8 ways diversity and inclusion help teams perform better

Diversity, equity, and inclusion (DEI) initiatives have been taking a beating lately. On his first day in office, US President Donald Trump issued an executive order calling government efforts to advance racial equity and to support underserved communities “illegal and immoral discrimination.” The order directed all federal agencies to terminate all equity-related contracts and stop promoting DEI.Lawsuits followed. Women, people of color, and all underrepresented groups got the memo, though: Initiatives aimed at giving them voice, empowering them to advance in careers they’ve been shut out of, and helping uplift their communities are anathema to this administration. It’s the battle of the sexes and a race war all over again.Or is it?Inflammatory political hyperbole aside, a backlash against DEI initiatives that focus on identity targets has been brewing for a while. But that doesn’t necessarily involve pushback against the concept of inclusion — at least not for most leaders.“I speak to leaders all the time, and I could see that a lot of what was being done in DEI was focusing too much on identity,” says Paolo Gaudiano, author of Measuring Inclusion. “Until we find an economic motivator, diversity, equity, and inclusion will be at the whim of political and societal whims. That is, unfortunately, what we’re seeing now.”Still, while companies were pursuing identity targets in hiring and team makeup, an economic motivator is precisely what leaders found.“This is not for social justice or corporate altruism,” explains Cheryl Stokes, CEO of CNEXT, a leadership development and executive networking business. “It gives you better business results.”“Ethnically diverse companies are 35% more likely to have financial returns above their industry medians,” explains Ashley Kelly, co-founder and CEO of CultureAlly, a D&I consulting and training organization.To fix inequity, Gaudiano believes it is smarter to measure, not identity, but the experiences of people at work.“White men only make up 34% of the population,” he says. “Yet they make up 57% of the population at the executive level. The problem is not that you’re not hiring enough diversity. You have a leaky bucket. You’re losing Black people, Hispanics, women, and LGBTQ [individuals] at higher rates than you’re losing white men. Step one is to stop the leaks.”Instead of asking people who they are, he says, ask them what happened.“Look for disparity in hiring interviews, performance reviews, promotions, and job assignments.” If your data shows that of 100 diverse applicants only men got hired, the women in your company always get low performance reviews, or Black women rarely get plum job assignments, you will see where your problems are.“Look through your processes,” he says. “If you see imbalances, figure out why, and drive that to zero.”For many business reasons, DEI is a worthy goal. It makes the team, the work, and the products better. Here are eight of those reasons.Stronger financial returns“Diversity for the sake of diversity is a bad idea,” says Javier Palomarez, president and CEO of The United States Hispanic Business Council. “It’s not sustainable.”Diversity, 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.“It doesn’t need to be as complicated as most corporations make it,” he says. “I 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 — this is where a lot of companies fall short — reflect the markets you serve?”For example, says Palomarez, “The 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.”Will 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.Increased access to talentHiring technology teams is legendarily difficult. A diverse team, though, can attract and retain talent that will walk away from a non-inclusive one. No one wants to be on a team because their gender or race satisfies an identity goal.“As employees, as professionals, as individuals, we have never wanted to be seen, first as a woman, and then only secondly, as a qualified professional,” says Christine Yen, CEO and co-founder of Honeycomb. “I think that’s true of any underrepresented person.”Yen’s team is diverse because the company is led by non-white women. “That hand was chosen for us,” she says. And that hand attracted an excellent, diverse team that represents all demographic groups. Those people weren’t treated as a diversity target; they were there for their professional skills and they knew it. This reality made it easy for the company to attract an excellent team and for that team to represent just about every demographic.“Even when the hiring market was hot and it was a challenge to nab talent, we always had more candidates than we knew to do with,” says Yen. “We had the luxury of being able to keep our bar high, because people knew that we were very thoughtful about the environment we were creating and how we were building teams. The composition of a team reflects that company’s priorities and what it might be like to exist in that environment.”Smarter decisions“Inclusive teams are 87% more likely to make better decisions than non-inclusive ones,” says CultureAlly’s Kelly. This is because diversity triggers more careful information processing, more questions, and less blind belief in the ideas of people who pontificate.“When you’ve got a diverse team, you get a broader pool of knowledge, a broader pool of skills and experiences,” says CNEXT’s Stokes. “Those multiple viewpoints give you a more comprehensive analysis than you would get if you’re all from the same background. You enhance your decision-making processes and have better outcomes when you’ve got diverse insights and viewpoints.”When everyone comes from the same background, learned at the same schools, and shares a common experience of the world, there is little to challenge their beliefs. If you are making important business decisions in a global economy and your team understands only one worldview, you will arrive at uninformed conclusions.