplace discrimination. About 25% of Hispanic and Black employees have experienced discrimination in the workplace, and nearly half of them quit work because of it.
As for compensation, there is a pay disparity related to racial diversity in the workplace. Hispanic and Black employees still only make $0.97 for every dollar that a white employee makes.
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As more diverse businesses are being created, equity, diversity, and inclusion are becoming a priority. Business leaders agree that there is a significant impact on business performance, improvement in company culture, and increased employee engagement when the workforce is diverse and inclusive.
An inclusive workplace appeals to job seekers who value diversity, diversity equity, and inclusion, especially to the younger generation, the older Gen Z, and Millennials. Companies with more diverse boards and that prioritize diverse teams may also attract more job seekers to the applicant pools for open positions.
To get some context, we will review some statistics.
A recent survey by Glassdoor revealed that about 75% of job seekers consider a diverse workforce an essential factor when evaluating job offers and companies. Furthermore, almost one-third of the participants said they would not apply for a job at a company lacking diversity.
Employers Prioritizing Cognitive Diversity in the Workplace have recorded more than a 25% rise in job applications by women. About 75% of job seekers were attracted to companies that prioritize and work to increase diversity.
A LinkedIn study found that about 60% of employees want their employers to create and sustain diversity initiatives and be actively engaged in and committed to increasing diversity in the workplace. That said, about 80% of millennials believe they will be more actively engaged when the companies they work for promote diversity in the workplace. Clearly, job seekers prioritize diversity, equity, and inclusion in their job searches as an important factor in their job hunts.
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“Thriving in a highly uncertain competitive environment requires creative thinking in those areas, and the diverse collaborators were better equipped to deliver it.” - Harvard Business Review
Prioritizing diversity in the workplace, including being more inclusive, significantly impacts workplace culture and company growth. The many benefits of workplace diversity and bridging the racial or ethnic minorities gap can be seen. They include the following:
Better workplace diversity means more innovation. Inclusive-oriented diverse teams are about 1.7 times more likely to have innovative leadership and about 1.8 times more likely to be change drivers in new markets. Also, companies with diverse management teams reported greater innovation revenue.
The most crucial factor for any business is making revenue and sustaining a solid profit margin. A study by McKinsey revealed that companies gain a competitive advantage by having diverse talent, leading to an outperformance of 62%. On the other hand, companies that don't embrace diversity underperform, with the national industry median in profitability at 40 percent.
Additionally, in terms of sales revenue, Illinois University Research found that companies with two or more races represented, with greater racial diversity, brought about 14 times more sales revenue compared to those with more racial diversity similarities on their teams.
Furthermore, racial and ethically diverse companies are more likely to outperform their counterparts. Such diverse companies will likely gain about 35% more financial returns than those lacking racial diversity.
A McKinsey research study found that employees are likely to be up to three times more engaged if their company's upper and lower management fulfills its diversity and inclusion promises. Employees will be fully committed and excited to complete the assigned tasks.
Diverse companies with inclusive teams are also likely to make better decisions up to about 65% of the time. Consequently, teams with greater gender diversity will make better decisions 70% of the time. Racial and ethnically diverse companies reported about an 87% increase in decision-making.
Ethnically diverse leadership teams can make decisions that positively impact a company's long- and short-term financial performance. A Gartner study found that an inclusive and diverse workforce can improve company efficiency and help them exceed their financial targets.
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The United States of America is becoming more diverse, with racial and ethnic diversity in the workplace improving as the population becomes more diverse. As of 2010, the country's population of Hispanic and white people combined (the two largest racial populations) was about 65%; the number has since dropped to about 58% as of 2020.
Projections are showing that these numbers will further decrease in the following decades. A study has found that by the 2040s, white people will not be the majority in the U.S., and about one in three Americans will belong to other races by the 2060s.
Diverse companies have various executive teams, and their members belong to different age groups and generations. Baby boomers, Generation X, Millennials, and Generation Z all now hold workforce positions, which also creates more diversity in the workplace.
With respect to diversity and inclusion, Generation Z is the most racially diverse generation, with more than half of them identifying as non-white. However, most other generations don't fall into the same category.
According to the 2015 census, about 70% of Baby boomers are white, while about 55% of millennials are white. Additionally, they comprise most of America's workforce as their age group is now in the 18 to 44 age range.
With that said, minority groups are still the largest in terms of representing those who are unemployed. According to the 2020 Census, the average unemployment rate in the US is around 8%. However, the rates are higher among Black individuals at 11% and Hispanic or Latina individuals at 10%.
It is a fact that in the US, 7.6% of individuals with disabilities are jobless. It is important to note that people with disabilities, across all age groups, face lower employment rates in comparison to those without disabilities.
As of 2021, 17% of the U.S. workforce comprises foreign-born workers. In the same year, about 5% of foreign-born workers were unemployed, a decrease from the 9% rate in 2020. However, the current rate is still higher than the 3% rate 2019. The rise in unemployment rates in 2020 and 2021 can be attributed to the economic implications of the COVID-19 pandemic.
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There is a lot of literature and statistics on workplace diversity. However, this critical factor in today's workplace is yet to be embraced widely. It is commonplace to have the absence of gender or racial diversity, especially in executive teams, despite the advantages it offers.
Whether you want to understand how to implement gender diversity, age diversity, sexual orientation diversity, or learn more about diversity and inclusion, our able coaches will guide you on cultural competence, including how to notice and avoid biases, and help you develop inclusive leadership practices that bring everyone on board.
Reach out today to get started.
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