Advantages and Disadvantages of Diversity in Workplace

by Linda Emma; Reviewed by Jayne Thompson, LLB, LLM; Updated March 04, 2019

Advantages and Disadvantages of Diversity in Workplace

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More than 25 million people working in the U.S. are foreign-born, and data suggest that in less
than three decades, the country will be a truly pluralistic society with no single group holding a
majority. If you expect your company to compete and succeed in this new world order, you need
to take a close look at the advantages and disadvantages of diversity in the workplace.

Advantage: Better Financial Results

Numerous studies have found that companies with diverse teams are more profitable than
homogenous businesses. A 2015 McKinsey report on public companies noted that those with
the most ethnic and racial diversity in their management were 35 percent more likely to be
financially successful.

Advantage: Global-Level Competition

Millions of Americans are employed by foreign-owned companies. We live in a global economy,

and the companies that consistently top the Fortune 500 list are global in nature. Companies
need to employ people who represent diverse populations and points of view to compete on this
world stage. What sells in small-town America may not fly in the cities of the United Arab
Emirates. On the other hand, if you understand the culture and the economies of each, maybe it
will.

Advantage: Fact-Based Decision-Making

Studies have found that diverse groups tend to focus on facts when making decisions. They look
beyond old-school ways of thinking and examine and re-examine facts to remain objective, thus
making better decisions for their company. Nonhomogeneous groups are more able than
homogenous groups to identify their biases and work to keep them at bay when making
important business decisions.

Advantage: Creative and Innovative Thinking

If everyone acts and thinks alike, you’re likely to see the same-old, same-old when it comes to
approaches to products, distribution, marketing, management and sales. However, when several
people approach problems and challenges from varied perspectives, you’ll discover more
creative solutions. Research suggests that diversity increases innovation and improves market
growth.

Advantage: Cross-Cultural Understanding

While homogenous groups may naturally get along better, in an increasingly diverse world, cross-
cultural understanding creates a better working environment and a better world. Rather than
relying on a crutch of old world prejudices and misconceptions, diverse work groups improve
internal climates and external results for businesses.

Disadvantage: Difficulty in Transitioning

If your company is just beginning to recognize the potential of diversification, there will likely be
challenges to creating a more diverse work environment. Old ways of thinking and entrenched
prejudices may hinder your efforts and create tension and conflict. Additionally, as cultures
collide, there may be misinterpretations of meanings. What’s funny to one culture may be
considered disrespectful to another. Management needs to buy in and educate employees
across the board if workplace diversity is to have its first measure of success.
Disadvantage: Short-Term Cost Outlay

Depending on how long you’ve been in business, you may have already learned a great deal
about accommodations in the workplace. Just as the Americans with Disabilities Act brought
significant changes to some businesses at a financial cost, so will diversity require some
flexibility. For example, if you have employees who are practicing Muslims, you’ll need to give
them time and space for daily prayer. Transgender employees may need their own bathrooms.
As your employees become more diverse, you may face associated costs that you hadn’t
considered.

Although the transition to a diverse workplace can be difficult, employers across the country and
the globe are making moves to diversify. They’re finding it’s worth the effort and the investment
and that the results are both morally and financially rewarding.