“That team is also likely a whitewashed, higher socioeconomic level that is not representative of the whole,” says Amanda Ralston, M.Ed., BCBA, LBA, founder and CEO of NonBinary Solutions. “You need to make the same extrapolation about the data you use to make decisions. Is it representative of society as a whole? Are you making assumptions about society from data that is based on privilege?”More effective problem-solvingWhen 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.“The kind of work you’re doing in tech is solving complex problems, problems that could have a variety of solutions,” explains Gena Cox, PhD, author ofLeading Inclusion. “Complex 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?”This can play out in technology everywhere from product development to IT services.Leon Burns, president and CEO at Open Technology Group, has worked hard to develop a diverse team and has seen huge benefits from it. “For 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’ve constructed our team so that we have 95% minority races and 37% women.”It works, he says. “There hasn’t been one thing we haven’t been able to solve. The perspectives fall into place, right when you need them. A lot of my friends in more ‘screened environments,’ if you will — where you have just one set of people — outsource a lot of their problems.”He offers an example. “We were working in the Department of Treasury,” he explains. “It is the most complex IT environment I’ve 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.” Otherwise, the job would have presented a nearly impossible problem. As it was, his team solved it quickly and the government expanded its contract.Enhanced innovation“A lot of what CIOs are doing is innovation,” says Nik Grainger, director of corporate and CFO at North Sea Transition Authority. “Innovation is about transformation. If you’re looking to achieve different things, you need to do that with people from different perspectives, different backgrounds. Otherwise, you will keep doing the same thing. For us, diversity is important in that transformation and innovation space, so that we can make sure that we’re moving forward and doing things differently.”Many studies have shown that diverse teams generate more innovative solutions than non-diverse ones.“Decades of research show that a diverse lived experience, which often comes from demographic diversity, brings diverse insights to the table,” says CNEXT’s Stokes. “Those 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.”Better retentionPoor retention is expensive. Some estimates put the cost of replacing lost employees at six to nine months of that employee’s salary. Keeping a team, once you have hired them, then, is essential to your bottom line.Poor retention is often caused, according to Hispanic Business Council’s Palomarez, by a failure to embrace the culture of the people you have invited into your workplace. “You should have a culture within your organization that embraces them,” he says, “and makes them feel at home, one that can retain and grow that talent.”“Almost every person that I’ve hired has had some element of adversity in their life for their ethnicity, sexual orientation, or gender identity,” says Jack Allen, founder, CEO, and chief Salesforce architect at ITequality. “When they find a welcoming workforce, they never want to leave.”According to Leading Inclusion author Cox, retention boils down to respect.“The key outcome all employees are driving for is respect,” says Cox. “I encourage leaders to focus on this. You can define what respect looks like and what the lack of it — disrespect — looks like. If you look at Pew Research data, disrespect is one of the top three reasons why people voluntarily leave.”More relevant products“If the people building your technology don’t have an appreciation and understanding for the culture of your buyers, you’re not going to optimize your investment,” says Palomarez.This can cover everything from the spoken and written language to the actual product ideas. If your team doesn’t have lived experience of the people in the markets you 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.If, for example, no one on your team has any lived experience around disability, you will probably miss a larger market than you think.“A lot of the work we do is around accessibility and digital inclusion,” says Hilary Stephenson, managing director at nexer digital. “People typically look at technology as designed for the majority and then look at edge cases. We flip that model. We design for the needs of disabled people, people who aren’t as confident, can’t afford Wi-Fi, or don’t trust digital services. If we design for them, we have a better chance of meeting the needs of everybody because everyone is aging or might break an arm or leg. We often think of accessibility as a niche thing for disabled people, but we all have access needs.”Improved engagementIf you build a team that is inclusive, that welcomes a diverse group of people and works to make sure that the women, people of color, LGBTQ people, and those with disabilities are comfortable and able to bring their authentic selves to the workplace, those people will not be wasting mental energy protecting themselves, hiding, or navigating toxicity. And neither will anyone else.“When you build your team to cater to the people who have the most needs, you inadvertently make your team that much stronger for everybody else that might be experiencing something momentarily,” says Allen. “You have a framework that’s been built to foster a positive work environment for anybody who might be struggling.”The systems you have built to create a welcoming culture for everyone, serves everyone on the team, often in ways you can’t see until everyone is free to be who they are. “If you’re distracted about not being able to be authentic,” says Allen, “you’re taking up bandwidth and energy that otherwise could be going to doing your job extremely well.”

