Cultural Diversity in The Workplace: What it is, Why it’s Important, and How to Get Started

As the world has become more remote and hybrid than ever before, companies everywhere are dealing with new challenges, opportunities, and dynamics. One of which is an increased globalization resulting in a more diverse workforce.

Globalization has led organizations to draw from a more diverse talent pool, enhancing their ability to attract and retain multicultural and international candidates.

Cultural diversity in the workplace is largely beneficial both for companies and people alike. However, there can be some growing pains that come with this shift. In a fundamentally international business environment, cultural understanding is essential for navigating cross-cultural interactions and avoiding miscommunications.

Here, we’ll discuss what cultural diversity in the workplace is, why it’s important, and ways to bring people together.

 

What is cultural diversity in the workplace?

Cultural diversity refers to the different groups of people in a workplace. A culturally diverse workforce brings together individuals with different underlying cultural values, which influence workplace behaviors and attitudes. These underlying cultural values shape how people interact, communicate, and approach their work, impacting team dynamics and organizational success.

These groups can be categorized by a variety of protected characteristics. Meaning, these are traits or parts of an individual’s identity that are specifically sheltered from discrimination by law.

Typically, diversity in the workplace is categorized by:

• Race/ethnicity: Race or ethnicity is what many people think of when they think of work diversity. Ensuring your team includes and embraces people of different races and ethnicities is crucial for diversity. These differences contribute to a multicultural workplace and a diverse professional environment, where varied perspectives and cultural backgrounds enrich collaboration.
• Age: Having a workforce made up of people of varying ages is age diversity. It’s important to have people on your team who can speak to the lived experiences and values of a range of generations, reflecting cultural values that may differ across age groups.
• Gender/sex/sexual orientation: Women, non-binary people, and members of the LGBTQ+ community face unique obstacles at work and in life. Including members of these groups will help everyone gain more understanding, and highlight the importance of reflecting cultural values related to gender and identity.
• Disability: Disability includes not only physical ability, but invisible ability, like mental health and neurodivergence, as well. It’s estimated nearly 20% of the workforce lives with some sort of disability, with most being invisible. These differences further contribute to a culturally diverse workforce, where inclusivity and accommodation are key.

Why is Cultural Diversity Important in the Workplace?

It may be one thing to know the importance of cultural diversity in organizations socially, but if you’re wondering if it actually benefits business outcomes, it does. Research shows that diverse teams perform better and that workplace diversity leads to improved business outcomes. In fact, it’s good for business in multiple ways.

• Culturally diverse businesses outperform peers because diverse teams produce stronger results through broader thinking and more informed decision-making.
• Diversity brings unique perspectives to the table, enabling teams to draw from varied perspectives that improve problem-solving and strategic planning.
• Multicultural product development teams benefit from diverse cultural perspectives, helping organizations design offerings that resonate across different audiences and regions.
• Local market knowledge and local marketing savvy allow teams to better tailor messaging, products, and experiences to meet regional and cultural expectations.
• Globally oriented companies are better positioned for international business development, using cultural insight to navigate global markets with confidence and agility.

Better Business Outcomes

Possibly the most compelling case for leaders for diversity in the workplace is its correlation with driving performance and retention. Research has continued to link more diverse companies with better business outcomes.

In fact, a 2019 analysis from McKinsey found that companies with executive teams with more gender diversity were 25% more likely to have above-average profitability than companies with less gender diversity.

Additionally, this study also found the most gender diverse companies were 48% more likely to outperform the least gender diverse companies. Another study by McKinsey found that companies with racial and ethnic diversity are 36% more likely to outperform their peers.

This is likely because diverse teams often make for more nimble and adaptable organizations. This allows companies to be better positioned to succeed in a competitive global job market, as they can quickly adapt to changing conditions, recognize market gaps, and leverage international talent and diverse perspectives for sustained growth.

 

Higher Job Satisfaction and Employee Retention

A 2021 study by Momentive found that 78% of people feel that it’s important for them to work for an organization that prioritizes diversity and inclusion, with 58% saying it’s “very important.”

In 2025, nearly 80% of employees said that diversity and inclusion are important to them when considering a job opportunity, and 76% consider a diverse and inclusive workplace an important factor in overall job satisfaction

A multicultural and inclusive environment not only attracts prospective employees but also supports employee loyalty by fostering mutual respect and a sense of belonging.

Another study also found a correlation between employees’ perception of their company’s diversity initiatives and their job satisfaction.

Workers who said their company wasn’t doing enough for diversity scored a 63 in overall work happiness, compared to 75 for employees who said their company was doing enough or even too much.

In fact, people who felt their company wasn’t doing enough for diversity scored lower in all areas of job satisfaction - particularly in areas of pay and career advancement.

Additionally, a study by Deloitte found that companies with inclusive cultures have 22% lower turnover rates. This study also found that millennials are 83% more engaged when working in an inclusive culture. Drawing from a culturally diverse talent pool and fostering an inclusive workplace environment can further enhance retention by creating a space where all employees feel valued and empowered to contribute.

