Study: Diversity in the Workplace 2021

By Bernhard Mehl
February 16, 2021
diversity in the office

When people talk about diversity in the workplace, it’s often with the acknowledgment that it needs improvement across the board. Office managers and administrators are well aware of the social benefits of a diverse workforce, and as of 2020 it’s been proven many times over that greater diversity within a company increases the likelihood of better financial returns, MarketWatch reports. In recent years, this general knowledge coupled with numerous tangible examples has encouraged more companies to put diversity and inclusion strategy at the forefront of their business plans.

However, for managers and administrators across industries, achieving this balance of diversity has proven to be more difficult than expected. For this reason, rather than addressing the lack of workplace diversity retroactively, many companies now emphasize creating a more inclusive workplace through specific Diversity and Inclusion (D&I) strategies.

To better understand the state of workplace diversity and the different types of diversity 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. Physical Disabilities, Cognitive Disabilities, and Age

Some key takeaways revealed in the study include:

  • Teams with above-average diversity reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity.
  • Only 85 women are promoted to managerial positions for every 100 men.
  • LGBTQ+-friendly workplaces lead to improved health, increased job satisfaction, better relationships with co-workers and supervisors, and greater work commitment among LGBTQ+ workers.
  • Around 60 percent of workers report witnessing or experiencing age discrimination.
  • Leading high-performance organizations are hiring more neurodiverse people than ever because their unique skills and talents are a perfect match for open positions.

While a number of findings indicate that we are starting to overcome some big hurdles, it’s also obvious that more progress needs to be made across the board. But how should we move forward? What motivates employers to have a more inclusive workplace? 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, culture, or history, whereas race is seen more as a biologically-defined category, like hair texture or skin color.

A 2020 McKinsey study of 1,000 companies found that businesses that were more diverse were also more likely to excel financially than those with a less diverse workforce. Not only are ethnically diverse teams more profitable, but there is a significant correlation between the diversity within an organization’s employees and leadership team and its overall innovation and productivity, Forbes reports. Companies with 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, according to a 2018 BCG study. 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.

Additionally, Forbes notes that more inclusive companies also prove to be able to evolve and adapt to consumers’ demands more efficiently. Because diverse teams can relate better with diverse customers, they’re able to better understand the customer’s needs.

When looking at inclusion in the scientific field, the numbers tell a similar story. A recent study published in Nature Communications showed that while scientists might be more likely to collaborate with people who are the same ethnicity as them, this doesn’t always lead to greater ideas or results. On the other hand, 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, particularly in STEM industries and organizations. These results underscore the effects of diversity and inclusion in teamwork, a promising result for organizations looking to increase profit, innovation, and the impact they can have on our world.

Despite clear evidence that diverse companies tend to be more profitable and innovative, numerous studies prove that corporate America still lags behind on the inclusion of minority groups, particularly women and people of color, in leadership positions. McKinsey found that among 317 companies included in their Women in the Workplace 2020 study, white men and women represented 85% of C-suite positions. Men of color represented 12% of C-suite positions,m while women of color made up just 3%. Notably, this lack of diversity starts from the bottom: Men and women of color comprised only 36% of the entry-level workforce at the companies included in the study.

diversity workplace representation color gender race

The disparity between white men and women and people of color continues to widen as employees move up the corporate ladder, McKinsey notes, starting just one step up from entry-level. People of color are less likely to be promoted to managers than their white counterparts, giving them even less of a chance to move up to higher-level leadership positions. Because these disparities start early on the corporate ladder, it has a significant impact down the line. As women and men of color are denied the opportunity to be promoted to higher positions from within, companies are turning to outside hires or relying more heavily on executive-level recruiters to fill high-level positions.

