Business Leadership Today

How DEI Can Improve Performance in Organizations


Matt Tenney, Author of Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process

The benefits of diversity, equity, and inclusion (DEI) in the workplace are well known, but many leaders may not realize the extent to which a diverse, equitable, and inclusive work environment can impact performance in organizations.

The key to understanding the impacts DEI can have on performance and how to leverage those powerful impacts is to understand how DEI shapes the employee experience. 

DEI improves performance in organizations because it creates a positive employee experience for all by fostering a work environment where employees feel valued, feel they are treated equally, and feel a sense of belonging with their peers. When these three needs are met, employees consistently perform well. 

In this article, I’ll explore the important role employee experience plays in performance and how DEI can help us foster a positive employee experience that is conducive to exceptional performance.

Employee Experience Explained

One of the hottest topics in business these days is employee experience. Despite all the recent attention devoted to it in well-known publications, many leaders still aren’t that familiar with employee experience or aware of the profound impact it can have on an organization. 

Gallup defines employee experience as “the journey an employee takes with your organization.” This journey includes every interaction that happens during the employee lifecycle, as well as the experiences that involve an employee’s role, work environment, and supervisor, among others.

This includes (but is not limited to) the employee’s first encounter with the employer (through familiarity with the employer’s reputation and the experience of applying for the job), the first time the employee meets the employer, the employee’s experience of their work environment and encounters with co-workers, the workplace culture, the exit interview process, and any interactions the employee has with the employer after the employee leaves the organization. 

Employee experience encompasses how an employee feels during all their interactions with their employer throughout their professional relationship with them. The quality of these interactions determines the quality of the employee experience. 

“The New Customer Experience”

Employee experience plays a significant role in employee motivation, employee engagement, and employee retention, but that’s not all. Employee experience is also strongly linked to customer experience

Customer experience encompasses everything an organization does to put customers first, provide an exceptional experience, add value, meet their needs, and help them grow. 

Employees who view their employee experience positively are much more likely to provide an exceptional customer experience when dealing with clients. In fact, the link between the two is so strong that many forward-thinking leaders view the employee experience as “the new customer experience.” 

According to a recent Harvard Business Review Analytic Services survey, 55% of executives surveyed said they believe it is just not possible to provide a great customer experience without providing a great employee experience. The evidence tends to support this.

Customers will see the positive effects of an excellent employee experience in the service employees provide to them. Organizations will see the positive effects an excellent employee experience can have on performance through improved profitability.

Link Between Employee Experience and Performance

Perhaps the most important benefit of a positive employee experience is high performance, both in terms of employee achievement and the organization’s long-term profitability. 

When an organization provides a positive employee experience, they see improvements in customer satisfaction and greater innovation. They also generate 25% higher profits than organizations that do not provide a positive employee experience.

Just as a positive customer experience is crucial for building loyalty and driving revenue, a positive employee experience boosts employee loyalty and performance. 

Because employee experience has such a profound impact on employee motivation, engagement, and retention—factors that can affect employee performance and organizational performance—creating a positive employee experience should be the top strategy leaders utilize to boost motivation, engagement, and retention in their organizations.  

The Case for DEI: How DEI Can Improve Employee Experience and Performance

With employee experience and performance so strongly linked, it’s clear that to keep employees consistently performing well (and the organization performing well financially), fostering a positive employee experience in our organizations is essential. 

But how do we create and maintain the conditions needed for all our team members to thrive and love what they do? By providing a work environment and workplace culture where they feel valued, feel they are treated equally, and feel a sense of belonging with their peers.

DEI can help us ensure we are providing the ideal conditions for an exceptional employee experience and exceptional performance. 

DEI Defined

The principles of DEI are diversity, equity, and inclusion. 

Diversity encompasses the range of similarities and differences each individual brings to the workplace, including (but not limited to) language, race, national origin, ethnicity, gender, age, religion, sexual orientation, disability, and socioeconomic status. 

Gallup defines equity as the fair treatment, access, and advancement of each person in an organization, including fairness in pay, fairness in daily work experiences, and opportunities for advancement. 

Inclusion is defined as “the policy of providing equal access to opportunities and resources for people who might otherwise be excluded or marginalized” and creating an environment where all team members, regardless of their differences, can thrive and fully participate. 

DEI provides a conceptual framework for supporting the full participation of all, particularly underrepresented members of society who have been the target of discrimination historically and championing fair treatment. 

DEI’s Effects on Employee Experience and Performance

DEI creates a positive employee experience by fostering a work environment where employees feel valued, feel they are treated equally, and feel a sense of belonging at work—three things employees need to stay motivated, engaged, loyal, and performing at their best.

Since we know that employee experience has such a significant impact on performance and that DEI policies and initiatives contribute to a positive employee experience, we know that DEI can improve performance in our organizations. 

When our team members aren’t motivated and engaged in their work, not satisfied with their work, or not invested enough in their jobs to stay in them, organizations eventually pay the price. 

But when we foster work environments that are diverse, equitable, and inclusive, productivity, engagement, and retention are higher, resulting in improved employee performance and financial performance. 

How big is the impact of DEI on an organization’s performance? Here are a few examples of ways DEI can benefit organizations:

  • When employees are satisfied that their employer is genuinely committed to fostering a diverse, equitable, and inclusive workplace, they are twice as engaged as those who are dissatisfied. 
  • They work 12 percent harder, are 57 percent more effective at collaborating with co-workers, and are 19 percent more likely to stay with the organization.
  • According to a 2012 McKinsey study, US companies with diverse executive boards had a 95% higher return on equity than those that lacked diversity.

These employees are better able to adapt to change, meet customer needs, and collaborate with their co-workers. Their organizations see improvements in their recruitment efforts and long-term profitability. 

The Key To Success: An Inclusive Culture

When organizations build diverse teams and promote equity, these efforts can only be effective if they first establish an inclusive culture. 

An inclusive culture is a workplace culture that is supportive of and respectful toward all employees. Organizations with inclusive cultures embrace differences in backgrounds and experiences and build high-performing teams of employees who are engaged with their work and invested in the organization’s success.

An inclusive workplace culture ensures that the contributions, talents, skills, and perspectives of all employees are welcomed and utilized in ways that help organizations achieve their vision. 

To stay motivated and consistently perform well, employees need a work environment that offers them a positive employee experience and where every team member feels empowered and supported. 

An inclusive culture in the workplace supports a positive employee experience for all and creates the psychological safety employees need to work well with each other and unite around a shared vision that keeps them motivated to consistently perform well. 

Matt Tenney has been working to help organizations develop leaders who improve employee engagement and performance since 2012. He is the author of three leadership books, including the groundbreaking, highly acclaimed book Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process.

Matt’s ideas have been featured in major media outlets and his clients include numerous national associations and Fortune 500 companies.

He is often invited to deliver keynote speeches at conferences and leadership meetings, and is known for delivering valuable, actionable insights in a way that is memorable and deeply inspiring.

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