Study: Diversity in the Workplace 2020

By Bernhard Mehl
November 20, 2019

When people talk about diversity in the workplace, it often comes with general acknowledgement that it needs improvement across the board. Office managers and administrators are well aware of the social benefits and it’s been proven many times over that greater diversity within a company increases the likelihood of better financial returns. In recent years, this knowledge coupled with the tangible examples has encouraged more companies to prioritize diversity and inclusion policies. 

However, for many companies, achieving this balance of diversity has proven to be more difficult than expected for managers and administrators. In response many companies have put an emphasis on creating a more inclusive workplace through specific Diversity and Inclusion (D&I) strategies, rather than addressing the lack of diversity retroactively.

To better understand the state of workplace diversity and the different types we encounter in the professional world, Kisi has completed a comprehensive study of four major elements of diversity, including:

1. Ethnicity/race

2. Gender

3. Sexual Orientation

4. Disabilities, Cognitive Disabilities, and Age 

Some key takeaways revealed in the study include:

  • Above-average diversity teams reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity.
  • For every 100 men promoted and hired to manager, only 72 women are promoted and hired.
  • LGBT-friendly workplaces lead to improved health, increased job satisfaction, better relationships with co-workers and supervisors, and greater work commitment among LGBT workers.
  • According to AARP, 64 percent of workers have witnessed or experienced age discrimination.
  • High-performance organizations are 37% more likely to hire people with a cognitive disability because they are good talent matches for open positions.

While some findings indicate not enough progress has been made, it is important to understand what is happening in the workplace to see where we can move forward and the benefits of being more inclusive. Here are our findings for four of the major categories of diversity that we’ve identified in the workplace. 

Ethnicity/Race 

Often confused in general conversation, ethnicity and race are factors that are constantly being weighed during the hiring process, despite people’s best efforts to remain unbiased. Ethnicity is based on the idea of a shared geographical background, cultural, or history, whereas racial backgrounds are seen more as social constructs, rather than a biologically-defining category. 

A 2015 McKinsey study of more than 300 public companies found that “those in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above national industry medians.”

Not only are ethnically diverse teams more profitable, but there is a significant correlation between the diversity of the leadership and overall innovation output of the organization. Companies that stated they had above-average diversity on their management teams also had higher levels of innovation revenue, or revenue earned from products or services launched within the last three years. The above-average diverse teams reported 45% of their total revenue came from innovation, whereas companies with below-average diversity scores only reported 26% of their revenue coming from innovation. More inclusive companies also prove to be able to evolve and adapt to consumers’ demands more efficiently.  

When looking at inclusion in the scientific field, the numbers tell a similar story. A recent study showed that scientists might be more likely to collaborate with people who are the same ethnicity as them. However, when an ethnically-diverse group of scientists collaborated on the same paper, the scientific impact was 10.63% higher for the papers, and 47.67% for the scientists, reinforcing the affect that greater inclusion has, particularly in STEM industries and organizations. 

Despite clear evidence that diverse companies tend to be more profitable and innovative, corporate America still lags behind on inclusion of minority groups, particularly women, in leadership positions. A study of more than 460 companies employing 19.6 million people, found that white men and women represent 87% of C-suite positions. Men of color represented 9% of C-suite positions and women of color just 4%. This lack of diversity starts from the bottom, as men and women of color are hired for just 33% of entry-level positions. 

2018 ethnic representation in companies by percentage

The disparity between these two groups continues to widen as employees move up the corporate ladder. People of color are less likely to be promoted to managers than their white counterparts. 

Because these  disparities start early within the corporate ladder, it has a significant impact down the line. Because there are fewer women and men of color to be promoted to higher positions from within, companies are  more likely to turn to an outside hire or rely more heavily on executive level recruiters for high level positions. Our findings show that, whether it is subconscious bias or simply a lack of awareness of inequality, gaps in company performance, innovation and culture directly correlate to the amount of ethnic and racial representation.  

Gender 

While gender equality has been an issue in the average workplace for decades, little progress has been made towards greater balance in the US. Currently, only 33 leaders of Fortune 500 companies are women, and this number is at an all-time high. In other words: Men represent 93.4% of all Fortune 500 CEOs. 

Similar to the disparity in ethnic and racial diversity, the problem with gender equality often starts at entry and mid-level hiring processes. For women climbing up the corporate ladder to a leadership position is often halted early in favor of their male counterparts. According to a survey by McKinsey, for every 100 men promoted to a manager position, only 79 women received that same promotion.  

Promotion rates by gender

Decades  of inequality and under-representation have had a long-term impact on the amount of women in leadership positions and studies have shown that women, particularly women of color, are more likely to be on the receiving end of microaggressions in the workplace:

Percentage of employees facing microaggressions in the workplace

However more global corporations are slowly but surely making efforts to rectify gender inequality. Most notably, in 2015, one of the largest multi-national tech businesses recently performed a company-wide salary audit to discover how deeply gender inequality had seeped into operations. 

Salesforce has traditionally been more progressive and inclusive than most tech companies, however CEO Marc Benioff, didn’t realize the extent of gender equality in his company until he was approached by two female executives. They confronted him about the salary discrepancies they had noticed between men and women in the same positions. After agreeing to a massive investigation, Benioff was embarrassed to admit that, despite his best efforts to include more women in leadership roles and in important executive meetings, gender inequality still proved to be an insidious problem in the pay structure of the company. In response, Benioff made an unprecedented decision for a company that size; he closed the pay gap across the board.  

Holding equality as a value is not just a matter of fairness or doing the right thing. Nor is it about PR or “optics” or even my own conscience. It’s a crucial part of building a good business, plain and simple.
Marc Benioff - CEO of Salesforce (Wired)

Like Salesforce, other companies have tried to eliminate this problem. In 2015, women represented 17% of C-suite positions. In 2019, they represent 21%. While some progress has been made at the top leadership positions, the numbers are slowly growing at the bottom, with just a one percent increase in women in manager positions from 2015 to 2019. 

The McKinsey study also found that 87% of companies are committed to gender diversity, a major increase from past years. Employee commitment to achieving gender diversity, especially among men, has also grown stronger in recent years. 

While companies might say they are more committed than ever to gender diversity,

employees don’t often see the problems resolved at the bottom of the ladder. Only half of the employees surveyed believe that gender diversity is a top priority within their company. Unfortunately, that number hasn’t increased within the last five years despite the fact that companies that are committed to gender diversity tend to have happier workers and better employee retention rates. 

Incorporating more women into the workplace doesn’t just serve the purpose of being more inclusive; companies focusing on promoting women tend to be more profitable. Peterson Institute for International Economics completed a study of more than 20,000 public traded companies and found that the number of women in executive positions correlated with increased rates of revenue and profits. 

Bernhard Mehl

Bernhard is the co-founder and CEO of Kisi. His philosophy, "security is awesome," is contagious among tech-enabled companies.