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. As of May 2020, only 37 leaders of Fortune 500 companies are women, CNN reports, and this number is at an all-time high. In other words: Men still represent 92.6% 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, McKinsey’s study shows. For women, climbing up the corporate ladder to a leadership position is often halted early in favor of their male counterparts. This leads to the staggering fact that for every 100 men promoted to a manager position, only 85 women received that same promotion.

promotion rates by gender

It’s no surprise that decades of inequality and under-representation have had a long-term impact on the number of women in leadership positions. Now, as more women have found themselves in leadership roles, studies like McKinsey’s have shown that women, particularly women of color, are more likely to be on the receiving end of microaggressions in the workplace.

microaggressions workplace representation

However, more global corporations are slowly but surely making efforts to rectify gender inequality. For example, in 2015, one of the largest multinational tech businesses, Salesforce, performed a company-wide salary audit to discover how deeply gender inequality had seeped into operations, as featured in Wired.

Salesforce has traditionally been more progressive and inclusive than most tech companies—but that didn’t stop them from running into the same problems other well-performing organizations run into when it comes to workplace inequality. CEO Marc Benioff didn’t realize the extent of gender equality issues in his company until he was approached by two female executives, he told Wired, who 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

Like Salesforce, other companies have tried to eliminate this problem. But In 2015, women represented 17% of C-suite positions, according to McKinsey... In 2020, they represent just 21%. Growth at the bottom of the corporate ladder has seen even less progress, with only a 1% increase in women holding managerial positions from 2015 to 2020.

McKinsey also found that 87% of the companies in their study are committed to increasing diversity within their organization, and employee commitment to gender diversity has grown as well. But while companies might say they are more committed than ever to gender diversity, employees don’t often see this commitment trickle down to the bottom of the ladder. In fact, 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. This is important for companies to be aware of because when employees see signs of commitment towards diversity from their employers, they tend to be happier and are more likely to stay with the company for longer.

Moreover, 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. McKinsey found that the number of women in executive positions correlated with increased rates of revenue and profits. This is just one more reason why companies should focus on increasing the number of women, as well as women of color, in their workplaces.

Sexual Orientation

Countless studies have found that, despite recent wins in the Supreme Court, many LGBTQ+ workers still experience discrimination in the workplace. A 2020 study by the Center of American Progress showed more than 36% of lesbian, gay, and bisexual individuals, and 36% of transgender people surveyed had experienced high levels of discrimination in the workplace.

lgbtq friendly employer chart

This mistreatment isn’t just detrimental to the LGBTQ+ community, but can also have a negative effect on the company’s bottom line. In fact, research by LGBT Capital found that, as of late 2019, the global annual spending power of LGBTQ consumers has grown to approximately $3.9 trillion. And adding to the strength of the LGBTQ community are their allies, people who aren’t members of the LGBTQ community but advocate for their rights. Allegis Group reports that 72% of all job hunters would prefer to work for an LGBTQ-friendly employer over a less inclusive one, making it even more important for companies to focus on cultivating inclusive, accepting work environments.

Another factor to take into account is that the LGBTQ+ community is large and encompasses people from all races, genders, backgrounds, and experiences. Because of this, it can be challenging for companies to understand how to teach employees to be inclusive when it comes to this demographic. Until mid-2020, no federal laws were in place to protect LGBTQ employees from employment discrimination. In June 2020, though, as reported by ABC, the Supreme Court ruled that employment discrimination based on sexual orientation or gender identity is no longer acceptable under federal law, a major milestone in the United States. Some companies, however, had decided to enact policies on their own before this ruling. And now, 94% of the top 50 Fortune 500 companies include gender identity in their non-discrimination policies, and 71% include transgender-inclusive benefits, according to the Human Rights Campaign 2021 Corporate Equality Index.

Another promising fact: The majority of the top Fortune 500 companies provide benefits to the same-sex domestic partners of employees, the Human Rights Campaign shares. While some might see this as a financial burden to employers, studies show organizations actually end up reaping benefits in multiple ways. The U.S. Chamber of Commerce Foundation found that employers with inclusive, LGBTQ+ friendly workplace cultures had more productive, happy employees, which leads to better performance for the organization’s bottom line. Businesses who have more inclusive policies also report outcomes like lower health insurance costs because the overall health of their employees has improved, notes PeopleScout, likely because LGBTQ+ employees are experiencing less stress and anxiety at work.

