Diversity, equity, and inclusion have become important social issues. In the wake of the George Floyd and Breonna Taylor murders of 2020, companies made massive, highly publicized efforts to correct for systemic bias and improve the mix of race, gender, and lived experiences in the workplace. According to a recent study from Pew Research, most employed adults in the US think this is a good thing.\n\nNot all of those efforts have been successful, though. Opinions on the topic vary widely across demographic and political lines. And many of those campaigns seem, in retrospect, to have been little more than marketing.\n\nPolitics \u2014 and even marketing \u2014 aside, there is no doubt that your teams should be diverse.\n\n\u201cThis is not for social justice or corporate altruism,\u201d explains Cheryl Stokes, CEO of CNEXT, a leadership development and executive networking business. \u201cIt gives you better business results.\u201d\n\nThis is especially true for technical teams, where innovation is your lifeblood, but it is true for every team, everywhere.\n\n\u201cThere have been many studies that show that with greater diversity, companies succeed,\u201d says Alphonso David, president and CEO of the Global Black Economic Forum. \u201cIt is true in every industry. It is true in the United States, Europe, Asia, Africa, and South America. The principle has been proven over and over again.\u201d\n\nDiversity makes your company \u2014 and your teams \u2014 more creative and innovative. In fact, it makes your teams so much better that you can see the results (in green) on your bottom line.\n\n\u201cEthnically diverse companies are 35% more likely to have financial returns above their industry medians,\u201d explains Ashley Kelly, co-founder and CEO of CultureAlly, a D&I consulting and training organization.\n\nHere are seven ways that diversity makes your teams better.\n\nStronger financial returns\n\n\u201cDiversity for the sake of diversity is a bad idea,\u201d says Javier Palomarez, president and CEO of The United States Hispanic Business Council. \u201cIt\u2019s not sustainable.\u201d\n\nDiversity, as companies have attempted it, is often implemented as a department effort. It is handed to a leader who takes it on as a project, separate from standard operating procedures. This, says Palomarez, is a mistake.\n\n\u201cIt doesn\u2019t need to be as complicated as most corporations make it,\u201d he says. \u201cI tell corporate leaders to take an honest assessment of the company. What markets do you serve? Where will growth come from? What does the employment market look like in your industry? What does the future employee look like for your brand? Does your leadership team \u2014 this is where a lot of companies fall short \u2014 reflect the markets you serve?\u201d\n\nYou can easily find the demographics your company hopes to serve and hire from. Do your teams look like that mix? How about your leadership? If not, consumers and talent will look elsewhere for a brand that appeals to them, understands their needs, and develops products, solutions, and people who understand their experiences and culture.\n\nFor example, says Palomarez, \u201cThe Hispanic community has provided over 51% of the overall growth of the United States in the last decade. In the next decade, according to the Department of Labor, 78% of new entrants into the American workforce will be Hispanic.\u201d\n\nWill your brand appeal to that enormous demographic? If not, you are leaving a substantial amount of money on the table. If so, it will be reflected in your revenues.\n\n\u201cWhen we start doing our work with an organization, we encourage teams to look at the makeup of the company,\u201d agrees Kelly. \u201cDoes it reflect the communities you serve? If not, that\u2019s an indication you need to dive deeper.\u201d\n\nIncreased access to talent\n\nHiring technology teams is legendarily difficult and not likely to get easier anytime soon. A diverse team, though, can attract and retain talent that will walk away from a non-inclusive one. \u201cCurrently, 70% of folks that are looking for work are looking for diverse companies,\u201d says Kelly. \u201cIt is an important factor when they make a decision.\u201d\n\nGiven the failures of inclusion exhibited by corporate diversity initiatives of recent years, talented people are wary of a company that claims to be hiring a diverse team but looks like a (less stylish) episode of Mad Men.\n\n\u201cWe know that there\u2019s infrastructure that supports non-diverse talent,\u201d says David. \u201cIf you are in the majority and walk into a technology company where most of the people are white, you are likely to find support, mentorship opportunities, and an infrastructure that will promote your thoughts and ideas in a way we don\u2019t see for minority populations.\u201d\n\nIf your tech and hiring teams are diverse, however, you send a very different message to potential employees.\n\nEveryone contemplating a brand for purchase or employment is asking, says Kelly, \u201cAm I reflected in this organization? Can I see myself here as an employee \u2014 or as a consumer?\u201d\n\nSmarter decisions\n\n\u201cInclusive teams are 87% more likely to make better decisions than non-inclusive ones,\u201d says Kelly. This is because diversity triggers more careful information processing, more questions, and less blind belief in the ideas of people who pontificate.\n\n\u201cWhen you\u2019ve got a diverse team, and you\u2019re actually being very inclusive, you\u2019re engaging them in the solution, and you get a broader pool of knowledge, a broader pool of skills and experiences,\u201d says Stokes. \u201cThose multiple viewpoints give you a more comprehensive analysis than you would get if you\u2019re all from the same background. You enhance your decision-making processes and have better outcomes when you\u2019ve got diverse insights and viewpoints.