DEI is not a new concept in the tech industry and business environment in general. The initiative started with the 1964 Civil Rights Act that prohibited employment discrimination based on protected characteristics such as race, color, or national origin. Tech companies, especially startups, are famous for being disruptors in their respective industries, which is why many of them accepted diversity, equity, and inclusion initiatives early on as a part of their business strategies.
However, with many other uncertainties and challenges tech companies and startups face, especially during recessions, economic downturns, pandemics and more, most of their DEI initiatives remained at very basic levels.
Employees had their anti-discrimination training, signed their company policies, and recruiters worked to diversify candidate pools. But, for many companies, DEI efforts often ended there, with diversity, equity, and inclusion being nothing more than buzz words in company policies.
While things were supposed to change drastically after the 2020 protests for racial and social equality that shook not just the U.S. society but the entire world, it didn’t exactly happen like that.
Initially, it was a wake-up call that companies needed to start thinking about making more serious efforts to change their DEI practices. The entire business world started to comprehend the importance of diversity and inclusion and what benefits they could bring to the startup community.
Unfortunately, like many social issues, it waned with a wimper. According to a 2022 survey from Culture Amp, “81% [of US companies] reported that they believe DEI initiatives are beneficial to their organizations. However, only 34% of respondents reported having enough resources to support DEI initiatives.” The platform surveyed the likes of Nasdaq, Oracle, MacDonalds, AirBnB, Salesforce, and more.
VC investors have a part to play in this as well. According to the 500 VC-backed startup founders that Embroker interviewed for its Startup Risk Index report, internal DEI issues are in the top three priorities when talking about risks that startups face. Founders perceive their investors to hold DEI as a higher priority than other risks, such as cybersecurity or innovation pace, with DEI ranking as the no.1 risk for early-stage founders’ investors.
To further emphasize the significance of DEI initiatives for companies, employers should note that one in three employees and job seekers indicated in Glassdoor’s Diversity & Inclusion Workplace Survey that they wouldn’t apply for a job at a company that lacks diversity in its workforce. Furthermore, 37% would not apply for a job at a company with disparities in different ethnic/racial groups’ employee satisfaction ratings.
These reports show that DEI initiatives have become crucial for startups that want to succeed in today’s business environment. To successfully design and eventually implement a DEI strategy, startup founders and key stakeholders should first ensure they understand what diversity, equity, and inclusion mean and what benefits they bring before deciding on the best course of action for their company.
What is Diversity, Equity, and Inclusion?
People sometimes use the terms diversity, equity, and inclusion interchangeably, where in fact, even though these concepts have similar goals, they all represent different things.
To be able to implement DEI into vital processes in your organization, you first need to understand what diversity equity and inclusion mean, how they are different, and what binds them together to create an inclusive, open, and ultimately profitable workforce.
Diversity doesn’t solely mean you should hire “diverse talent” and then alienate people rather than include them, as it actually beats the core purpose of diversity. Then again, diversity is not only about what makes people different. It is about creating an environment of acceptance and appreciation of all the ways in which people are different.
A diverse environment is an environment that gathers people of different races, gender identities, sexual orientations, age, ethnicity, spiritual and religious beliefs, political opinions, and other characteristics. It is an environment made up of individuals that represent many of these differences and work together to create a culture where people value that diversity.
There is no one definition that fits everyone when it comes to diversity. For example, millennials value cognitive diversity in the workplace, which is the integration of various backgrounds, experiences, and viewpoints in a group. Boomers and gen-Xers see diversity as a promise of fair treatment for everyone, regardless of gender, race, religion, ethnicity, or sexual orientation.
Sometimes these two takes can conflict, as well, which is another concern for business owners to think about. It may be a worthwhile exercise to think about what you consider diversity to be.
Equity is often mixed with equality, but these terms don’t have the same meaning. Equality means that we are all equal, whereas equity guarantees that everybody has access to the same opportunities. Equity in the workplace promotes fairness through all the processes and ensures equal treatment for everybody in the organization and an equal opportunity for advancement.
