Increasing cultural diversity in the workplace is much more than just an HR buzzword. It’s key to successful teams and businesses. If you want to create teams capable of producing breakthrough innovations, diversity is nonnegotiable. Sure, we can just tell you to build a more diverse team, but you’ve heard this a million times. What, specifically, is so great about diversity?

The fact is that diversity enhances creativity, improves problem solving and decision making, fosters a happier, more engaged workforce, and spurs economic growth. And all this is supported by decades of research. Let’s take a closer look at the benefits of diversity.

Diverse teams are smarter.

There’s always more than one way to solve a problem. Each team member brings to the table their own unique perspectives and approaches, forged by their cultural background, experiences, personality, and a multitude of other factors. In a diverse team, you naturally have access to a greater variety of perspectives and problem-solving approaches.

You might think that putting together a group of people with wildly different approaches and viewpoints would be a recipe for disaster and discord. And there would be a grain of truth to that: working in diverse groups does present certain challenges. Working with people who look like you and think like you is certainly the path of least resistance, but the easiest option is not always the best one. In fact, according to some experts, diversity enhances performance precisely because it’s more challenging.

Diverse teams are not smarter just because they have a greater variety of perspectives. It turns out that diversity actually changes the way we process information and make decisions. We consider more information and process that information more deeply and carefully in a diverse group.

The research bears this out. For example, a 2006 study found that racially diverse juries considered more information, made fewer errors when recalling information, and were more open-minded than all-white juries. This difference was not solely attributable to the behavior of nonwhite participants: the behavior of white participants actually changed in the presence of a more diverse group. In another study, small groups of college students from the same fraternity or sorority were asked to solve a murder mystery. After deliberating for some time, they were joined by a newcomer from either the same fraternity/sorority or a different one. The groups that were joined by an outsider were more likely to guess the correct suspect.

Working with people who are different from us forces us to challenge our assumptions, anticipate divergent viewpoints, and overcome outdated ways of thinking. Simply put, it makes our brains work harder—and that can only be a good thing, right?

Diverse teams are more innovative.

Having a variety of different voices sharing ideas and perspectives often leads to out-of-the-box thinking. This in turn can give rise to the development of new and exciting products and solutions. Researchers at the London School of Economics found that businesses with culturally diverse management teams are more likely to introduce new product innovations than ones with culturally homogenous teams.

A survey conducted by Forbes found that among companies with more than $10 billion in annual revenue, 56 percent “strongly agreed” that diversity helps drive innovation. Rosalind Hudnell, the director of global diversity at Intel, noted, “Because of our diverse workforce, we’ve experienced a boost in productivity. . . . You can’t be successful on a global stage without [diversity].”

Diverse teams create more culturally sensitive and inclusive products.

A lack of diversity in a team has the potential to lead to some frankly embarrassing and out-of-touch product fails. In 2017, a popular smartphone app was forced to pull filters that allowed users to modify their selfies to look like different races—a feature described by critics as “digital blackface.” Other apps have faced similar accusations of racism: one allowed users to report having seen something “sketchy” in a particular location, spurring headlines like “Smiling Young White People Make App for Avoiding Black Neighborhoods.” Concerns have also been raised over facial-recognition software. Research has found that this new technology is more likely to be inaccurate when used on black people. Some experts believe this is due in part to the fact that “its algorithms are usually written by white engineers who dominate the technology sector.”

A culturally and ethnically diverse team can help ensure that concerns about representation and inclusivity are raised—and resolved—before a product hits the shelves.

Diverse teams attract and retain employees.

Employees, by and large, already recognize the benefits of diversity. According to a Glassdoor survey, two thirds of job hunters consider diversity important when evaluating companies and job offers. A diverse and inclusive workplace is especially important to millennials: research suggests that in an inclusive workplace culture, millennials report higher levels of engagement and empowerment. Building diverse teams will not only help your business attract talented, globally minded individuals, it will also help you keep them happy and engaged—and keep them around.

Diverse teams help the bottom line.

Okay, it probably goes without saying that smarter, happier, and more innovative teams achieve greater business success, but we think it’s worth emphasizing. The research is clear. A 2015 McKinsey report found that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have above-average financial returns. Another analysis found that racial diversity is associated with “increased sales revenue, more customers, greater market share, and greater relative profits.” Increasing cultural diversity is simply good business sense.

In 2020, there’s no excuse not to have culturally diverse teams. But remember, differences can also present challenges, so make sure you have created an inclusive workplace culture that welcomes differing opinions and allows all individuals—regardless of their differences—to thrive. In a future blog post, we’ll look at ways to overcome cross-cultural communication barriers.

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