Diversity, equity, and inclusion (DEI) initiatives have been taking a beating lately. On his first day in office, US President Donald Trump issued an executive order calling government efforts to advance racial equity and to support underserved communities “ discrimination.” The order directed all federal agencies to terminate all equity-related contracts and stop promoting DEI.

. Women, people of color, and all underrepresented groups got the memo, though: Initiatives aimed at giving them voice, empowering them to advance in careers they’ve been shut out of, and helping uplift their communities are anathema to this administration. It’s the battle of the sexes and a race war all over again.

Or is it? Inflammatory political hyperbole aside, a backlash against DEI initiatives that focus on identity targets has been brewing for a while. But that doesn’t necessarily involve pushback against the concept of inclusion — at least not for most leaders. “I speak to leaders all the time, and I could see that a lot of what was being done in DEI was focusing too much on identity,” says Paolo Gaudiano, author of .

“Until we find an economic motivator, diversity, equity, and inclusion will be at the whim of political and societal whims. That is, unfortunately, what we’re seeing now.” Still, while companies were pursuing identity targets in hiring and team makeup, an economic motivator is precisely what leaders found.

“This is not for social justice or corporate altruism,” explains Cheryl Stokes, CEO of CNEXT, a leadership development and executive networking business. “It gives you better business results.” “Ethnically diverse companies are 35% more likely to have financial returns above their industry medians,” explains Ashley Kelly, co-founder and CEO of CultureAlly, a D&I consulting and training organization.

To fix inequity, Gaudiano believes it is smarter to measure, not identity, but the experiences of people at work. “White men only make up 34% of the population,” he says. “Yet they make up 57% of the population at the executive level.

The problem is not that you’re not hiring enough diversity. You have a leaky bucket. You’re losing Black people, Hispanics, women, and LGBTQ [individuals] at higher rates than you’re losing white men.

Step one is to stop the leaks.” Instead of asking people who they are, he says, ask them what happened. “Look for disparity in hiring interviews, performance reviews, promotions, and job assignments.

” If your data shows that of 100 diverse applicants only men got hired, the women in your company always get low performance reviews, or Black women rarely get plum job assignments, you will see where your problems are. “Look through your processes,” he says. “If you see imbalances, figure out why, and drive that to zero.

” For many business reasons, DEI is a worthy goal. It makes the team, the work, and the products better. Here are eight of those reasons.

Stronger financial returns “Diversity for the sake of diversity is a bad idea,” says Javier Palomarez, president and CEO of The United States Hispanic Business Council. “It’s not sustainable.” Diversity, 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. “It doesn’t need to be as complicated as most corporations make it,” he says.

“I 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 — this is where a lot of companies fall short — reflect the markets you serve?” For example, says Palomarez, “The 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.

” Will 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. Increased access to talent Hiring technology teams is .

A diverse team, though, can attract and retain talent that will walk away from a non-inclusive one. No one wants to be on a team because their gender or race satisfies an identity goal. “As employees, as professionals, as individuals, we have never wanted to be seen, first as a woman, and then only secondly, as a qualified professional,” says Christine Yen, CEO and co-founder of Honeycomb.

“I think that’s true of any underrepresented person.” Yen’s team is diverse because the company is led by non-white women. “That hand was chosen for us,” she says.

And that hand attracted an excellent, diverse team that represents all demographic groups. Those people weren’t treated as a diversity target; they were there for their professional skills and they knew it. This reality made it easy for the company to attract an excellent team and for that team to represent just about every demographic.

“Even when the hiring market was hot and it was a challenge to nab talent, we always had more candidates than we knew to do with,” says Yen. “We had the luxury of being able to keep our bar high, because people knew that we were very thoughtful about the environment we were creating and how we were building teams. The composition of a team reflects that company’s priorities and what it might be like to exist in that environment.

” Smarter decisions “Inclusive teams are 87% more likely to make better decisions than non-inclusive ones,” says CultureAlly’s Kelly. This is because diversity triggers more , more questions, and less blind belief in the ideas of people who pontificate. “When you’ve got a diverse team, you get a broader pool of knowledge, a broader pool of skills and experiences,” says CNEXT’s Stokes.

“Those multiple viewpoints give you a more comprehensive analysis than you would get if you’re all from the same background. You enhance your decision-making processes and have better outcomes when you’ve got diverse insights and viewpoints.” When everyone comes from the same background, learned at the same schools, and shares a common experience of the world, there is little to challenge their beliefs.

If you are making important business decisions in a global economy and your team understands only one worldview, you will arrive at uninformed conclusions. “That team is also likely a whitewashed, higher socioeconomic level that is not representative of the whole,” says Amanda Ralston, M.Ed.