For example, women were historically often passed over for promotions because of the possibility of getting pregnant and leaving for maternity leave. As much as we would like to think things are different today, there are still people who feel they don’t get the same opportunities. In 2020, 31% of LGBTQ+ individuals felt they didn’t have an equal chance for promotion, salary increases, or job retention.
That’s why the need for equity initiatives that aim to instill the importance of equal treatment into the very core of the company systems is still crucial for every organization devoted to fair employment practices. If you want to start from the recruiting process, consider implementing blind hiring techniques for impartial talent screening. Equitable workplace practices require a lot of planning, training, and hard work but also bring fairness into your processes.
The Tech industry still has a long way to go to become an environment where diversity and inclusion flourish. According to the BuiltIn’s State of DEI in Tech report, 30% of the interviewed employees say their companies don’t have a DEI program in place or make little progress towards meeting their DEI goals. But what does inclusion actually mean?
Inclusion in the workplace refers to an environment where everybody feels respected and valued. It is a place where people can speak their minds and participate in the decision-making processes. People are sometimes unconscious of their bias and don’t even notice that they treat people differently. Removing that bias in the workplace and building empathetic relationships set the ground for an inclusive environment.
A diverse workforce doesn’t mean much if your employees don’t feel like they belong in the organization. A culture of inclusion embraces differences and shows everyone that their opinions matter. That’s one of, if not the premise around which you should build your DEI initiatives.
Inclusion also means that there is no room for discrimination and intolerance. Your company should be a safe space where everyone should have a right to contribute, but with an understanding that not everybody is comfortable with speaking up. This is just one example of how inclusion is a complex concept that requires constant work and a deep understanding of what inclusion means for your business.
Why Is DEI Important for Startups?
Before you commit to implementing a DEI initiative in your organization, you need to understand why it matters to you and what benefits it could bring your company.
Commitment to diversity, equity, and inclusion needs to start with leadership. The biggest questions that executives need to ask themselves are:
- What kind of company do you want to build?
- How much time and resources can you invest in building an inclusive culture?
- What benefits do you think it will bring to your business?
It turns out that diversity, equity, and inclusion can be very beneficial for your organization.
Apart from DEI initiatives becoming one of the prerequisites for raising funding from VCs, diversity, equity and inclusion bring many other gains to your startup. Let’s look at some of them:
- Better financial returns: McKinsey found in its research on the importance of diversity that top companies in racial and ethnic diversity are 35% more likely to have better financial returns than the median companies in the same industry. Also, Credit Suisse’s report indicates that companies with 10 percent or more women on the board outperformed those without women and those with fewer than 10 percent women or no female directors.
- An upper hand in talent acquisition: Glassdoor’s Diversity & Inclusion Workplace Survey results show that 76% of candidates and employees say a diverse workforce is vital when choosing a company for their future employment. Candidates research your company before applying for a position and evaluate your interview process. Removing bias from the recruitment efforts will significantly broaden the talent pool for your team.
- Increased performance and better employee satisfaction rates: Deloitte’s research from 2020 points out that companies with a strong DEI initiative saw their job performance rise by 56% and turnover risk decrease by 50%. Also, one micro-exclusion incident can cause a team member’s performance to drop by 25%. The survey showed that 93% of respondents agreed that a sense of belonging spurs performance, proving that content employees perform better.
- Empowered decision-making and innovation: A diverse team offers more creativity and different perspectives when evaluating an idea and making decisions. Creating a culture of respect where ideas are welcome inspires innovation and acceptance.
- Better brand recognition and brand associations: Inclusive brands and brands that promote diversity in their internal and external operations form stronger bonds with their employees and customers. These brands resonate better with job seekers and buyers everywhere. For example, Google and Ford are famous for their diversity and inclusion efforts and release progress reports annually.
