The business benefit of diverse teams
Promoting diversity and equality is not just a socially responsible initiative, but a strategic business decision, imperative to innovation and success. Why should startups invest early in diverse people, and how they can do this to make a greater social impact whilst also improving business?
Recent Me Too and Black Lives Matter movements helped shed light on the challenges women and ethnic minorities continue to face seeking equity in society today. These powerful social and political movements undoubtedly had an impact on peoples’ thinking – and impacted how businesses lead and support their own micro-communities too. We are seeing a promising move towards allyship and more inclusive hiring practices in business, diverse teams and boards, and more career support for those from under-represented groups. While there is still more work to be done, the benefits of early-stage businesses championing a more diverse and inclusive working environment are undeniable.
Talent poor, to talent powered
Brexit, global supply chain problems and COVID-19 proved the perfect storm for British businesses, further exacerbating the skills problems across almost every industry. According to research by Skillsoft, around three-quarters of IT decision-makers worldwide claim to be facing critical skills gaps across tech departments. Talent is in short supply and organisations are having to fight for limited resources.
When it comes to startup hiring, every action and every decision is critical – in a small team one employee has the potential to drive significant growth in the company. While startups may be attractive to jobseekers because of their high-growth potential, earning opportunities and agile nature – these are not always the most important aspects employees are looking for. Equality, Diversity and Inclusion (ED&) is now a significant factor for job seekers in the market today.
According to a Glassdoor survey, 72% of women, 89% of black respondents, 80% of Asians, and 70% of Latinos, said workforce diversity was important to them. This was a sentiment echoed by a significant majority of white respondents, who also said workforce diversity was important when selecting their next role.
Diverse and inclusive businesses are opening themselves up to a much larger talent pool than the companies who continue to recruit in the same way they have for 30 years. Startups have a genuine opportunity to not only entice great diverse teams by committing to an inclusive talent attraction strategy in the early-stages of their businesses, but to grow and nurture a truly inclusive working culture too. Employees from every group need to feel psychologically safe to bring their unique perspectives forward and the lessons learned here, will enable startups to scale sustainably and ethically.
Engines of innovation
At its core, a startup is a problem-solving entity seeking answers to multiple questions. Its ideas come from people, and teams of people working together. If a startup were to nring together a group of innovators that share the same life experiences and dimensions to build a new product or solution – they are eradicating diversity of thought and unlikely to produce something that is unique, relevant and accessible to all factions of society today. The more diverse teams are across gender, ethnicity, age, educational background, experience level and expertise - the more likely your creative team will draw inspiration from seemingly unrelated places.
When it comes to deciding which ideas to test and put more resources behind, diverse teams are also far better than homogenous ones. With more pathways to execute on an idea, you will see diverse teams move forward with - or ditch - ideas far faster and more cost-effectively.
On average, startups take three to four years to be profitable, but 2019 analysis from Mckinsey & Company found that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile. In the case of ethnic and cultural diversity, the business-case findings were equally compelling: top-quartile companies outperformed those in the fourth by 36 percent in profitability.
How to make ED&I a priority
How do startups and larger, more advanced organisations integrate ED&I into their business strategies to reap the rewards of more diverse teams? The first step is to make your founders and business leaders aware of the benefits of being an inclusive business and to acknowledge the need for change.
- Audit: Look at your existing talent attraction and retention practices, and assess current strengths and opportunities to gauge what is working, and what isn’t. Have you created an inclusive culture? Does your leadership reflect that?
- Plan: If your organisation does not have the infrastructure in place to make immediate improvements to your diversity strategy, allocate resources to develop permanent training programs and policies. The makeup of your senior leadership team, top management, your customers, and key stakeholders are all huge signifiers to the rest of your workforce.
- Sustain: Make accountability a priority. For example, make all hiring managers must all share in the vital objective to provide equal opportunities access to roles, if this is the wider business goal.
- Go public: Just as annual business objectives may be shared within an organisation to encourage all teams to work towards the same goal – diversity and inclusion goals should also be made public. If you meet these benchmarks, share the successes with your employees and be transparent about any setbacks - just keep moving forward.
The survival of a startup relies on its profitability, growth, agility and innovation – all areas where people are critical in contributing to success. The renewed focus on employers to prioritise diversity and ensure people of different genders, ethnicities and backgrounds are given equal opportunity to contribute, is important for every social impact business. However, diversity and inclusion is also integral to business success. Understanding this relationship is what will help businesses – of every shape and size – to truly build a corporate culture that supports and values different perspectives.