Diversity vs Equity vs Inclusion: Our Business Guide

Businesspeople having a meeting in a boardroom

Today, most businesses are familiar with the terms ‘diversity’, ‘equity’, and ‘inclusion’ – or DEI for short. What remains unclear is whether or not businesses truly understand these principles and why they are important. For entrepreneurs and people managers, embracing DEI is a powerful way to foster innovation and excellence in your venture, as well as to massively contribute to your employee satisfaction.

A study published in November 2022 by Wildgoose, a team building firm, found that over half of the participants witnessed discrimination or lack of inclusion in the workplace, and one in five think their company isn’t inclusive.

Inequality and lack of inclusion are highly corrosive factors for any business. It goes far beyond simply being a bad image for a company – although this can be hugely damaging in itself. It also leads to unwanted situations, such as poor productivity and difficulties in retaining or hiring quality staff.

While bigger companies often have the support of well-staffed and trained human resources departments to help foster a healthy work culture, smaller businesses often rely on the management and leadership structure for matters related to  DEI.

Before a company can address issues surrounding diversity, equity, and inclusion, it is imperative that there is a keen understanding of what each term means individually, and how they work together to create a motivated, collaborative, and productive workforce.

That is what we will examine in this article.

What is diversity?

Diversity refers to a workplace or organisation’s aim to represent  people of all walks of life. This can ensure that a workplace isn’t dominated by one social group – especially the ones favoured in society or perceived as majorities.

Insider's take

Diversity is the collective result of the variety and uniqueness of human experience represented within a business.

Ellie Green, writer for recruitment platform Totaljobs

Work towards diversity happens across the board and is usually quite gradual. For instance, the 2023 Financial Times Stock Exchange Women Leaders Review celebrated the fact that 40% of the board members of Britain’s 350 biggest listed companies were women.

However, this only came about after a decade of intense behind-the-scenes work, since this number was just over 9% in 2011. It also begs the question: ‘How do other society sectors factor into this?’

It’s also worth remembering that the discussion around diversity, at its basic level, has less to do with company betterment and more to do with the law. As a term, diversity stands in contrast to discrimination, since discriminatory biases prevent the diverse recruitment and progress.

On that note, it’s extremely important that your business looks into ways of reducing recruitment bias. Beyond its ethical implications, this will raise your chances of staying compliant with the Equality Act 2010, which outlines nine characteristics that can’t be discriminated against:

  • Age
  • Disability
  • Gender reassignment
  • Marriage and civil partnership
  • Pregnancy and maternity
  • Race
  • Religion and philosophical belief
  • Sex
  • Sexual orientation

Despite not being mentioned in the legislation, educational and socioeconomic backgrounds are crucial subjects to tackle on the road to diversity. Classism has been identified as the most prevalent diversity-related problem in UK workplaces, with one third of UK companies needing to improve their ways to address it.

To tackle classism in your company, it’s important to look into ways of bridging socioeconomic gaps. Supporting your staff’s side hustles, for example, can be an efficient way of allowing some of your employees to earn extra income while still contributing to your company.

What is equity?

Equity is a set of internal actions that aim to level the playing field for employees. They do so by embracing their differences in abilities and backgrounds, and granting them parity in contributions and career opportunities within the company.

Insider's take

[Equity means] fair treatment, access and advancement for each person in an organisation. This definition considers the historical and sociopolitical factors that affect opportunities and experiences so that policies, procedures and systems can help meet people’s unique needs without one person or group having an unfair advantage over another.

Ryan Pendell, workplace science writer for analytics firm Gallup

People come with various behaviours, skill sets, and personal histories. The key to give them the same opportunities as everyone else in a work scenario isn’t to treat them equally, but to treat them differently in accordance to their particularities.

One simple example of an equity measure is a flexible shift, in which employees work for the same number of hours but are allowed different start and finish times, therefore embracing the variety of people’s productivity throughout the day. Besides accommodating, this measure can also boost productivity.

However, the issue runs deeper: an effective equity strategy can make sure everyone in your company have fair chances at promotions – a key factor for staff retention – from female hybrid workers to employees without a college degree, for example. Eliminating biases related to referrals, college degree, and previous experience are paramount to level the playing field. These are known to be affected by traits such as age, gender, and ethnic background.

What is inclusion?