 

More Innovation

When a company has a diverse work culture and multicultural teams, it lays the foundation for more innovative problem solving. This is because contrasting ideas can flow more easily, which stimulates innovation. Different communication styles, cultural, and cognitive diversity within the workforce further enhance creativity by bringing unique perspectives and approaches to challenges. This also helps foresee potential problems down the line.

From a marketing standpoint, diverse teams are better equipped to reach a more diverse audience, and can develop a more potentially diverse offering that appeals to various market segments. And a wider audience means a bigger opportunity for sales. This ability to easily innovate and reach people helps give companies a competitive edge.

In a multicultural workplace, conflicting working styles can present challenges, but when managed effectively, they can foster creativity and drive new solutions.

 

Demonstrates Authentic Company Values

It’s undeniable that some people won’t see the value in diversity or DEI initiatives. In fact, some may even be actively against efforts for diversity. But companies will need to decide for themselves which values they choose to uphold.

If your organization has any kind of corporate value around community, belonging, inclusion, collaboration, etc., diversity efforts will likely be needed to truly uphold those values. Company values should also reflect underlying cultural values, as these influence working styles, attitudes, and approaches within diverse teams.

In fact, as our social environment continues towards progress, companies now risk being perceived as hypocritical, deceptive, or out of touch if their values don’t match their actions.

Luckily, striving for diversity, equity, and inclusiveness will always be strong values that not only benefit your bottom line, but they also benefit your people too. Diversity and inclusion support professional growth fundamentally for all employees by broadening perspectives, enhancing skills, and fostering international networking.

 

Challenges of Cultural Diversity

While cultural diversity brings a wealth of benefits to organizations, it also introduces unique challenges that must be thoughtfully managed to create a truly inclusive environment. Ironically, the reason why DEI is so valuable is also what can cause challenges - navigating cultural differences in the workplace.

Employees from different backgrounds may have varying communication styles, approaches to problem-solving, and expectations around professional etiquette. Without cultural awareness and sensitivity, these differences can sometimes lead to misunderstandings or feelings of exclusion.

Another common challenge is addressing language barriers. In a diverse workplace, not everyone may be equally fluent in the primary language used for business communication. This can impact collaboration, slow down decision-making, and make it harder for some employees to fully participate in meetings or share their ideas.

Biases and stereotypes—whether conscious or unconscious—can also undermine efforts to promote diversity in the workplace. These biases may affect hiring, promotions, or day-to-day interactions, making it essential for organizations to foster cultural sensitivity and provide ongoing training to help employees recognize and overcome their own assumptions.

Ultimately, embracing cultural diversity means proactively identifying these challenges and taking steps to ensure that all employees feel valued, respected, and empowered to contribute. By promoting cultural awareness and building an inclusive environment, organizations can turn these challenges into opportunities for growth and innovation.

 

How to Promote Cultural Diversity in the Workplace

The thing about promoting diversity is that if it’s not an authentic initiative, you risk doing more harm than good. Hiring someone to “fill a quota” will not only put your employee at a disadvantage, but it will likely end up in your people mistrusting leadership, as well.

It's essential to manage cultural diversity thoughtfully to prevent the emergence of negative cultural stereotypes, which can hinder collaboration and morale within teams.

Therefore, it’s critical that any diversity, equity, and/or inclusion initiatives come from the right place. They need to be driven by a true desire to gain new perspectives and enrich their company’s culture. Promoting diversity also helps foster a more diverse professional environment, where varied cultural attitudes and workplace behaviors can contribute to innovation and growth.

Here’s how to start:

1. Evaluate and Communicate

Whether you’re starting fresh or are wanting to update an existing diversity initiative, it’s important to start on the right foot. Consider giving employee surveys to gain a deeper understanding of the current environment.

You may think you know what areas your company needs to prioritize, but you may find your employees are having a different experience altogether.

For example, you may think you need more ethnic diversity, but your survey reveals a significant number of your staff is struggling with a mental health disability.

In this case, ethnic diversity is still important, but it may become a secondary priority to disability initiatives.

Then, once you’ve gathered your data, communicate your plans to your team. Using professional communication is essential for clearly sharing diversity plans and effectively gathering feedback from employees. This will not only get everyone on the same page, but it will also show your team how valuable diversity is at your company.

 

2. Create a Diversity, Equity, and Inclusion Committee

Depending on your resources, creating a diversity, equity, and inclusion committee may be a worthwhile endeavor.

This committee might involve hiring specialists dedicated to improving your DEI initiatives. But this could also involve employees who have an interest in DEI working together on a committee.

The committee itself should be made up of a diverse group of people ranging in age, sex, race, culture, etc. To foster open dialogue and participation from all members, DEI committees can emphasize flat organizational hierarchy, encouraging everyone to speak up and share their perspectives. This group should be responsible for helping generate DEI goals, as well as helping facilitate follow through.

Remember though, change cannot rely on this group alone. It will require a company-wide effort for significant, lasting progress to occur.

 

3. Employee Resource Groups

Employee resources groups (ERG) are employee-led groups whose goal is to foster inclusivity and community. These groups are made up of people from the same diversity “group” and act as a resource for others in the company.

For example, you may have an LGBTQ+ employee resource group, a Gen Z group, and/or a Latinx group all at your company. These groups are there for others to lean on for personal and professional support.

