The Impact of Diversity in the Workplace

Why is Diversity Important?

Looking for a way to boost productivity, improve efficiency, and increase employee retention? Diversity & inclusion might be the answer.

It’s more than an initiative. Time and time again, diversity has been shown to have a measurable impact on team performance. In a 2006 study, the impacts of racial diversity on group decision making were measured through a randomized controlled trial using members of a jury. White jurors in diverse groups made fewer errors, used more facts from the case, and were more open to discussion than their counterparts in all-white groups.


Financial Impact of Diversity

But does this effect translate into the workplace? The research suggests that yes, it does. A study done by McKinsey & Company looked at various forms of diversity in various companies and measured the financial impact of heterogeneity.

  • Ethnic/racial diversity had a significant impact on financial performance, with the most diverse companies being 36% more likely to outperform industry standards.
  • Companies in the top 25% for gender diversity were also 25% more likely to financially outperform industry standards, and that’s not all. When compared to the least gender diverse companies, the most gender diverse were 48% more likely to outperform industry standards!

We see these same trends when looking at output of high-performance teams. According to research done by Gartner through 2022, gender diverse teams outperformed gender homogeneous teams by an average of 50%. In diverse teams, employee performance improved by 12%, with a similar increase in employee retention.


Diverse in Every Way

Diversity comes in many forms—gender and racial diversity are some of the more frequently discussed, but age, sexuality, and geographic diversity are also crucial to improving performance. A 2017 study by Cloverpop measured the performance of decision making in different variations of diversity and found that while any team outperformed individuals 66% of the time, the numbers got even better when more diversity was present.

  • Gender diverse teams outperformed individuals 73% of the time, while all-male teams made better decisions in only 58% of scenarios.
  • Teams with age and gender diversity performed even better still, outdoing individuals 80% of the time.
  • Teams that featured age, gender, and geographic diversity proved themselves to be the strongest of all, outperforming individuals in 87% of decisions.



Why does diversity end up boosting performance so much? If your team looks, acts, and thinks the same way, you’re missing out on valuable insight from often-underrepresented populations. People with different experiences and backgrounds can provide important context or information that impacts business decisions. Experts refer to this as “cognitive diversity”, a concept that can help businesses innovate, expand, and avoid pitfalls along the way.



Diversity in and of itself is not enough; inclusion is the real secret to success. In fact, diversity without inclusion can end up hindering performance, with friction increasing up to 15% when compared to non-diverse teams (Cloverpop). So, what exactly is inclusion?

Inclusion is the idea that every individual brings something unique to the table and that these differences should be valued, respected, and supported. If diversity is the presence of people from different backgrounds, then inclusion is getting these people to work together. Prioritizing inclusion once diversity is present is in the best interest of any organization; research from Korn Ferry found that inclusive teams are 87% more likely to make better decisions and 75% faster at bringing products to market.


Key Takeaways

Fostering a diverse and inclusive workplace is crucial to developing a successful and sustainable business. If you’re struggling to meet performance goals, come up with big ideas, or make better decisions, look at your company’s diversity and inclusion policies– a study by Boston Consulting Group found that companies with set diversity & inclusion policies increased their innovation revenue by up to 12.9%.

There’s no question that diversity is good for business. If your company needs to make a change, boosting diversity and inclusion is a great place to start.


Delaney Campbell