How to Make the Business Case for Workplace Diversity in 7 Steps

Workplace diversity has become a top recruitment priority these days. A survey by SHRM found that 57% of HR professionals state their recruiting strategies are designed to attract diverse candidates. Glassdoor found that 67% of job seekers said that diversity is an important factor when deciding between companies and job offers.

Workplace diversity is no longer just a noble goal or feel-good concept. In addition, companies are starting to view diversity as a competitive advantage.

The bottom-line benefits of workplace diversity include:

  • McKinsey’s data show companies with diverse executive boards enjoy on average 53% higher returns on equity
  • Research by Professor Neale at the Stanford Graduate School of Business and her colleagues has found diverse work teams show better performance for product development and creating new markets
  • A study by Professor Herring at the University of Illinois at Chicago examined more than 500 organizations and found that every 1% increase in gender diversity is correlated with a 3% increase in sales revenue and every 1% increase in racial diversity is correlated with a 9% increase in sales revenue

The value of having a diverse organization is clear. So to help you make the business case for workplace diversity in your recruitment efforts, I’ve created this 7-step guide.

Step 1: Find a workplace diversity champion

Making workplace diversity a recruitment priority requires internal support. Find the person with the right authority to champion the cause and greenlight the resources required to increase workplace diversity through recruitment. In general, this requires that you’re granted access not only to HR data but also to business data such as costs and revenues. This might be your VP of HR or the Head of Talent Acquisition.

Step 2: Analyze your workplace demographics

First, you have to define what workplace diversity means to you and to your company. Assess your workplace’s demographics for the groups that fall under that definition and analyze your company’s relative diversity strengths and weaknesses.

You can compare your demographics to industry benchmarks or to aspirational benchmarks, for example, a 50% female workplace.

Step 3: Demonstrate the initial ROI of workplace diversity by linking demographic data to business data

The simplest way to make a business case for workplace diversity is to statistically link your workplace demographic data to business data such as revenue through a correlation or a regression.

If your data analysis results are statistically significant, that’s a great start! You’ve made an initial business case for workplace diversity. If the results aren’t significant, don’t fret. It’s possible that you don’t have enough diversity data at your company to find significant results. You can still establish a business case for workplace diversity by collecting more data (i.e. by hiring more diverse, qualified employees).

Step 4: Set quantifiable diversity KPIs

Based on your assessment of your workplace’s demographics and your initial ROI analysis, set a few measurable diversity KPIs. Or start small and set one quick win KPI. For example, to increase female hires in tech-related positions by 10% within six months.

Step 5: Conduct a diversity audit

Analyze your company's current practices and policies for sourcing, recruiting, and hiring. Identify potential unconscious biases in your recruitment process that may be hindering workplace diversity by ignoring, turning off, or accidentally discriminating against qualified, diverse candidates.

Step 6: Remove recruitment practices that may be reducing workplace diversity and replace them with less biased methods

Recruiting methods that help you avoid human biases are using data-based pre-hire assessments, software for shortlisting candidates, blind hiring strategies such as anonymized resumes, and a structured interview approach that objectively scores candidates’ skills, traits, and qualifications.

Step 7: Demonstrate the ROI of increased workplace diversity by linking demographic data to business data

Re-run your correlation or regression on your workplace demographic data and business data. This time you want to check the statistical significance as well as the effect size.

The size of the effect is important because you want to be able to report something quantifiable such as, “For every 1% increase in racial diversity, our company experiences a 5% increase in sales revenue.”

Main takeaways

The social and emotional benefits of workplace diversity have been discussed for a long time. To really make workplace diversity a recruitment priority at your company, it’s valuable to establish the business case for investing time and resources into attracting, recruiting, and hiring more diverse, qualified employees.

This requires 7 steps:

  1. Finding a workplace diversity champion.
  2. Analyzing your workplace demographics.
  3. Demonstrating the initial ROI of workplace diversity by linking demographic data to business data.
  4. Setting quantifiable diversity KPIs.
  5. Conducting a diversity audit.
  6. Removing recruitment practices that may be reducing workplace diversity and replacing them with less biased methods.
  7. Demonstrating the ROI of increasing workplace diversity by linking demographic data to business data.

Making the business case for workplace diversity isn’t trivial. It requires organizational support, access to data, and a genuine passion for the cause.


For more insights on building an organization of diversity & inclusion, be sure to check out this panel discussion from Greenhouse OPEN 2016 called "Building Competitive Companies Through Diversity & Inclusion." Simply click the button below!

Building Competitive Companies Through Diversity & Inclusion

Ji A Min

Ji-A Min is Head Data Scientist at Ideal.com, software built to eliminate hiring mistakes. Ideal instantly shortlists the best candidates for your company using people analytics and helps companies increase their workplace diversity through intelligent shortlisting, pre-hire assessments, and blind hiring.

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Diversity & Inclusion