When building your business, it’s important to create a strong foundation of core values. So while you’re establishing your mission and values, it’s also imperative to integrate diversity, equity, and inclusion from the start.
Startup companies have a lot of facets of business to focus on, and oftentimes, the budgets are tight. Still, it’s best to take the time and money from the beginning to incorporate DEI efforts in order to create a business that is welcoming. The result? Your company can attract top talent to bring different perspectives to the table, ensuring your company can best serve its community by developing unique products and services.
Let’s explore how DEI can create a win-win-win for startups, their employees, and their customers.
What is DEI?
Diversity, equity, and inclusion, often shortened to DE&I or DEI, is a framework designed to create welcoming and fair workplaces. DEI is an umbrella for three specific components: diversity, equity, and inclusion.
Diversity involves the presence of a wide variety of groups within a population, including race, religion, ethnicity, gender, sexual orientation, socioeconomic status, age, and physical and mental abilities.
Equity refers to providing fair treatment and access to opportunities for everyone.
Inclusion requires a company to eliminate barriers that would prevent anyone from participating fully. This element allows everyone, regardless of background, to feel welcome and able to participate fully.
“If you took Diversity, Equity and Inclusion and drew it as a Venn Diagram, at the center of all three of these achievements is Belonging,” said Jennifer L. Williams, CEO and founder of Diversd. “Ultimately, you want an organization where talent from anywhere can come and succeed for themselves and for the business.”
When should a company start incorporating DEI?
Focusing on DEI from the start is easiest for the company and creates a safe, welcoming, and comfortable environment for employees and clients from the beginning. Companies shouldn’t delay interweaving DEI with the business; instead, DEI can be an important founding principle and core value for new companies.
“Startups can create a culture of inclusion from their inception, and by prioritizing DEI&B early on, they can avoid problems that can arise, helping prevent costly issues like employee turnover and low engagement,” said Mandy Price, co-founder and CEO of Kanarys.
DEI for startups vs. established companies
Startups that integrate DEI from the beginning can build a foundation that will help the company continue to focus on DEI moving forward. It may feel like a hurdle to establish these strong core values at the beginning, when founders are also dividing their time between creating products or services, establishing the business procedures, and pitching to investors, but it will be easier than trying to weave it into the business later on.
For companies that try to incorporate DEI initiatives once the employee count is in the hundreds or thousands, it can be more difficult to implement company-wide. Still, more established companies should start measuring their existing DEI efforts, find ways to build upon these initiatives, and start putting time and money toward spreading DEI efforts companywide.
Benefits of early DEI efforts
Businesses of all sizes can benefit from focusing on diversity, equity, and inclusion. But these gains are amplified when DEI is a foundation of a startup company, especially as it scales.
And the benefits are plenty. When you emphasize diversity, equity, and inclusion in your business practices, you can see a number of returns, from creating a happier workplace with less turnover to providing better products and services to clients by drawing from a well of unique perspectives and ideas.
Here are some top benefits of establishing DEI efforts as a startup.
Tap top talent
Without a focus on DEI in hiring practices, startups are limiting their own potential to create brilliant, innovative teams. When focusing on DEI in hiring, startups can connect with top talent with different perspectives to bring to the table. For the employees, that means creating a diverse and inclusive workplace; for the company, that means creating teams that can provide unique ideas and solve challenges by coming to solutions through different lenses.
Boost team morale
According to the Workforce Happiness Index by CNBC and SurveyMonkey, employees that believe their companies aren’t contributing enough toward DEI efforts had 12 fewer happiness points than those who responded that their companies were focused on DEI efforts.
When employees feel that they can voice their ideas and concerns, are paid and treated fairly, and have access to resources and opportunities for advancement, the entire company can benefit from heightened happiness and morale.
Improve performance
In a LinkedIn study, 60% of the respondents noted that diversity contributed to their sales teams’ successes. The study also noted that diverse companies earn around 2.5 times more cash flow per employee, and inclusive teams were 35% more productive than less inclusive businesses.
In a study by McKinsey & Company, researchers found that companies with over 30% women executives were more likely to outperform companies with 10% to 30% women executives, and companies with 10% to 30% women executives were more likely to outperform companies with fewer than 10%. Similarly, McKinsey case studies found companies in the top quartile for ethnic and cultural diversity outperformed companies in the bottom quartile by 36% for profitability.
Another study by Boston Consulting Group found that companies with above-average diversity in management teams saw 19% higher innovation revenues compared to companies with lower-than-average diversity in management.
