The impact of DEI on employee engagement and retention — People Matters


Diversity, Equity, and Inclusion (DE &I) have become key focus areas of the workplace. Equity in the workplace is about fair and impartial processes and outcomes for each individual. Diversity refers to welcoming people from all races, cultures, sexualities, ages, ethnicities, and gender. While inclusion is about making them feel included and respected.

To ensure fair and impartial processes and outcomes, leaders and employers must be mindful of the challenges, barriers, and advantages for everyone at any given time.

Importance and benefits of diversity and inclusion 

According to a McKinsey report, companies with higher racial/ethnic diversity are 35% more likely to perform better than their competitors. Here are the many benefits of fostering diversity and inclusion in the workplace:

Experience higher employee engagement

When employees do not get discriminated against for their identities and would receive equal rewards and recognition merely based on their performance, they will actively participate in company activities and help you nurture a great workplace culture. 

Results in higher innovation and revenue benefits

Diversity and inclusivity in the workplace bring innovative ideas and creative solutions during problem-solving and town hall meetings. New ideas and perspectives lead to higher innovation and enhance team communication, eradicating prejudices.  Usually, companies that value their employees’ basic rights always experience higher profits. 

This leads to better decision-making

When you hire people from diverse backgrounds, you get to hear stories, experiences, and perspectives from various voices. Thus, you have the privilege and opportunity to think and perceive from varied angles to help you in your decision-making process. 

Higher employee retention

In my opinion, companies that embrace diversity and inclusion alongside workplace equity experience reduced employee turnover and relatively higher employee retention rates. 

Impact on employee engagement 

A Fast Company report mentions companies with above-average gender diversity and employee engagement levels outperform other companies by 46% to 58%. Companies with improved DEI policies always reach the pinnacle of success compared to companies that fail to recruit and recognise a wide range of diverse talents.

Let’s look at how it impacts engagement levels at work: 

ERGs provide an equal communication forum

Employee resource groups (ERGs) bring diverse groups together and provide an equal forum for discussion of challenges faced by employees, needs, and specific demands that the underprivileged require. Such open and welcoming meetings enhance employee engagement at work as people get to know each other and their basic needs more evidently without being judged. It creates a safe workplace and builds a sense of belonging for all employees, a key employee engagement driver. 

Flexibility increases engagement levels

Another impact of DEI in elevating employee engagement is flexibility. Employee needs vary from person to person based on their preference, context, gender, age, etc. For example, LGBT employees want equal rights, working parents need extra childcare support, and women would want period leaves or pregnancy leaves. 

Hence, practising DEI and offering such flexibility positively impacts employee engagement at work. 

Training and development are keys to engagement

Employee engagement is all about development. The engagement levels rise up further when done with equity and inclusion. Diversity training programs and equal learning and development opportunities are basic employee needs. When we nurture and train our employees equally, it develops a dialogue which is an amazing driver of employee engagement at work. 

Furthermore, diversity training programs teach empathy, respect, and equality and eradicate stigmas from the workplace. Hence, it cultivates a discrimination-free workplace where employees harmonise their voices in unison and show higher engagement levels with their peers and mentors. 

Impact on employee retention 

Making DEI an important aspect of the employee retention strategy is a crucial step toward nurturing equitable workplace culture. In fact, the closer you’re attached to your DEI goals, the more likely you can retain your employees for a longer period of time. 

Business is all about making money but with a touch of equality, righteousness, respect, and fair recognition to every employee irrespective of their gender, caste, religion, race, sexuality, and all sorts of minorities. 

Let’s see how we can improve employee retention with the right DEI goals and initiatives. 

DEI gives workers a purpose to stay

Nowadays, we rarely hear the statement “after all, it is just a job.” Instead, workers now focus on words like “purpose,” “meaning,” and “equality” when they describe their desirable job roles and what they expect from their employer. They not only focus on monetary benefits but give importance to values and respect. And workers wish to stick to a company that focuses on DEI as it gives them a sense of belonging. 

If we fail to meet these expectations, we will likely experience a high employee turnover rate and increased attrition rate. According to a Robert Half Survey, 71% of workers would leave their organization if their values do not align with the company. 

Fair recruitment leads to higher retention rates

When you adhere to your DEI goals, you’re bound to play fair right from the recruitment stage. A diverse and inclusive workforce signifies increased productivity, engagement, and retention. Research by Catalyst found that companies with a DEI initiative result in 49% improvement in problem-solving abilities, 35% increase in engagement, and 20% of workers intend to stay in the organization for a longer time. 

If we make it a point to invest in DEI wholeheartedly right from the hiring stage, we can mitigate the issue of attrition and enhance retention at work. This attracts a wide range of talent pools across various diversities and backgrounds. This further gets conveyed to existing employees as they see their company focusing on welcoming and hiring employees irrespective of their identities. I think DEI becomes an amazing retention strategy if we start right from the beginning.

DEI promotes safety and security

Employee safety and security are crucial to both workers and employers. We, as leaders, must create a safe workplace for everyone, especially those vulnerable. DEI is the key to eradicating workplace discrimination and making a workplace safer and more secure. 

When we hear employees’ pleas, discomfort, and harassment issues and take strict action, it develops a sense of trust, loyalty, and comfort. And, workers would want to stay in an organisation that is safe, secure, and free of discrimination. 

I believe diversity, equity & inclusion (DEI) make a workplace equal, fair, and egalitarian. It contributes to higher job satisfaction, increased retention rates, and employee engagement.

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