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What is Diversity and Inclusion? And Why Does It Matter?

Team 365 finance

Written by Team 365 finance


Promoting and continually supporting diversity and inclusion in the workplace is the basis of good management. It ensures businesses treat their people as individuals and value those differences. By doing so, the workforce can feel empowered to participate fully within the organisation and unlock their potential.

While UK legislation covers a variety of factors, meeting the minimum standards is not enough — to create true diversity and inclusion, it goes far beyond basic legal compliance. Instead, organisations should develop strategies that affect the business for the better, adding value to their activities and influencing employee wellness and satisfaction.

Keep reading this article to learn more about how diversity and inclusion should look and how you can foster an inclusive culture within your business.


What is diversity and inclusion?

Diversity and inclusion are often mentioned in the same breath. Though they do go hand in hand, they have separate meanings.

Inclusion is where the differences between staff are valued to allow everyone an equal experience and ability to thrive in the working environment. These differences could be their background, their identity or their current circumstances. An inclusive work environment would be where your people can feel like they belong and perform to their full potential without conforming to any ‘norms’ placed upon them by the workplace.

Diversity, on the other hand, is about recognising the differences. Diversity means having a range of perspectives and experiences at the table in the decision-making process and having a workforce that reflects and represents the community you are trying to serve.

In the UK, diversity is protected by legislation. The Equality Act 2010 protects individuals from discrimination about nine particular characteristics.


The protected characteristics

So what are the nine characteristics protected by the UK Equality Act 2010? Let’s go into detail about each one:


This characteristic refers to an individual’s age or their age group, for example, an 18-30-year-old. The age grouping is common on applications and is to prevent any prejudice about the supposed ‘inexperience’ of young people or those who are ‘too old’ to do specific roles.



A person has a disability if they have a physical or mental impairment that has a substantial and long-term adverse effect on that person’s ability to carry out normal day-to-day activities.



An individual cannot be discriminated against because of their sex. Usually, this might refer to birth sex which would be male or female and is separate from gender.


Gender reassignment

The process of transitioning from one sex to another is a protected characteristic if an individual identifies as different from their birth sex.

This characteristic also covers gender-fluid identities. It’s important to note that gender reassignment characteristics are not a medical process. The individual does not have to undergo medical treatment or be under medical supervision to be protected under the Equality Act as a transgender person.


Marriage and civil partnership

Marriage is a union between two people regardless of gender or sex. It’s common for same-sex couples to have their relationships legally recognised as civil partnerships, and individuals who have civil partners cannot be treated less favourably than married people.


Pregnancy and maternity

Pregnancy is another protected characteristic, and a pregnant person cannot be discriminated against in the workplace because of their condition, before, during or after pregnancy.

Maternity refers to the period after birth. Protection against maternity discrimination is for 26 weeks after giving birth in the Equality Act, and this includes treating a person unfavourably because they are breastfeeding.



Race refers to groups defined by nationality (including citizenship) and ethnic or national origins. It’s also illegal to discriminate based on an individual’s unique heritage or skin colour.


Religion and belief

Any religion that an individual subscribes to is protected, including a lack of religion.

The Equality Act also protects religious or philosophical beliefs and includes a lack of beliefs. If individuals do not subscribe to specific thought leaders, they cannot be discriminated against because of what they do or do not believe in or how they live their lives because of those beliefs.


Sexual orientation

Sexual orientation refers to whether a person’s sexual attraction is towards their sex or gender, the opposite sex or gender, or that individual’s specific definition of attraction to other genders.


In what circumstances do the protections apply?

The protected characteristics are not only relevant to workplace settings, but individuals are also protected from discrimination:

  • In education
  • As a consumer
  • When using public services
  • When buying or renting property
  • As a member or guest of a private club or association


Why is diversity and inclusion important?

Aside from being a legal requirement, why do companies need to consider strategies to include diversity and inclusion in their organisation?

Research finds that the most diverse companies are now more likely than ever to outperform less diverse peers on profitability. For example, executive teams that score highly in ethnic diversity are 36% more likely to outperform their less diverse counterparts. In addition, executive teams that score high on gender diversity are 25% more likely to have above-average profitability. Harvard studies also show that simply having a higher share of women in the organisation can lead to profits rising by up to 50%.

According to Harvard Business Review, diverse teams are also 70% more likely to capture specific markets. A good rule of thumb is if you want to speak to a target market, your team must look like that target market. If you have little diversity, it’s unlikely that you’ll fully understand the experiences and needs of the people you want to talk to the most.


What do diversity and inclusion look like within a business?


Research finds that inclusive marketing impacts customer purchases. In a recent US survey, 64% of customers said they took action after seeing an ad that they considered diverse or inclusive. Specific consumer groups felt even more strongly about inclusive advertising, including the Latinx+ (85%), Black (79%), Asian/Pacific Islander (79%), LGBTQA+ (85%), millennial (77%), and teen (76%) consumers.

Consumers can sense and research whether companies practise what they preach regarding diversity and inclusion, or else their ads are seen as disingenuous.

For example, if a business wanted to show support of LGBTQA+ causes, putting a rainbow on a product is not a diversity strategy. Not supporting the causes throughout the rest of the year, or for example, not including gay or trans voices in the conversation around the marketing, would be seen as ‘rainbow-washing’ and not a genuine contribution to a diversity initiative.


