Introducing and monitoring diversity, equity, and inclusion (DEI) efforts can sometimes seem like a daunting task for small businesses. While owners are often already stretched thin by being forced to wear several hats, there are steps small businesses can take to set up DEI programs and measure the progress of new or existing initiatives.
What is DEI and Why Does it Matter?
Diversity, equity, and inclusion efforts are about creating a workplace that expresses the full mosaic of talent available, making sure people are given equitable opportunities, and creating sustainable inclusion, Eric Ellis, president and CEO at management consulting firm Integrity Development Corp., told The Balance in a phone call.
Recent increased awareness of diversity and inclusion has propelled a vocal movement that’s garnered attention on social media, including the popular Instagram account Pull Up For Change, which fights for economic opportunities for Black people. Beyond ethical and social justice reasons, a diverse workforce has been found to make more business sense as well.
The most diverse businesses are now more likely than ever to outperform less-diverse companies in terms of profitability, according to recent research by McKinsey & Co. The study found that the more representation, the greater the probability of outperformance.
“Companies with more than 30 percent women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all,” McKinsey reports.
“In the case of ethnic and cultural diversity, our business-case findings are equally compelling: in 2019, top-quartile companies outperformed those in the fourth one by 36 percent in profitability,” McKinsey also noted in its May 2020 report, “Diversity Wins: Why Inclusion Matters.”
Setting Up DEI Efforts: Where to Start
The first question organizations should ask themselves is, “Do I want to do this, and why?” Ellis suggested exploring the intention behind DEI efforts—you don’t want to find yourself jumping on the bandwagon just because everyone else is.
Take time to understand what your company is looking for, as well as assessing the demographics of the pool of candidates available to you, and the diversity that may occur among your customers.
True diversity and inclusion starts at the top of the company, and for best results, must be an all-or-nothing approach, Shadeed Eleazer, an adviser to entrepreneurs and the chapter president for SCORE Greater Baltimore, told The Balance in an email. SCORE is a federal Small Business Administration (SBA) initiative that provides volunteer mentors for small business owners around the U.S.
Eleazer recommended that DEI programs at small businesses develop an internal board or council made up of both employees and management. In an effort to gain honest feedback, ground rules should be established, including agreement that a management-employee hierarchy isn’t a part of the group.
There are many online resources available to teach about diversity, equity, and inclusion. The Implicit Association Test can be one useful tool to help identify unconscious biases.
Some companies may find it helpful to partner with a consultant when implementing diversity programs. Businesses can also find guidance at their local SCORE center.
Inclusion Strategy in Four Pillars
Ellis pointed out that years of research have identified two key components of effective diversity training: perspective-taking (as people spend time developing empathy toward diverse individuals, it motivates their willingness to make changes), and strong, challenging action plans. The CEO outlined four main pillars for creating an inclusion strategy.
First Pillar: Develop a Strong Foundation
Start DEI efforts from the top down. Begin by engaging the higher-ups, and let team leaders develop their own individual strategies for involving their groups.
Second Pillar: Internal Structure
This relates to recruitment and development systems. Do an analysis of the business’s hiring and other processes and systems to see how fair they are, and to identify where there may be some inequity or bias. Look at your education and development programs to make sure your company is engaged in the different levels of learning around inclusion and diversity:
1. Reaction: Take employees through an overview of inclusion to make sure that people have a common language for it.
2. Knowledge and understanding: What do people in the organization need to know that they don’t already? Are they working with diverse customers? Is there a gender gap, or are there generational challenges, for example?
3. Behaviors: Which ones do managers and others need to display to strengthen inclusion?
Third Pillar: Strengthening External Structure
Is the company’s marketing speaking to all potential audiences? Are products and services meeting the needs of diverse customers? How diverse are the business’s suppliers?
Fourth Pillar: Measurement and Accountability
Measure results and develop an accountability system.
Creating Diversity in a Small Business
While small business owners may want to incorporate diversity, they might assume their company isn’t big enough, or that it’s located in too-homogeneous an area. However, diversity is a broad, three-dimensional concept, Ellis explained.
If you have more than one person working for your company, you’re diverse. There are many personal dimensions of diversity, such as age, race, gender, and sexual orientation. Diversity also has social dimensions like political beliefs, income, parental, and marital status. And it has organizational aspects, like work location, work style, tenure, and seniority, Ellis said.
Business owners can focus on being inclusive and equitable toward the diversity they already have, while at the same time identifying what other types of diversity they want to attract.
Subcontractors and consultants can be an effective way to incorporate more diversity into a small team, as well as using diverse vendors and suppliers.
Extending, Monitoring DEI Beyond Hiring
“Hiring diverse talent isn’t enough—it’s the workplace experience that shapes whether people remain and thrive,” the McKinsey DEI outlook report said.
Establishing valid inclusion processes within an organization is an ongoing effort, Eleazer advised. Diversity and inclusion must be a message that is delivered from executive leadership and incorporated into routine company practices such as meetings and gatherings. He recommended that team leaders and managers undergo diversity training, and suggested having a diverse group manage the company calendar.
Periodic spot-checks by an independent committee can help evaluate fairness in systems for work assignments and performance reviews. Tools like the aforementioned council approach, using anonymous surveys, doing confidential interviews with employees, and an annual report from the company leader can help small businesses measure effectiveness.
Companies working on DEI are encouraged to move away from annual performance evaluations and instead incorporate more frequent collaborative coaching meetings, Ellis said.
Business owners should be sure to include remote workers in their DEI efforts, and to recognize the unique needs of these workers as another dimension of diversity. There are resources available, such as the Remote DEI Toolkit created by a collection of virtual education organizations, to help workplaces with remote workers explore diversity, equity, and inclusion.
- Establishing diversity, equity, and inclusion efforts, and monitoring existing programs for effectiveness can have tangible benefits for your business.
- Diversity programs work best when they begin at the leadership level, and are an all-or-nothing commitment.
- Perspective-taking and strong, challenging action plans are key components of successful strategies.
- Businesses should make sure to extend DEI efforts beyond the hiring process, and incorporate changes into the company culture, and with their remote workers and vendors.
- Measurement tools and external resources are especially helpful for small business owners to track progress and create accountability.