How to Promote Diversity, Equity, and Inclusion in Your Company
You probably don’t have the resources Google or Ford do to invest in your DEI efforts, but, maybe surprisingly, they are good examples of corporations with solid DEI manifestos. Slack also has a Slack for Good initiative to “increase the number of historically underrepresented individuals in the technology industry.”
Apple’s inclusion and diversity initiative resulted in 47% of women in open leadership roles globally and a 16% increase in open leadership roles filled by people from underrepresented communities.
Even though you can’t match Slack or Apple’s investment in DEI efforts, you can still allocate enough resources to create an inclusive environment in your startup. Here are some actions you can take to promote inclusivity:
Remove Bias From Hiring and Employ Diverse Talent
Liz Schrader, the Co-Founder of EQ Recruiting, recommends that you set specific diversity hiring goals and have your recruitment and leadership teams take unconscious bias training. She also recommends partnering with diverse talent community groups, such as Jopwell, Elpha, Dev/Color, or Latinas in Tech.
Working with these organizations will help you have a fair representation of diverse candidates throughout the hiring process, including the outcome. If you have 50% of women, ethnic minorities, or LGBTQ+ candidates in the first round, it doesn’t mean you have fulfilled your inclusion goals. Allowing these candidates a fair chance to advance into the next pipeline stages and get an equal opportunity for employment shows that your unbiased hiring process works.
To ensure your open positions are available for all qualified candidates and that your job descriptions are inclusive and transparent, use inclusive language and clearly state what the job entitles. Add culture questions to the interview process to see if the candidate’s understanding of DEI aligns with your company culture.
Create an Inclusive Workplace Culture
Porter Braswell, the Co-Founder and CEO of Jopwell says that the essential first step is to “clearly define the pain points you experience and the groups of individuals that require better representation” before defining your DEI strategy. Creating an inclusive culture is no easy task, and you will need to perform regular check-ins with your team to ensure you are on the right track.
Inclusive workplace culture also means that your policies and procedures need to reflect your inclusivity efforts. For example, creating a family and parental leave policy that is equitable to all your employees will show your LGBTQ+ employees that their rights as parents or caregivers are no different than those of their colleagues.
A flexible remote or hybrid working arrangement also sets the ground for an inclusive environment. Apart from allowing candidates to apply for a position from anywhere in the country or even the world, it also gives employees flexibility when dividing time between work and other commitments.
Perform Pay Audits and Implement Transparent Salary Policies
If there are pay gaps between your employees based on ethnicity, gender, or race, the best way to discover them is through pay audits. Individuals that work at the same level and position and perform equally well should have the same salary range. If your audit shows that is not the case, you might have some disparities you should locate and fix.
One way to deal with these discrepancies is to set transparent salary policies. Conduct market-wide research to define competitive compensation for each job in your company and ensure that your salary policy is fair and transparent.
Define the Role of the Leadership Team
For your DEI efforts to work, you and your leadership team must lead by example. If you want to inspire your team to foster an inclusive culture, you must show model behavior. The leadership team must live and embody the values of a diverse and inclusive organization, and they won’t be able to do that unless they are personally committed to achieving the goals of your DEI initiative.
Start with this question: Did your leadership team get enough education and training on how to create an equitable and inclusive environment? If they don’t set an example and inspire their respective teams, you can’t expect your employees to take the initiative and lead the DEI efforts themselves.
If you don’t have an expert in the diversity, equity, and inclusion field on board, consider hiring a trainer to work with your team and facilitate conversations and workshops. They can also educate your leadership team on how to empower other employees to embrace diversity and embark on their own DEI journey.
As a startup, knowing that you don’t have the same resources as the big tech companies to devote to your DEI efforts, making this initiative your priority is not an easy decision. You would need to consciously decide that your company culture, policies, and hiring process will build on the concept of diversity, equity, and inclusion. However, knowing that the benefits for your company are many should help you make that commitment.
Remember that you will need to evaluate your initiatives and results regularly to ensure that you are on track with your set goals. Conduct surveys with your employees, act on the results, and most importantly—don’t forget to lead by example.