\u201d\n\nMore effective problem-solving\n\nWhen it comes to solving problems, especially technical ones, diversity unlocks a wealth of ability. This has been proven to be true, no matter the background, ethnicity, or ages on the team. The more diverse the team, the better it is at solving problems.\n\n\u201cThe kind of work you\u2019re doing in tech is solving complex problems, problems that could have a variety of solutions,\u201d explains Gena Cox, PhD, author ofLeading Inclusion. \u201cComplex problems like that benefit from diversity of thought, from people who look at it from a different angle, raise a question in a different way. Why would you restrict innovation to one perspective?\u201d\n\nThis can play out in technology everywhere from product development to IT services.\n\nLeon Burns, president and CEO at Open Technology Group has worked hard to develop a diverse team and seen huge benefits from it. \u201cFor my field, for people who look like me, walls have been put up to keep us out. Typically, IT is only 15% black and 21% women. We\u2019ve constructed our team so that we have 95% minority races and 37% women.\u201d\n\nIt works, he says. \u201cThere hasn\u2019t been one thing we haven\u2019t been able to solve. The perspectives fall into place, right when you need them. A lot of my friends in more \u2026 screened environments, if you will \u2014 where you have just one set of people \u2014 outsource a lot of their problems.\u201d\n\nHe offers an example. \u201cWe were working in the Department of Treasury,\u201d he explains. \u201cIt is the most complex IT environment I\u2019ve ever been a part of. The only reason we were able to get through a lot of the obstacles there was because we had some guys from Iran, South Korea, and Bangladesh with completely different training. They were able to go to the root of the primary server and network providers and pluck bugs out, one by one.\u201d Otherwise, the job would have presented a nearly impossible problem. As it was, his team solved it quickly and the government expanded its contract.\n\nEnhanced innovation\n\n\u201cIf we\u2019re talking about technology, we have to talk about innovation,\u201d says David. \u201cInnovation comes through the lens of diversity. We look at issues differently based on where we are born, how we are raised, where we come from. A diverse team will create products in a way you may miss if you have a homogeneous team.\u201d\n\nMany studies have shown that diverse teams generate more innovative solutions than non-diverse ones.\n\n\u201cDecades of research show that a diverse lived experience, which often comes from demographic diversity, brings diverse insights to the table,\u201d says Stokes. \u201cThose different perspectives lead to more creative ideas and may challenge the prevailing notions of teams that have been together too long. Bringing in different people can challenge the status quo and get you out-of-the-box thinking.\u201d\n\nBetter retention\n\nPoor retention is expensive. Some estimates put the cost of replacing lost employees at six to nine months of that employee\u2019s salary. Retention speaks to the inclusion portion of a company\u2019s DEI efforts.\n\n\u201cWe\u2019re finding retention rates are abysmal,\u201d says David. \u201cYou get hired and then you leave very soon thereafter because you realize this is not an opportunity that will lead to growth and ultimately success.\u201d\n\nMuch of this is about promotions, pay, and opportunities. But some of it is discovering, once hired, a culture of discrimination. Your ideas aren\u2019t heard. You are talked over. You work hard and aren\u2019t recognized for it. According to McKinsey\u2019s Women in the Workplace study, women are subjected to demeaning microaggressions at a rate twice that as men. For women of marginalized identities, these are more frequent and more demeaning.\n\nPoor retention is also caused, according to Palomarez, by a failure to embrace the culture of the people you have invited into your workplace. \u201cYou should have a culture within your organization that embraces them,\u201d he says, \u201cand makes them feel at home, one that can retain and grow that talent.\u201d\n\nAccording to Cox, retention boils down to respect. \u201cThe key outcome all employees are driving for is respect,\u201d says Cox. \u201cI encourage leaders to focus on this. You can define what respect looks like and what the lack of it \u2014 disrespect \u2014 looks like. \u201cIf you look at Pew Research data, disrespect is one of the top three reasons why people voluntarily leave organizations.\u201d\n\nA diverse team is a welcoming culture for diverse people. It knows what respect looks and feels like, for diverse people. And it gives the people on the team the psychological safety to call out disrespect.\n\nMore relevant products\n\n\u201cIf your offering is not what your consumer is looking for,\u201d says Palomarez, \u201cyou\u2019re talking past each other. If the people building your technology don\u2019t have an appreciation and understanding for the culture of your buyers, you\u2019re not going to optimize your investment.\u201d\n\nThis can cover everything from spoken and written language to actual product ideas. If your team doesn\u2019t have lived experience of the people in the markets you want to serve, you will miss something. You might miss many things. There are so many examples of this in AI development that it is affecting the development and application of the technology.\n\n\u201cIf the product you\u2019re building does not have the cultural relevance embedded in it, then it\u2019s all for naught,\u201d says Palomarez.