Some other financial benefits experienced by inclusive companies include a larger pool of applicants to recruit from and higher employee retention rates than those with less inclusive workplace culture, the U.S. Chamber of Commerce Foundation discovered. Plus, as previously mentioned, allies are more likely to work for an LGBTQ-friendly company, according to Allegis Group, helping organizations to attract the brightest talent. Because of these inclusive policies, employees tended to feel more valued and comfortable at work, which BCG found can lead to higher levels of productivity.

Other: Age, Physical Disabilities, and Cognitive Disabilities

Those at the higher end of the age spectrum and people with physical disabilities and/or cognitive disabilities tend to be overlooked as positive assets to a company, and are perhaps some of the most underrepresented social groups in the global workforce.

As the average age expectancy continues to increase, the average worker isn’t retiring as early as they used to. The Population Reference Bureau found that in 2018, about 24% of men and 16% of women over 65 were still in the labor force. And by 2024, that’s expected to rise to around 26% of men and 18% of women in this age group.

aging workplace representation
Source: Population Reference Bureau

In some fields, particularly in tech, the correlation between youth and innovation is heavily emphasized. A survey of tech workers by CWJobs found that this has caused 32% of their respondents to fear losing their job due to their age. Even more troublesome, 51% said that they left a job because of age discrimination. And according to AARP, 60% of workers across all fields have either experienced or witnessed age discrimination. But hiring a younger workforce doesn’t necessarily mean more innovation or productivity; excluding candidates based solely on their age might be limiting companies to their expertise, maturity, and experience.

age discrimination workplace chart

And older employees aren’t the only ones suffering from age discrimination. Workers on the other end of the spectrum feel they’re treated differently, too. In fact, e2i states that almost two-thirds of office conflicts can be tied to intergenerational differences, often caused by stereotypes that older employees believe about their younger coworkers. Actually, many employees feel the age discrimination problem goes both ways. For example, younger employees might be passed over for a promotion, despite having the work ethic and skills to handle the added responsibility, whereas older employees might not get the same career development opportunities offered to younger employees like education coursework, reimbursement for continuing education, or industry conference attendance.

Another group that is underrepresented in the workplace is people with intellectual and developmental disorders (IDD). Workers with IDD often face problems even getting hired because of perceived misconceptions and concerns. According to a study by the Institute for Corporate Productivity (i4cp), the preconceived concerns regarding hiring people with IDD average around 20% higher than the actual challenges that occurred once they were hired.

Some major concerns of companies surveyed by i4cp included a lack of positions that were a good fit, the need for extra supervision, or productivity and performance issues. However, this discrimination often proved to be unfounded when the employee with IDD began working. In fact, 59% of employers surveyed said that in general, employees with IDD were highly motivated, and only 7% found hiring a neurodiverse employee to pose challenges to team dynamics within their organization.

People with disabilities have also found it difficult to be fully represented in the workforce. According to i4cp’s survey, 81% of adults with developmental disabilities do not have a paying job in the community. This is important to note because there are currently more than 60 million people in the U.S. who have a disability, and together they have nearly $200 billion in discretionary spending power, according to the U.S. Department of Labor. By being more inclusive, companies might find that they are attracting a new workforce and client base.  In fact, 61% of employers with IDD employees said one benefit of hiring these employees was that the inclusive culture was attractive to their talent pool, i4cp says.

spending power disabled people in the united states
Source: Allegis Group

High-performance organizations have realized that people with IDD tend to have necessary, and often unique, skills that allow them to thrive in administrative office work, facility maintenance, knowledge-based jobs, and food preparation, showing a stronger trend towards hiring workers with IDD and other disabilities, both The Next Web and i4cp report. And the numbers are looking up: Around 49% of organizations surveyed by i4cp currently have employees with IDD, and another 7% say they plan to within a year.

Final Thoughts

Diversity in the workplace helps to create an inclusive environment for every member of the workforce to thrive and grow. By exploring how organizations can become more diverse, both employee experience and business success rates can improve. While there’s still a long way to go, it seems that things are improving slowly but surely, which is a great sign for the future.

Bernhard
Bernhard Mehl

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