What is the difference between diversity and inclusion in the workplace?

The difference is often misunderstood. Diversity is about representation. It’s measurable: gender, ethnicity, disability, age. Many organisations treat it as a numbers exercise, ticking boxes to meet targets.

Inclusion is about experience. It means creating an environment where people feel valued, supported and able to thrive. Unlike diversity, inclusion is harder to measure because it’s about how employees feel day to day: whether they feel safe to speak up, whether their ideas are heard, and whether they can balance work and life without fear of judgement.

“It’s making people feel that they belong—and everybody is so individual and unique. That’s a real challenge. And I think it’s something that’s quite exciting about technology because you can start to personalise things.”

Zoe Wilson, Director of ReThink HR notes how technology can help you personalise business functions to aid inclusion

This distinction matters. McKinsey research shows that companies with strong diversity are 35% more likely to outperform competitors. But those benefits rarely materialise if inclusion is missing.

Many organisations assume that hiring a diverse workforce automatically solves cultural challenges. In reality, representation without inclusion often creates new problems. When employees feel excluded, they are less likely to speak up about concerns, which increases stress and reduces performance. Over time, this silence can lead to disengagement, absenteeism and even higher turnover. A lack of inclusion leading to absenteeism is one of the factors we tackle in our guide detailing ‘7 Ways To Effectively Reduce Absenteeism in the Workplace’.

Inclusion is what turns diversity into a genuine advantage. It ensures that people from different backgrounds can contribute fully, feel respected and thrive in the workplace. Without it, diversity targets become a box-ticking exercise rather than a driver of innovation and productivity. Research from Onvero reveals that inclusive workplaces see employees stay nearly four years longer and report 68% higher productivity. 

Consider these real-world scenarios:

• A woman promoted to board level still faces unconscious bias and lacks mentorship, leaving her vulnerable to imposter syndrome.
• A Muslim employee observing Ramadan struggles because policies don’t allow flexible hours.
• A parent requesting time off for a school event feels penalised because flexible working isn’t consistently applied.
• A disabled employee avoids asking for adjustments for fear of being labelled “difficult”.

These examples show that diversity alone does not guarantee fairness or belonging. When inclusion is missing, employees experience stress and isolation, even in organisations that meet representation goals.

The result is not just cultural harm but measurable business impact: higher absenteeism, lower engagement and reputational damage.

When inclusion is missing, the impact goes far beyond how people feel at work. Stress and anxiety often rise, leading to more sick days and millions of lost working hours each year. Turnover also increases as employees who feel excluded start looking for opportunities elsewhere.

Replacing employees is costly, not just because of recruitment expenses but because teams lose experience and continuity. Over time, this slows productivity and affects growth. Employer reputation suffers too. In a competitive job market, candidates pay close attention to company culture. Organisations that fail to create an inclusive environment struggle to attract skilled people, and those who do join are less likely to stay.

A 2023 McKinsey study found that companies in the top quartile for ethnic and cultural diversity on executive teams were 39% more likely to outperform on profitability. Meanwhile, Gallup’s State of The Global Workforce estimates that disengaged employees cost businesses $8.8 trillion globally in lost productivity, and exclusion is a major driver of disengagement.

Creating an inclusive culture doesn’t happen overnight. It takes real commitment and consistent action. The starting point is leadership. When senior teams make inclusion a priority, set clear goals and model inclusive behaviours, it sends a clear signal across the organisation.

Policies matter too, but they need to feel practical, not just like compliance. Blind recruitment, transparent promotion criteria and flexible working options show that inclusion is more than words on paper. The key is making sure these policies are applied fairly and consistently.

Communication is just as important. People need safe ways to raise concerns and regular chances to share feedback. Acting on that feedback quickly builds trust and shows employees their voices count.

Finally, inclusion should be part of everyday life at work, not a one-off project. From onboarding to performance reviews, every interaction is an opportunity to make people feel they belong. Realising people’s differences allows you to tailor approaches and improve inclusion. Zoe Wilson, Director of ReThink HR discusses this in Episode 8: Performance and Progression of our Do the Best Work of Your Life series:

“Managers often treat people exactly the same through processes like probation. One person loves regular meetings and detail, another feels micromanaged and not trusted. Two different styles, two different outcomes—one thrives, one leaves.”

Resistance to change is one of the biggest hurdles in large organisations. It often comes from concerns about losing control, extra workload or disrupting established routines. Senior leaders may worry about the cost or complexity of implementing new policies, while managers on the ground often feel uncertain about what inclusion means in practice.

The key to overcoming this resistance is clear communication and visible leadership commitment. When executives explain why inclusion matters, not just as a moral imperative but as a driver of performance and profitability, it reframes the conversation. Linking inclusion to reduced turnover and improved engagement makes it a business-critical priority.

Another challenge is measuring inclusion. Unlike diversity, which is quantifiable, inclusion is subjective. How do you know if people feel they belong? While there’s no single metric, organisations can use engagement surveys, pulse checks and demographic analysis of satisfaction scores to identify patterns. If certain groups consistently report lower engagement, that’s a red flag. For more ideas on practical ways to track and improve inclusion, read our blog on diversity and inclusion in financial services, which tackles some of the preconceived notions about the industry and what your HR team can do to tackle them.

Practical steps to move forward without overwhelming teams include:

• Start small with pilot programmes, such as flexible working trials or mentorship schemes, before rolling out organisation-wide.
• Update policies to reflect real-life needs, like religious observances or caring responsibilities.
• Use technology for feedback loops, such as anonymous channels for employees to share concerns and ideas safely.
• Train managers on inclusive behaviours, because culture lives in day-to-day interactions.
• Address lack of inclusion in the workplace by creating safe feedback channels and acting on concerns quickly.
• Reduce lack of diversity risks by implementing blind recruitment and transparent promotion criteria.
• Combat lack of inclusivity through flexible working policies and tailored onboarding experiences.
• Prevent absenteeism linked to lack of diversity and inclusion with mentorship programmes and inclusive leadership training.

Remember, inclusion isn’t a one-off project. It’s a continuous process that requires listening, adapting and acting on feedback.

Start by reviewing your current strategy. Look at where policies aren’t applied consistently, listen to employee feedback and take visible steps to close the gap. Inclusion isn’t a one-off project - it’s an ongoing commitment that drives engagement, reduces absenteeism and builds a culture where everyone can thrive. If you’re exploring technology to support inclusion and streamline HR processes, check out our guide on how to choose HR software.

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