Increase employee retention
Simply put, turnover is bad for business. Employee turnover costs time and money to rehire and retrain employees. But more and more workers are focused on working for companies that have inclusive workplaces. In a survey by GoodHire, a whopping 81% of respondents said they would consider quitting their jobs if their employers lacked DEI commitments.
Minimize groupthink and homogeneity of ideas
When everyone in a workplace comes from similar backgrounds and experiences, overall perspectives are limited. This leads to groupthink, which can stifle any creativity or innovation. Without innovation, a business will suffer.
On the other hand, 74% of millennial respondents in a Deloitte survey said that organizations with inclusive cultures foster innovation.
“We come from the same neighborhood or family or graduate class — and this leads to ‘same thought.’ For that reason, when building a startup, the founding team has to be intentional about finding people with different opinions or points of view — diverse perspectives and contrarians who can broaden the aperture of how we see problems,” Williams said. “If a startup does this from the very beginning, it will be easier to do as the company scales, because DEI is built into the company’s DNA.”
Jennifer Williams of Diversd
How to incorporate DEI from the ground up
As you can see, DEI efforts are important to any business, but incorporating these elements in a startup can build a stronger business in the long run.
Startups often work within time and financial constraints, but that shouldn’t interfere with DEI efforts. After all, it’s going to cost a business more money not to focus on diversity, equity, inclusion, and belonging.
“A startup founder can integrate DEI by scaling their organization with diversity in mind,” Williams said. “Then pay everyone fairly while giving everyone equal opportunities to flourish and get paid for it. That’s equity. And then make sure every individual is connected to the mission of the company and their voices are heard. That’s inclusion. Most of what DEI is is treatment and communication. Those become even more costly when you don’t have it.”
For businesses who are ready to jump in and start building more inclusive and fair workplaces for all, here are some tips for getting started.
Consider DEI when establishing policies and procedures
It may seem obvious, but as a startup defines how it will run the business, hire new talent, train staff, and so on, founders can approach these business policies and procedures with an intersectional lens. Start thinking of how to incorporate DEI principles within these company foundations.
Set up employee resource groups (ERGs)
Employee resource groups are groups within the workplace that can serve employees with similar interests, backgrounds, and lived experiences. These groups can provide supportive environments for underrepresented employees and offer a safe space for personal and professional development. ERGs offer employees a place to discuss ideas and concerns and can boost engagement and belonging.
Use data
Startup founders already know the importance of data. In addition to leading compassionately and listening to and understanding employees and their lived experiences, founders can also incorporate data to ensure they build effective DEI initiatives.
“One of the most important things is ensuring data is an integral part of your DEIB approach so that company leadership can truly diagnose your DEIB issues and see your issues through the lens of actual numbers and data,” Price explained. “It’s crucial for organizations to look at DEIB from a systemic standpoint and think about a long-term strategy that is ingrained in the business. The real key to doing so is gathering data on employees’ lived experiences to inform an intentional strategy to address systemic issues in the workplace.”
Stay accountable
Once you have data, you can establish goals and metrics to determine where your company is doing well with its DEI efforts and what areas it needs to improve. Listen to employees, whether through one-on-one meetings, group sessions, or even anonymous surveys and feedback opportunities, to find ways you can make the workplace feel more inclusive and just for everyone. In areas that are lacking for DEI efforts, set measurable goals to improve and stay accountable for strengthening weak points in the business.
Hire a DEI team
Once a startup starts to scale and has the resources available, it’s wise to hire a consultant or set up an internal DEI team to help track DEI metrics, progress, and success and make sure all employees feel safe and included.
“DEIB experts can identify hidden or systemic barriers that prevent an inclusive and equitable environment by conducting workplace equity audits and helping companies take the time to diagnose these issues before jumping straight to training,” Price said.
But Price also noted that DEI teams should focus on data-based approaches to accurately address company-specific needs, rather than setting up general trainings that may not work for everyone.
“DEIB isn’t a one-size-fits-all approach, and most companies want a quick band-aid when they really need an X-ray along with a prescription written for them that helps diagnose what’s actually going on inside their workplace,” Price said.
Creating DEI-centered startups
Startups that take the initiative to weave diversity, equity, and inclusion into the company DNA from the start can grow leaps and bounds over companies that neglect these efforts. With a welcoming, compassionate, and just working environment, startup founders will create a space that breeds innovation, productivity, authenticity, and happiness.
