Diversity, equity and inclusion (DEI) has emerged as a vital component of organisational success over the past couple of years, with research demonstrating that the framework is fundamental for increasing growth, innovation and competitiveness — particularly for small businesses, writes Sebastian Morgan, Resume Genius career and productivity expert.

But while Australia has shown the second-largest growth in DEI success since 2019, half of HR professionals say their employers aren’t putting enough focus on improving diversity, equity and inclusion in their organisation.

But why should small businesses be putting more focus on diversity, equity and inclusion? This article explores three reasons why it should be a priority as well as how you can implement a successful DEI initiative in your organisation.

1. DEI-satisfied employees stay on longer

Diversity is an increasingly important issue for employees, and this trend is only set to continue in the coming years.

By 2025, over 75 per cent of the global workforce will be millennials, a group that actively values diversity in the workplace — almost 50 per cent, according to WEF data. As a result, employers who demonstrate a commitment to DEI are much better positioned to attract top-quality talent.

The same can be said for employee retention. Numerous reports indicate a close relationship between employer commitment to DEI and employee commitment to their jobs. Employees who believe their employers are committed to improving diversity and inclusion are 20 per cent more engaged at work and 87 per cent less likely to quit their jobs.

For small businesses in particular, maintaining a low employee churn rate is absolutely crucial. It can be enormously costly to hire and onboard a new employee. Recruitment costs alone average at around $23,800, while job ad placement and training are significant expenses.

Even if you can stomach the cost, a failure to commit to DEI can damage your ability to fill vacant positions. In a Deloitte report, 56 per cent of workers said they wouldn’t recommend their place of work to friends and family if they believed their employer wasn’t committed to diversity, equity and inclusion.

2. Diverse teams are better at getting the job done

Prioritising DEI contributes to stronger, more positive company cultures, and with it, increased performance, creativity and productivity.

Diverse teams are simply smarter than their competitors — and the data shows it. In a study of 1,700 companies across eight countries, diverse teams had a 19 per cent higher revenue because of innovation. Companies with ethnically diverse workforces were 36 per cent more profitable than companies with low ethnic diversity, while gender-diverse workforces were 25 per cent more profitable.

One reason for this is diverse teams are better at decision-making. Having a workforce that consists of different backgrounds, personality types and demographics encourages team members to consider perspectives that might not be so apparent where diversity isn’t present. While a homogenous group might feel like it’s doing a great job, a diverse one is more likely to question established processes and notice strategic errors, which ultimately makes it more successful.

3. They’re better at understanding customer needs

Customers feel more respected and understood when they see themselves represented in the companies they interact with. Whether it’s in terms of demographics, personality type or socioeconomic background, diverse teams are more relatable to consumers — and better at anticipating, interpreting and addressing consumer needs too.

That’s important in a diversifying landscape given that in 2022, close to one in three Australian residents was born overseas. Businesses that are able to connect with their customers by building more diverse decision-making teams are better positioned to create exceptional consumer experiences and create lasting impressions on their consumers.

How to implement successful DEI initiatives

The benefits of prioritising diversity, equity and inclusion are clear, but successful strategies need to consist of more than recruitment quotas and one-off sensitivity workshops.

Developing a successful DEI initiative begins with an audit of where your business currently stands:

• How diverse are management and decision-making teams?
• What processes do you already have in place for addressing workplace inequality?
• How do your employees feel about your current approach to DEI?

Use these questions to build an initial overview of what your business is doing well, and what it needs to improve at.

In the process, remember to look beyond traditional markers of diversity, such as the demographic makeup of your workforce. Though these metrics are important, they won’t give you the full picture — it’s possible (and common) for a business to have a diverse workforce but concentrate decision-making within a very narrow segment of that workforce.

Clear goals produce tangible results

For your DEI initiative to be successful, it’s important to set specific, measurable goals that you can track and develop a clear strategy for.

Identify which specific areas of your business your strategy should target first, whether that’s representation in leadership, better HR processes for dealing with discrimination, or creating a more equitable customer experience. Determine the metrics that you’ll use to assess your strategy as you implement it.

In addition to enabling you to monitor the success of your initiatives, having clear metrics will allow you to communicate the results with your workforce, thereby demonstrating your commitment to DEI.

And as we’ve already established, employees who see you’re doing something about DEI will be more satisfied and engaged in their jobs, and likely remain with you for longer. In other words, a thoughtful investment in diversity, equity and inclusion is an investment in both the long-term success of your business and the longevity of your employees.

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