Businesses that fail to employ a diverse workforce risk damaging their future productivity and profitability, employment experts claim.
The Chartered Institute of Personnel and Development (CIPD) claimed that taking on staff from underrepresented groups can help organisation achieve beneficial results and compete in the war for talent.
Firms should turn to older workers who bring long term experience, CIPD said, by offering alternative saving options and more flexible retirement arrangements.
The report stressed that training was key to tapping into a diverse talent pool.
While the majority of employers train interviewers in diversity issues, only 29% advertise beyond traditional means to target under-represented groups such as ethnic minorities and women.
With many firms struggling to fill vacancies, CIPD urged businesses to also consider taking on ex-offenders.
Only 6% who have knowingly employed former prisoners have had a poor experience and research shows that employment actually reduces instances of reoffending by up to 50%.
Dianah Worman, CIPD diversity adviser, said: "It is important to provide training for line managers in order to demonstrate the business case behind diversity because they can help make the change.
"Changing mindsets and developing good practices will help organisations retain knowledge and experience, widen the recruitment base, and could lead to more customers and greater profits."
CIPD's report, Driving Diversity Progress, was launched at a round table discussion during a diversity event in Ireland.
