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Diversity in the workplace has been an important topic within many organizations for several decades but the growing numbers of millennials in the workplace has made the topic more important than ever. As the most diverse generation in the workplace, millennials are forcing companies to rethink how diversity affects the workplace as well as their business efforts.

Fortunately, there is already a broad body of research showing how diversity can bring tremendous benefits to the workplace. While it does present some challenges requiring companies to undertake significant changes in their existing practices, the long term advantages that come from embracing diversity make the decision an easy one.

Diversity Drives Innovation

In today’s fast-changing economic environment, organizations that can’t innovate quickly enough to keep up will struggle to find success. Having the best and brightest minds may sound like an ideal strategy, but if all those minds think and behave the same way, they’ll quickly fall into the same predictable patterns, which can be devastating for a business. Culturally diverse workforces don’t bring differences for the sake of difference; instead, they introduce new ways of thinking that can cut through the harmful effects of conformity and groupthink.

Research has demonstrated that diverse teams consistently outperform more homogenous groups in terms of problem solving. It turns out that being similar to others leads people to assume that they share common experiences, ideas, and opinions, which closes off entire lines of discussion. One study even showed that participants were more likely to consider conflicting opinions when they came from someone they regarded as different than themselves. In fact, simply adding diversity to a group seems to make people more likely to believe that there are differences worth discussing.

For these reasons, diverse teams are far more likely to generate new ideas and creative solutions to problems. They take fewer assumptions for granted and pull inspiration from a wider range of experiences, which leads to the kind of dynamic innovation needed for success in today’s economy.

Diversity is Reality

The United States has become an increasingly diverse society over the last half century and is on pace to become even more diverse over the next few decades. While there is certainly an argument to be made that the workplace should reflect that reality, there is also a compelling business case that diversity can drive the bottom line. Companies are increasingly offering products and services to customers from various cultural backgrounds, and hiring employees who can provide valuable insights into what these customers want and need can help to drive profits and market reach.

With more and more business being conducted on a global scale and virtual teams operating across national boundaries, embracing cultural diversity presents a great opportunity for companies looking for a competitive edge. As the forces of globalization continue to break down barriers between cultures, companies with the ability to leverage good intercultural relations and inclusive hiring practices will have a significant advantage.

Challenges of Diversity

While the benefits of diversity in the workplace are well documented, it also brings about a number of unique challenges. A growing body of research has demonstrated that while diverse workplaces perform better in terms of productivity, they also frequently show lower levels of happiness among employees.

Take, for instance, a prominent 2014 MIT study on gender diversity. While the scope of the research was limited to a single large firm over a period of seven years, it showed that although gender diverse offices performed far better financially than their homogenous counterparts (roughly 41% better), both the men and women surveyed in those offices scored lower in terms of satisfaction and morale.

Other studies have shown broadly similar trends, but as the Harvard Business Review has pointed out, this dynamic is, to a certain extent, precisely the point. Diverse teams can create a feeling of discomfort that actually contributes to better performance. Shaking up the status quo and incorporating new ideas from people with different experiences may be disruptive and uncomfortable, but it also makes new solutions possible. While people may feel more relaxed in an office filled with coworkers who look and think like them, they’re also less likely to be exposed to different ways of thinking that could push them to perform better.

From a practical standpoint, organizations still need to think long and hard about how they’re going to manage the inevitable disruption of embracing diversity. In addition to the question of how the company itself will treat a more diverse workforce, consideration needs to be given to employees themselves. Establishing clear policies and procedures that address potential issues are a good start, but implementing extensive sensitivity training is critical as well; many employees will not even be aware of how their behaviors are affected by cultural biases and prejudices.

Hiring for Diversity

Embracing cultural diversity in hiring practices can help to shake up the implicit bias that often leads to companies bringing on the same sort of people. There are a number of ways to incorporate diversity considerations into the hiring process that go beyond simple “token-ism,” which can help ensure that hiring practices help to contribute to innovative work environments. For example, Michigan economist Scott Page suggests implementing data-driven assessments that identify candidates who bring unique ways of thinking to the organization.

It’s also important to remember the ways in which industries that rely heavily upon referrals in job searches (such as Silicon Valley tech companies) can undermine diversity efforts. Much in the same way that hiring for cultural fit can produce a form a “groupthink” conformity, referral networks can often create a culturally similar pool of candidates who have a leg-up in the recruiting process.

Incorporating greater cultural diversity into any organization brings many important advantages, not the least of which is improved financial performance. Making a commitment to that diversity, however, is more than just a simple shift in hiring practices. In order to be successful, any diversity initiative needs to account for how that change will affect existing practices while identifying specific changes that will need to be made to facilitate the transition. While this process can be difficult, the benefits are too substantial for any company to afford to ignore.