Inclusion is the feeling of acceptance and worthiness that an employee experiences in a workplace setting. It means workers feel comfortable to be their true selves at work by bringing their ideas to the table, knowing they will be respected and their input equally considered

Insider's take

Inclusion can be measured by a sense of belonging, connection, and community at work. It’s really about how you feel connected to your workplace and the people around you. An organisation that has mastered inclusion is one where people feel encouraged to bring their ‘whole selves’ to work. Between voicing diverse points of view and finding a sense of connection to others, this is what makes inclusion real

Laura Hamill, CEO for organisational research firm Paris Phoenix Group

As a feeling, inclusion is closely related to mental health from a personal perspective. Happiness and safety go a long way to ensure someone is comfortable enough to show up and develop the activities they’re expected to do without the risk of burnout.

From a managerial perspective, this is usually tied to staff retention. Where employees don’t feel welcome and at ease, the psychological pressure and sheer discomfort is likely to prompt them to leave.  As a whole, if the company culture isn’t inclusive, you are bound to lose employees and teams will rarely be fully staffed.

What’s the difference between diversity, equity, and inclusion?

In short, the difference between diversity, equity, and inclusion is that diversity refers to the variety of social groups represented in a workforce, whereas equity refers to members of these different social groups being afforded equal footing for growth in the company, and inclusion relates to the feelings of safety, worthiness, and belonging that an employee feels in their work environment.

It’s likely you’ve seen diversity, equity, and inclusion bundled together or even used interchangeably, but it’s important to note their differences when you develop your strategy to bring these ideas into your company. This is because each will call for a specific set of actions and measurement methods.

When correlating them, diversity is an objective situation while equity is a series of procedures actioned on this situation. Inclusion is a feeling that usually derives from the two. Because of its psychological nature, inclusion is harder to establish and measure, which means it’ll be something you should be always checking in on, either via informal chats or surveys.

What are the benefits of DEI?

The benefits of DEI are numerous, including talent attraction, staff retention, boosted productivity, better staff health, and bigger employee engagement. Investing in DEI is also one of the ways of showing employee appreciation and, as mentioned in our interview with Maryam Din (client account manager at LGBTQ charity Stonewall), it’s an initiative small business can definitely do.

For companies renewing their workforce and keen on tapping into the jobseekers now entering the market, DEI is a no-brainer. In a survey conducted in 2022, almost 7 in 10 employees said they’re likely to work for a company with a diverse workforce for five or more years. This means diversity is a factor that affects both their job search and their potential tenure with their employer. When coupled with inclusion promotion, the resulting feeling of belonging among staff commonly leads to better employee engagement.

It goes further: a massive study conducted in 2021 concluded that inclusive company cultures contribute to an increase of staff happiness and an overall improvement of their health. This is a major plus for companies fighting the current employee absenteeism trend.

For its part, the correlation between DEI and productivity has been consistently pointed out by studies, with one published by management consulting firm McKinsey & Company in 2019. It states that gender and ethnically diverse companies are up to 36% more likely to outperform companies that aren’t.

That said, diversity alone doesn’t cut it: academics Robin J. Ely and David A. Thomas noted in a 2020 article that companies should, beyond hiring people from underrepresented groups, make efforts to tap into their experience-related knowledge to learn how work more efficiently.

Insider's take

Our research showed that when companies take this approach, their teams are more effective than either homogeneous teams or diverse teams that don’t learn from their members’ differences. Such companies send a message that varied points of view are valued and don’t need to be suppressed for the sake of group cohesion. This attitude encourages employees to rethink how work gets done and how best to achieve their goals.

Robin J. Ely and David A. Thomas, academics at Harvard Business School

DEI: key takeaways

You now know the difference between diversity, equity, and inclusion, as well as how they work together towards creating a healthier, more collaborative work environment that fosters productivity and engagement.

Your ability to provide that environment can be a key factor for staff retention levels in the near future. The resignation of Dominic Raab over “intimidating” behaviour goes to show that anywhere can become a toxic work environment.

As you move towards implementing these policies, it’s important to remember that DEI initiatives are not developed under a tokenist mentality – as illustrated by the “diversity hire” concept – but fully ingrained in the company culture as a whole.

Beyond its obvious PR aspect, DEI is about embracing and respecting the whole spectrum of the human experience. It’s not only about getting underrepresented groups through the door. It’s also about making sure that once in, they thrive.

Written by:
Lucas Pistilli author headshot photo
Lucas is a Brazilian-born journalist and Expert Market’s go-to writer for all things EPOS systems, merchant accounts, and franking machines. Having covered business, politics and technology for many years, he’s driven by his passion for the written word and his goal to help people make well-informed decisions.