Diversity, Equity, and Inclusion in the company promote problem-solving and a culture of innovation. According to a study from Boston Consulting Group, diverse companies report 20% higher “innovation revenues” or proceeds from newly launched products/services.
Diversity in sourcing and hiring refers to the policies ensuring the process is free from all types of biases. When hiring talent, the personal characteristics of the candidates including race, gender, religion, and sexual orientation should not impact their chances of getting shortlisted.
Startups with higher rates of diversity and inclusivity in their culture are more profitable, spot risks better, and are better at retaining talent (Diversity, Equity, and Inclusion 4.0 Toolkit by World Economic Forum).
Despite these benefits, there are many diversity gaps in startups and scale-ups worldwide. According to Crunchbase, startups led by Black and Latinx founders received $15 billion in funding from 2015 to 2020 – only 2.4% of the total startup funding in the US.
In addition, VC-backed startups received funding of $141 billion in 2018 – in the same year, funding to startups led by Black and Latinx founders peaked at $4 billion.
The situation is similar in other parts of the world, including Europe. According to World Economic Forum, fewer than 1% of Europe’s tech founders identified as African/Black/Caribbean in 2019.
World Economic Forum’s Gender Gap Report 2020 revealed that only 43% of tech startups have at least one female C-suite executive, and 42% of companies have at least one female board member.
These challenges manifest a challenge for the global tech ecosystem. On the other hand, it represents a huge opportunity for businesses ready to start sourcing diverse talent pools.
While sourcing talent, if they ensure better diversity and inclusivity measures than the rest – it can help them attract the top 1% of talent!
In this guide, we will explore the tangible benefits of factoring diversity and inclusion into your sourcing process (excluding the obvious fact that it is simply the right thing to do);
Reduce Employee Turnover
A higher employee turnover rate is not only a loss of valuable knowledge and experience, as well as never-to-be-recouped recruitment and training associated investments – it brings down the morale of the employees left – leading teams to lose confidence, and decreasing their ability to perform.
Diversity and inclusivity can help decrease employee turnover. When the workforce is diverse and inclusive, all employees feel valued, and this sense of happiness makes them stay longer in organisations.
In addition, a diverse team results in more innovation, and more openness and receptivity to new ideas. All this contributes to the bottom-line profitability of the company, particularly with startups or scaleups where the very nature of the company is, at times, a new idea, as are the ways to grow the company itself, as well as solving problems with new, innovative solutions. As the company becomes more profitable due to diverse worldviews, the best performers get promoted and stay longer with the company.
Deep Dive Into Diverse Talent Pools
Ensuring diverse hiring practices urges you to dive deeper into previously untapped talent pools. It helps your startup hire candidates from different cultures and incorporate new worldviews into the business.
The post-pandemic remote-first culture of work has led companies to hire from all around the globe,and has opened the door to more talented candidates and leaves the company with a significantly increased range of candidates to choose from.
In addition, hiring candidates from diverse backgrounds can help startups cut costs as the salary ranges generally differ based on location, creating a win-win for both the company and the candidate; paying a great wage for the candidate, whilst saving costs for the company.
Enhance Your Employer’s Brand
Diversity, Equity, and Inclusion strategies help you to position your startup as a much more appealing business to work for. Do any truly top-tier candidates want to work for a company that doesn’t take diversity and inclusion into consideration?
Ensuring diversity in sourcing and recruiting can help companies attract the top 10% of candidates who value diverse cultures. Inclusivity in the workplace ensures that all employees feel valued – enabling them to hit their peak productivity levels. First you must feel valued, and then you can produce the best work you’re capable of producing.
All of this improves your employer branding. It positions you as an employer that not only recruits from diverse talent pools, but also displays that differing world views will not only be tolerated, but encouraged, within your company culture.
A Final Word
According to a report by Silicon Valley Bank, only a quarter of startups (26%) are actively trying to increase diversity in their leadership teams. They also asked startups in the UK, US, and Canada about the ethnic and racial minorities in their C-suites and their Boards. Less than half (43%) reported at least one C-suite executive/board member who is ethnically or racially diverse.
The current levels of diversity and inclusion at startups are significantly lower than they should be. As a fast-growing startup, it represents a massive opportunity to start sourcing the RIGHT WAY and get ahead of your competition.