What Does Diversity Mean to Small Businesses?
Definition and Examples of How Diversity Improves Businesses
Diversity and inclusion (D&I) can play an important role in a workplace regardless of size. While large companies like General Motors and even the U.S. Department of Defense have developed strategic plans to increase D&I, small businesses can also do their part. After all, these businesses employ nearly half of the private-sector workforce, so ramping up diversity efforts can have a profound impact.
In fact, recent studies have shown that employees of companies that embrace D&I are able to make better, faster business decisions and are more likely to spur revenue growth through innovation.
What Is Diversity & Inclusion?
While “diversity” and “inclusion'' might be familiar terms, it’s important to clearly define them. Diversity not only refers to race, but also age, gender, ethnicity, religion, sexual orientation, disability, education, national origin, as well as marital and socioeconomic status. Inclusion refers to an organization’s ability to value these differences so that diverse individuals are accepted, welcomed, feel a sense of belonging, and are treated equally.
How Can Diversity Help Small Businesses?
As mentioned, small businesses can benefit greatly from improving their D&I efforts. Studies have shown that companies perform better on several indicators when they have diverse leadership, which, in turn, can impact every level of the organization.
According to a 2017 McKinsey Report, companies that have leadership teams that rank in the top 25% for racial and ethnic diversity are 33% more likely to outperform their industry peers in terms of profitability. Meanwhile, another research and consulting firm, Gartner, reports that, through 2022, 75% of organizations with frontline decision-making teams reflecting a diverse and inclusive culture will exceed their financial targets. By creating a more interconnected workplace, the benefits of giving underrepresented groups a seat at the table become ever clearer.
Recruitment and Retention
When it comes to recruiting new talent and holding on to valuable employees, one of the key factors that potential and current employees consider is the company’s culture. In a recent survey conducted by recruiting site Glassdoor, 76% of job seekers report that a diverse workforce is an important factor when evaluating potential employers and job offers, while a majority of current employees think their companies should be doing more to increase diversity.
As the population changes, so does the marketplace. Hiring a diverse staff can be beneficial to your business as differing world views, experiences, and skill sets expand what’s possible, resulting in new ideas and opportunities. These innovations can also expand your markets, as customers often find it more appealing to work with someone with whom they can relate.
Diverse opinions bring new perspectives, which can drive business success.
Improves Employee Engagement
An additional benefit of a more diverse and inclusive workplace is happier employees, which translates to a more engaged workforce. Research has found that when companies embrace D&I policies, employees perform at a higher level. A focus on D&I can also improve team morale and foster a higher level of trust between employees and company management.
How to Improve Diversity in Your Small Business
Now that you have an understanding of what D&I is and how it can benefit your small business, here are some tips to help your company move toward a more inclusive workplace.
Evaluate Your Current D&I Status
How does your company stack up against others in your industry when it comes to D&I? What are the obstacles that need to be addressed to improve the situation? By starting with a realistic evaluation of what policies and practices exist, you can move closer to establishing what can be added and improved upon.
Don’t just stick to the numbers. To gain a better grasp of where you stand with D&I, talk to current employees to gain insights from their experiences and perspectives.
Establish New D&I Objectives
After identifying your D&I status, start working on positive changes to improve it. To help you with planning and implementation, research and consulting organizations such as the Society for Human Resource Management (SHRM) and TSNE have created guides to develop a plan that includes identifying how D&I initiatives can help achieve business objectives. In addition, make an effort to institute inclusive procurement practices, like, for instance, buying products and services from minority-owned businesses that are often underused.
Educate Staff and Seek Support
Hold training sessions and discussions on the value of D&I in the workplace and involve staff at all levels of the organization to ensure their buy-in and support. Creating a D&I committee and setting accountability standards for D&I also enforce its importance.
Measure the Effectiveness
Regularly evaluate the progress or failure of your plan and adjust it as needed. Because the needs of the industry, the marketplace, your company, and your employees are ever-changing, your plan should be flexible to adapt to those changes.
As small business owners strategically adjust their environments and operations to support a more diverse and inclusive workforce, they can expect to reap the benefits of their efforts—operationally and financially.