Hiring and acquisition

Almost all job applications have a protected characteristics questionnaire. The questions ensure that bias is reduced in the early stages of the hiring process.

Bias can be conscious or unconscious. Conscious bias is where an individual discriminates against a particular group knowingly. Unconscious bias is where prejudice is acted upon without the individual realising any bias tendencies.

An example of unconscious bias when sifting CV’s could be applications with ‘foreign’ sounding names can be more easily dismissed than British ‘sounding’ candidates. A study recently found that African Americans are 14% less likely to get a call back about a job than those with white-sounding names.

It’s essential to make your staff aware of bias to eliminate inequalities from your acquisition process, to get the best talent, regardless of heritage, name, nationality or other protected characteristics.


Workplace culture

An organisation’s culture refers to the values, beliefs, and behaviours that are promoted and practised in a business. In diverse and inclusive companies, their culture would ensure that the workplace was a safe space for individuals to bring their whole selves to work — meaning, the people don’t have to hide parts of their identity in order to ‘fit in’ or avoid being judged.

For example, if certain employees don’t drink alcohol for religious purposes but on work nights out, they are disparaged for not having ‘just one’. To avoid awkward questioning, those employees don’t attend team-building activities. This is an example of a non-inclusive workplace as the environment doesn’t allow them to express or practise their beliefs without discrimination (even unintentional).


How to promote diversity and inclusion in the workplace

Now, we’ll turn to ways that businesses can foster an inclusive and diverse workplace.

Lead by example

First of all, focus on educating your senior team and leaders throughout the organisation about valuing and encouraging diversity and inclusion. Then, management can implement any diversity initiatives and monitor processes for more inclusion throughout the operation to become habitual in the workplace.

Consider setting up a diversity and inclusion team, which could collate employee feedback and discuss how to improve the workplace culture. Then, those individuals could lead by example and make the cultural shifts needed to foster diversity and inclusion.


Cultural inclusion and team building

A tangible way to demonstrate that the organisation values diversity and inclusion is to celebrate what makes your employees different. There are a few ways to ensure you respect others cultural boundaries:

  • Recognise seasonal celebrations that reflect the diversity of your employees. For example, certain employees may not celebrate Christmas but have a separate festive period for their religion. Ensure you allow them to celebrate in their way and include the entire office to educate and celebrate the cultural differences you have on display.
  • Try team-building activities such as pot-luck dinners or lunches, where your employees bring a dish that is part of their heritage.
  • Encourage staff to decorate their desks to reflect their individuality and dress for occasions of cultural significance.
  • Ensure that your events or team-building activities are inclusive. For example, avoid company outings during the daylight hours of Ramadan, so those celebrating can eat in accordance with the holiday’s traditions.
  • Create special social networks for different groups. Many businesses have women’s forums, disability groups, or LGBTQA+ communities that can meet and discuss relevant and empowering issues for them. Ask your employees to get involved, and you could find many groups that would be useful for your staff, creating social and professional connections for those involved.


Training courses

Make diversity and inclusion part of your education process. For example, you could regularly host training courses or workshops to ensure you’re helping your staff learn why diversity is essential within the workplace. Not only will this make employees aware of their own unconscious bias, but it will illuminate a new perspective and allow colleagues to strengthen relationships.


Assess your hiring process

To claim you have a true meritocracy where individuals are hired on their merits without any form of bias, businesses must take a look at their recruitment systems. Here are some methods to reduce bias in the application process:

  • Anonymise any names so that any cultural bias is removed.
  • Ask set questions in applications and interviews, so you’re gaining the same information from candidates without their circumstances or education affecting the application.
  • Develop a test or sample task, so you base decisions on the quality of the work and not their CV. More privileged individuals might have more impressive experience or previous opportunities available to them.
  • Examine the language used in your job advertisements to ensure they are attractive to both men and women and individuals of different cultural backgrounds.


Feedback channels

Simply ask your employees what they think about diversity and inclusion in the business.

Anonymise surveys or allow staff to discuss in smaller groups to ensure they don’t feel like they are ‘speaking out’ and trust that management will hear all opinions. Opening a forum to discuss microaggressions and how to tackle them ensures that your business culture revolves around improving inclusivity consistently and doesn’t just rest on the laurels of having a diverse team.


External consultation

You can bring in outside help if you find your workforce is resistant to change or you’re unsure how to amend your existing policies and processes. Legal and HR advisors will support your organisation through the changes you need to be more than just legally compliant.


Access flexible financing with merchant cash advances from 365 finance

If your business wants to invest in a new strategic direction and make the necessary changes to ensure your workplace is diverse and inclusive, flexible financing could be a valuable option to bridge the gap while you invest in your future.

At 365 finance, we offer revenue-based finance to businesses across the United Kingdom. So if you’ve been trading for six months or longer, we can help you quickly access finance when you need it most.

Revenue-based finance solutions are designed as a quick way for any business that accepts credit or debit cards to raise capital without needing a bank loan or sizable overdraft.

365 finance offers £10,000 to £400,000 in unsecured funding for UK SMEs. No APRs, no hidden costs or fixed monthly payments.

Contact us today to see how we can help your business reach its full potential.