ERGs can also play a key role in recognizing and accommodating religious holidays, helping to foster inclusion and respect for employees' diverse cultural and religious practices.

The goal isn’t to create exclusion – in fact, you may find members from other groups want to join different ERGs as allies. In this case, you’ll find different groups of people mixing and learning about the experiences of others in their office.

 

4. Cultural Diversity and Inclusion Training

It’s important to remember that we all have biases. But even unintentional or unconscious bias can still cause harm to others. To help combat these biases, consider cultural diversity and inclusion training.

This type of training teaches employees to acknowledge biases they may not have known they had. They then learn how to deconstruct those and how to then change their behavior.

Cultural diversity and inclusion training may require a coach to come in and host a workshop, or training can be done in a bigger group with a discussion to follow. This can be a great way to break down barriers and get into uncomfortable discussions that lead to real change.

 

5. Update Your Holiday Calendar

A small but impactful step in your diversity journey may be revisiting your holiday calendar. Updating the holiday calendar to recognize and celebrate diverse traditions supports a multicultural workplace by fostering inclusivity and respect for all employees.

Depending on your population, you may notice a number of your employees don’t celebrate typical US holidays but do others instead.

Try sending out a company-wide communication saying you’d like to learn more about the unique traditions of the different cultures in the office. Then, invite employees to volunteer to share about their customs.

This could be a great opportunity to learn about the different cultures that already exist in your company. And you may even adopt a new holiday schedule.

 

6. Get Leadership Buy In

As with many corporate initiatives, true change begins when company leaders embrace the effort. This means C-suite, execs, and managers will need to not only speak openly about diversity efforts but will also need to lead by example.

Developing global business leaders who can champion diversity and inclusion initiatives is essential for success in today's interconnected business environment.

For example, it’s not enough to announce that mental health days are available. It means leaders should start actually using them.

It’s not enough to make Juneteenth a new company holiday, it’s taking a moment to educate why the day is significant. And it’s not enough to say you have a zero-tolerance policy, it’s speaking up when you see discrimination occurring.

Encouraging employees to do these things is good, but showing your team that you’re striving for change too is even better.

 

7. Be Transparent

Striving for change will inevitably cause some growing pains and there will likely be cultural diversity issues. But fight the temptation to bury hiccups under the rug.

For example, maybe one of your company’s goals was to take a more active role in monthly observations. So, you might have had great initiatives to celebrate Black History Month in February.

But for one reason or another maybe you didn’t end up doing much to celebrate Pride month in June. These things happen. But rather than letting the issue pass by, address it.

Choose a company-wide meeting where you can take a few minutes to discuss your diversity efforts. In the meeting, acknowledge that you missed the mark, apologize, and let people know what you plan to do differently in the future.

By not shying away from the problem, you’re showing a true commitment towards progress. Transparency in diversity efforts not only builds trust but also helps your organization adapt more effectively to an uncertain global business environment, where agility and openness are essential for long-term success.

Conversely, don’t forget to celebrate wins. In the example above, while it’s appropriate to discuss where you fell short, it’s also important to highlight how well you did with Black History Month. Remind your employees that although you’ve stumbled, you’re still heading in the right direction.

 

Measuring Cultural Diversity

To ensure that diversity and inclusion initiatives are making a real impact, organizations need to regularly measure cultural diversity within their teams.

Tracking the composition of the workforce—such as the representation of different cultural backgrounds, ethnicities, and religions—helps provide a clear picture of how diverse the organization truly is. This data can help identify gaps and guide future hiring and development strategies.

Beyond demographics, it’s important to assess how employees perceive the workplace culture. Surveys and focus groups can reveal whether team members feel included, respected, and supported, or if there are areas where the organization can improve. These insights are invaluable for building a more culturally diverse workplace that meets the needs of all employees.

Key metrics like employee engagement, retention, and turnover rates can also indicate the effectiveness of diversity efforts. For example, higher engagement and lower turnover among employees from diverse backgrounds suggest that the organization is succeeding in creating an inclusive workforce. Regularly reviewing these metrics allows organizations to make data-driven decisions and continuously improve their approach to managing cultural diversity.

By measuring and monitoring cultural diversity, organizations can ensure they are not only attracting a diverse talent pool but also fostering a culturally diverse team where everyone has the opportunity for personal and professional growth. This commitment to a diverse and inclusive workforce is essential for long-term success in today’s global business environment.

 

Work with Terryberry

Terryberry provides solutions to help build a healthy, accepting work culture through effective employee engagement. These solutions include:

• Service Awards and Performance Awards: Recognize and reward employees based on years of service awards, anniversaries, or performance.
• Social Recognition: Empower your employees and managers to recognize their peers and celebrate successes with an easy-to-use social recognition application.
• Employee surveys: Unlock improved feedback and communications with employee and customer feedback solutions.
• Wellness Programs: We make it easy to run wellness programs and activity challenges that increase engagement, expand corporate health, and build team camaraderie.

Ready to learn more? Schedule a demo with our team to get a hands-on walkthrough of how Terryberry can transform the culture of your workplace.