Impact of Workforce Diversity on Organizational Performance
Diversity and Inclusion in the workforce of an organization is crucial aspect in determining its performance and productivity. Workforce diversity can be defined as the differences among people working in an organization based on their different physical, social, and psychological attributes. These attributes include gender, religion, culture, or political beliefs. The diversity in a workforce also includes the similarities or differences among individuals. Workforce diversity is a tool used for the growth of an organization. An organization with a diverse workforce shows improved productivity, creativity, and profit.
In this era of globalization, organizations keep on identifying different techniques to outpace their competitors. One such technique is the incorporation of a diverse workforce in the organization. Organizations are now hiring the best talent from all around the world irrespective of their ethnicity, religion, or political ideas (Cletus et al.). Employees belonging to diverse backgrounds improve critical thinking in an organization. A diverse workforce is better at improvising solutions and improving problem-solving methods by innovating new and better techniques. A study has shown that the organizations with diversity among the workforce show 35% more profit than the organizations with a homogenous workforce (McKinsey). The performance of any organization is guided by the contribution of every member of staff. An organization can benefit from the diversity in the workforce in terms of a blend of innovative ideas and different skills.
There are several ways in which workforce diversity can increase the productivity of an organization. If an organization consists of a diverse workforce, it will result in higher employee engagement. The employees will work with complete focus and more efficiently. They will strive for the progress of the company beyond their personal goals. The organizations show increased productivity when there is diversity in the workforce on both upper and lower-level management. According to a study, when there is a 1% increase in the diversity similarity in the top management and the lower-level management, the productivity of the organization increases by $729 and $1590 per annum for each employee (Lauren Turner).
Organizations with a diverse workforce show better decision-making ability. In a diverse workforce, an employee from different backgrounds can provide a different perspective to a problem (Cletus et al.). This results in innovation and a broad range of ideas which helps in a better performance of the organization. A combination of different skillsets of a diverse workforce plays an important role in a better resolution of conflicts and improved communication throughout. An organization in which there is an equal opportunity for employees irrespective of their background stimulates the development of employees’ skills and personalities, which eventually improves the organization’s performance. The recruitment of a diverse workforce results in an organization’s appeal. The image of the organization is strengthened, and more clients and business groups collaborate with the organization.
It can be concluded that diversity in the workforce has a direct effect on the organization’s performance. Organizations with a diverse workforce show better decision-making and critical thinking ability. It also results in increased employee engagement and improved communication. A diverse workforce also makes an organization appealing and attractive to clients. This results in more contracts for the organization. All in all, a diverse workforce acted as a stimulant for organizational growth and increased productivity.
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- Cletus, Helen et al. “Prospects and Challenges of Workplace Diversity in Modern Day Organizations: A Critical Review.” Holistica, vol. 9, 2018, pp. 35-52, doi:10.2478/hjbpa-2018-0011.
- Lauren Turner, Maya Fischhoff. “How Diversity Increases Productivity.” Network for Business Sustainability www.nbs.net/articles/how-diversity-increases-productivity. Accessed August 12, 2021.
- McKinsey. “Why Diversity Matters.” McKinsey Insights www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters. Accessed August 12, 2021.