Improving workplace diversity has "real business benefits" for companies, a new report suggests.

Put together by the Confederation of British Industry (CBI) and the Trades Union Congress, the research reveals that firms which look for staff on the basis of their potential, regardless of their sex, race, age, disability, sexual orientation or religion benefit in a number of ways.

For example, they are said to experience improved employee retention rates and lower recruitment costs, as well as higher worker morale and productivity.

Entitled Talent not Tokenism, the report states that diversity need not be a complex legal minefield for companies.

"Employers who take steps to encourage a more diverse workforce notice huge benefits from doing so, whether it is hiring skilled staff, understanding their customers’ needs better or more fundamentally through improved morale and productivity," stated Richard Lambert, director-general of the CBI.

A lobbying organisation, the CBI aims to help create and sustain conditions under which UK firms can prosper.