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Racially Diverse Workplaces Have Largest Revenue Growth

Racially Diverse Workplaces Have Largest Revenue Growth

Why closing the racial gap is better for people and better for business.

The area of Diversity and Inclusion (D&I) has emerged as one of the hottest topics in the business world in the past few years. The D&I field refers, in large part, to the fair treatment of racial and ethnic minorities in organizations.

Heightened attention to racial equality in the work world may have something to do with the growing body of research on the business advantages of diversity. It may also stem from our polarized national climate, where racial extremism has sparked a reaction from leaders in many social sectors, including business.

Much of the attention to organizational diversity has remained focused on the representation of different ethnicities. Our research suggests that taking the conversation deeper yields tangible business benefits.

Hiring for diversity is not enough

Looking at statistics on how many African American or Black, Latino, Asian, and other people of color a company employs is a good place to start, but it fails to tell the whole story.

To get a clear picture of a company's diversity, it’s also vital to explore the kinds of experience those employees are having relative to their white colleagues.

The experiential data will uncover workplace gaps and their root causes. This will enable companies to make practical decisions that can help create a more consistent and equal experience for all employees.

Not only does this contribute to a fairer society, it's a savvy business strategy: when organizations close the gaps between racial groups, performance improves.

Where the gaps show up

According to our data, employees who identify as a racial or ethnic minority have a less positive experience than their white counterparts in key areas of fairness such as promotions, equal pay, and fair treatment. White employees are far less likely than minorities to perceive racism at work.

Do you care about cash flow? Diversity can help drive results

We also discovered additional areas where minorities do not enjoy as positive a workplace as whites. In particular, one of the largest gaps between the racial groups had to do with whether employees felt that people in the organization care about each other, with minorities being significantly less likely than whites to feel they’re part of a caring community.

Two other vital differences echo this disparity:

1. People feeling welcome when they switch job units.
2. Management hiring people who fit in well.

The picture that emerges is one where fewer minorities feel a strong sense of community at work as compared to their white colleagues.

When a portion of your workforce feels less care than others, growth is stymied.

While you may doubt that the “soft” issue of caring at work could have hard-edged business implications, we have found that employees experiencing a caring community at work is one of the top drivers of revenue outperformance for small and medium-sized companies.

In particular, when employees in a high-trust culture experience a caring workplace, they are 44 percent more likely to work for a company with above-average revenue growth.

Homogeny hurts productivity

Likewise, the racial gaps in fairness and levels of responsibility are red flags for business results. Employees who perceive an unequal playing field are less likely to be fully engaged or productive than employees who feel welcome to play an important role.

The numbers bear out this analysis. In our examination of Great Place to Work-Certified™ companies, we found the 100 companies with the largest gaps between the experiences of white employees and minorities had significantly lower revenue growth than the 100 companies with the smallest disparity.

As this chart shows, the companies with the most significant gaps averaged 8.6 percent revenue growth, while companies in the top quartile averaged 11.1 percent growth.

 

Companies with the most consistently positive experience between minority and white employees posted revenue growth nearly one-third greater over the same period.

The story doesn’t end there

We also found employees’ productivity, brand ambassadorship, and intent to stay also rise when racial gaps narrow.

As the data shows, organizations get the full benefits of a diverse workforce not just by hiring for diversity, but by creating a great workplace experience for all people.

Curious about your company’s racial gaps? Our employee surveys can help you understand how your employees’ workplace experience differs based on race.

Get started today.


Claire Hastwell