, BCBA, LBA, founder and CEO of NonBinary Solutions. “You need to make the same extrapolation about the data you use to make decisions. Is it representative of society as a whole? Are you making assumptions about society from data that is based on privilege?” More effective problem-solving When it comes to solving problems, especially technical ones, diversity unlocks a wealth of ability.

This has been , no matter the background, ethnicity, or ages on the team. The more diverse the team, the better it is at solving problems. “The kind of work you’re doing in tech is solving complex problems, problems that could have a variety of solutions,” explains Gena Cox, PhD, author of .

“Complex 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?” This can play out in technology everywhere from product development to IT services. Leon Burns, president and CEO at Open Technology Group, has worked hard to develop a diverse team and has seen huge benefits from it.

“For 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’ve constructed our team so that we have 95% minority races and 37% women.

” It works, he says. “There hasn’t been one thing we haven’t been able to solve. The perspectives fall into place, right when you need them.

A lot of my friends in more ‘screened environments,’ if you will — where you have just one set of people — outsource a lot of their problems.” He offers an example. “We were working in the Department of Treasury,” he explains.

“It is the most complex IT environment I’ve 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.

” Otherwise, the job would have presented a nearly impossible problem. As it was, his team solved it quickly and the government expanded its contract. Enhanced innovation “A lot of what CIOs are doing is innovation,” says Nik Grainger, director of corporate and CFO at North Sea Transition Authority.

“Innovation is about transformation. If you’re looking to achieve different things, you need to do that with people from different perspectives, different backgrounds. Otherwise, you will keep doing the same thing.

For us, diversity is important in that transformation and innovation space, so that we can make sure that we’re moving forward and doing things differently.” Many studies that diverse teams generate than non-diverse ones. “Decades of research show that a diverse lived experience, which often comes from demographic diversity, brings diverse insights to the table,” says CNEXT’s Stokes.

“Those 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.” Better retention Poor retention is expensive.

Some put the cost of replacing lost employees at six to nine months of that employee’s salary. Keeping a team, once you have hired them, then, is essential to your bottom line. Poor retention is often caused, according to Hispanic Business Council’s Palomarez, by a failure to embrace the culture of the people you have invited into your workplace.

“You should have a culture within your organization that embraces them,” he says, “and makes them feel at home, one that can retain and grow that talent.” “Almost every person that I’ve hired has had some element of adversity in their life for their ethnicity, sexual orientation, or gender identity,” says Jack Allen, founder, CEO, and chief Salesforce architect at ITequality. “When they find a welcoming workforce, they never want to leave.

” According to author Cox, retention boils down to respect. “The key outcome all employees are driving for is respect,” says Cox. “I encourage leaders to focus on this.

You can define what respect looks like and what the lack of it — disrespect — looks like. If you look at , disrespect is one of the top three reasons why people voluntarily leave.” More relevant products “If the people building your technology don’t have an appreciation and understanding for the culture of your buyers, you’re not going to optimize your investment,” says Palomarez.

This can cover everything from the spoken and written language to the actual product ideas. If your team doesn’t have lived experience of the people in the markets you serve, you will miss something. You might miss many things.

There are so many examples of this in that it is affecting the development and application of the technology. If, for example, no one on your team has any lived experience around disability, you will probably miss a larger market than you think. “A lot of the work we do is around accessibility and digital inclusion,” says Hilary Stephenson, managing director at nexer digital.

“People typically look at technology as designed for the majority and then look at edge cases. We flip that model. We design for the needs of disabled people, people who aren’t as confident, can’t afford Wi-Fi, or don’t trust digital services.

If we design for them, we have a better chance of meeting the needs of everybody because everyone is aging or might break an arm or leg. We often think of accessibility as a niche thing for disabled people, but we all have access needs.” Improved engagement If you build a team that is inclusive, that welcomes a diverse group of people and works to make sure that the women, people of color, LGBTQ people, and those with disabilities are comfortable and able to bring their authentic selves to the workplace, those people will not be wasting mental energy protecting themselves, hiding, or navigating toxicity.

And neither will anyone else. “When you build your team to cater to the people who have the most needs, you inadvertently make your team that much stronger for everybody else that might be experiencing something momentarily,” says Allen. “You have a framework that’s been built to foster a positive work environment for anybody who might be struggling.

” The systems you have built to create a welcoming culture for everyone, serves everyone on the team, often in ways you can’t see until everyone is free to be who they are. “If you’re distracted about not being able to be authentic,” says Allen, “you’re taking up bandwidth and energy that otherwise could be going to doing your job extremely well.”.