Why even the most hard-nosed entrepreneur will diversify their startup
Updated: Oct 26, 2021
When it comes to increasing workforce diversity, companies that resist proactively looking for diverse candidates say doing so would be “lowering the bar.” In my work as Vice President of Diversity and Inclusion for one of the world’s most highly competitive accelerator programs, I’ve heard this argument from entrepreneurs all too often.
First, no, entrepreneurs who specifically hire for diversity aren’t compromising their focus on excellence; for businesses moral victories will never outweigh running a successful company. Secondly, if my tone here sounds brusque or cynical, that’s on purpose: Since arguing for diversity on ethical grounds doesn’t seem sufficient to convince everyone, let’s try to make the case using a colder, more calculating language.
We can discuss, for example, the bottom line, and how more diverse companies aren’t lowering their standards but are, in fact, earning 19% more revenue. We can also talk objectively about why tech leaders should look to diversify their teams, how they should go about it, and how they should measure success.
Since the quest for greater diversity in the tech sector requires uncomfortable conversations, let’s put tact aside and get to the point.
Diversifying your portfolio, literally
In what scenario would a shrewd, uncompromising investor not contemplate diversifying their portfolio when the vast majority of tech startups they’re considering are doomed to fail? If they understood that 87 percent of US VC funding keeps going to startups without a female founding member, and that gender-diverse tech companies return 5.4 percent more annually, who would not consider diversifying – quite literally – their investments?
Leaving aside moral imperatives, the numbers themselves make a powerful case for investing in teams that include people of color, women, and other underrepresented groups. The cold, hard truth is that companies occupying the top quartile in measures of racial diversity are 35% more likely to generate returns higher than those of the national industry median.
The incorporation of diverse perspectives into the tech world enriches and empowers the industry. Bringing greater diversity to your business will allow your team to draw on new approaches, new techniques, and new tools – enabling you to reframe old problems and search out the most innovative solutions.
Far from lowering the bar, we as decision makers in the tech industry must wake up to the reality that adopting pro-diversity policies means diversifying our portfolios as any good investor would do.
Your pipeline problem
Once we fully grasp the fact that a more diverse workforce means a more creative and innovative team, it’s time to understand why your company is failing to bring on more diverse members.
What are some measures you can take to build a more diverse talent pipeline?
The first step is to analyze what backgrounds and profiles are most represented at your company. Gather data on who is overly represented in your prospect pool and what profiles repeatedly get contacted for interviews.
With this data in hand, you have a number of strategies at your disposal for attracting a more diverse prospect pool. One of the most impactful is to use networking as a recruiting tool. Organizations such as the Society of Hispanic Professional Engineers (SHPE), National Society of Black Engineers (NSBE), and the Society of Women Engineers (SWE) host yearly events that offer companies an opportunity to extend their reach into many different specialized networking groups.
Meanwhile, in your search for prospects, use a wider variety of outreach methods. Using a mixture of social media and a number of recruitment platforms besides LinkedIn will help you cast your net wide.
But even more importantly, remain vigilant about the biases that are affecting how you use these tools. LinkedIn recently reported, for example, that recruiters are 13% less likely to click on a woman’s profile when she shows up in their search. Interestingly, this bias may prevent you from hiring or even reviewing the most qualified candidates. Why? because, a report has shown that women will only apply to jobs for which they meet 100% of the requirements, while men feel confident enough to apply if they meet only 60%. As the report points out, there may be many underlying reasons why women typically only apply for jobs in which they meet all the requirements. But the good news is you can be quite confident when interviewing women that they meet all the requirements.
In short, become uncomfortably familiar with your company’s struggles to source diverse talent. Consciously seek out a more varied talent pool, and stay wary of systemic bias. If you’re not being proactive, you’re hamstringing your business.
Getting real about inclusion
A final, candid reality check: If as good investors we should advocate for diversity, let’s make sure we’re championing an earnest, realistic approach.
Analyze your applicant funnels, rethink your recruitment processes, root out biases, and change the way your organization is operating.
If we really want to make progress towards inclusion, we’ll have to commit ourselves to the long haul – accepting that although a more farsighted approach won’t necessarily yield immediate returns, it’s the key to lasting change.
Diversity and winning
Just because I’ve laid out the “calculating, pragmatic” case for why and how we must diversify tech doesn’t mean there isn’t a real moral imperative here too. Let’s be clear: Opening up the world’s most lucrative industry – long a bastion of white male privilege – to participation by underrepresented groups is an urgent matter of fairness.
But it’s important to recognize that the moral imperative is actually in harmony with our most hard-nosed entrepreneurial logic. Even appealing solely to rationale, we can see that an exclusive tech sector stuck in its old ways denies itself a greater range of skills and competencies, all garnered through a broader variety of life experiences.
In other words, less diversity means lowering the bar. Less diversity means losing out.
Jason Thompson is VP of Diversity and Inclusion at Techstars.