Over the last decade or so, D&I initiatives are no longer a rarity—they’re part of the corporate lexicon. There’s even been enough data to get the attention of the C-suite. According to McKinsey’s 2018 report, Delivery through Diversity, ethnically- and culturally-diverse companies are 33% more profitable than companies that lack ethnic and cultural diversity. Companies with gender-diverse executive teams are 21% more profitable than companies with male-dominated executive teams—and that’s just some of the recent research stating the business case for diversity. The business case for diversity has been made.
For the last 20 years, companies are increasingly talking the talk, and some are even walking the walk. Diversity is trending in the corporate world for sure. In light of this past summer’s global awakening to racial justice issues due to a series of events in the United States, D&I is front and center in the boardroom. One company after another came out with pledges to up their diversity games. Bank of America said it would spend $1 billion over 4 years to support economic opportunity initiatives, and Comcast committed to $100 million over 3 years to fight injustice and inequality. Even before the protests, Intel demonstrated its commitment and showed leadership on diversity issues.
Fortune 500 companies have the financial wherewithal to devote mega resources to D&I in their businesses and society at large. But what about small business owners who have limited budgets? What can they steal from the corporate D&I playbook to make it work for their businesses? Lendio, via email, interviewed diversity and inclusion experts and small business owners for their thoughts and strategies.
Truth is, there’s plenty a small business can do in the name of D&I.
3 Rules to Replicate
Raleigh Mayer, a senior fellow at the Logos Institute for Crisis Management and Executive Leadership and an expert on corporate ethics and diversity, says, “Although it may seem counterintuitive, diversity and inclusion practices are as critical for smaller companies as in large corporations, as smaller firms tend to have more insular culture, less structured environments, and fewer managers to provide guidance or offer opportunities and promotions.”
She points out that even small talk is big talk—every message matters. When looking to honor diversity and expand inclusion, small businesses should borrow 3 components from larger corporate models.
- Invest in a full experiential audit: “Engage a qualified consultant to interview and/or survey employees and assess the visual, verbal, and tonal messages an organization sends, including type and style of meetings and social activities,” says Mayer.
- Implement multicultural mentoring: Mayer explains, “Mentoring works best when matches have variety—function, gender, age—and no one is partnered with their direct superior; the consultant should advise on the pairing.”
- Train everyone in inclusive leadership: Based on the findings from the audit, arrange workshop-style seminars that address the issues raised and are geared to build connection and candor.
“These actions are only successful if there is a truly non-negotiable zero-tolerance policy, where any disrespect of identity or demonstration of bias is immediately identified, denounced, and addressed,” says Mayer.
Build a Diverse Board
Big corporations still haven’t made significant progress on board diversity. According to Black Enterprise, 37% of the S&P 500 did not have a single Black board member in 2019. In 2018, 136 African American board members represented 11.1% of directors at Fortune 100 companies. For the Fortune 500, this number drops to 8.6%. But small businesses should make doing so a priority. Sarah Pierman, cofounder and CEO of Dynamic Boards, an online job site launched this year to help companies advertise their non-executive director vacancies to a much better mix of talented individuals.
“When it comes to the mix we have on our boards, our message to small businesses would be don’t copy the big corporations! They run expensive secret searches to find new board members using prestigious search firms. Recently the exec of a large corporation told us they spent a large sum of money on a search that introduced them to 5 people they already knew. We believe companies should open up the process and look to find people they don’t know,” says Pierman.
Pierman stresses that advertising board roles isn’t expensive and is likely to bring a wider diversity of candidates. “If you want to see a better mix apply for roles, you can encourage applicants through the way you write the ad. Make it clear if you’re looking for someone specific and why. From our experience, lots of companies are looking for diversity on their board but are too afraid to mention it in their advertisements. It’s okay to encourage applications from under-represented groups—just make it clear why.”
Form a D&I Committee
Tyler Butler, founder of 11Eleven Consulting, recommends smaller companies approach DE&I (diversity, equity, and inclusion) efforts from a grassroots perspective. She says forming a committee is a great place to start. “An internal inclusion committee should serve as an example. And an important example at that. This group must be both diverse and inclusive, otherwise it risks lacking credibility with employees, investors, customers, stakeholders, and management.”
She explains that while diversity describes a state of being, inclusion is the actual set of behaviors that govern. “It is crucial that any leadership team within a company that is championing D&I be both. Taking time to communicate to relevant audiences how this committee was selected, what each member will contribute, and how this offering will be activated is critical to having an effective inclusion committee.”
Identifying and establishing key partnerships is critical to having a successful inclusion committee. Diversity and inclusion work is not done in a vacuum. It is highly collaborative and requires that companies, their teams, and the communities where they operate join forces to accomplish common goals. “Developing relationships with like-minded groups whose mission and goals align with those of your committee is important. Communicating these partnerships both internally and externally will serve to spur on positive momentum,” says Butler.
Spread the Word
Joe Thurman, cofounder of Breaking the Bias, a DE&I training organization, says one key action the big companies that are truly leaders take is to go public with their vision and progress. “Making your goals, your lessons, and your progress around diversity and inclusion public puts a very good target on your back. People who are looking for organizations that truly adopt DEI will target you and your mission will begin to flourish. Bank of America and VF Corporation are 2 big companies doing that well.”
Even big companies have to start small and focus on impact. “Build your first ERG (Employee Resource Group), and to that point, build ERGs before you need them,” says Thurman.
Even if you don’t have someone of color or representation from the LGBTQ+ community, build affinity groups focused on bringing that culture into your company. Says Thurman, “You are never too small to start…so learn from the big companies that you should start small and grow from there.”
Lessons From the Entrepreneurial Front
Jake Hill is CEO of DebtHammer, a small business that helps families avoid falling into the payday lending trap. He highlights the small business owners’ challenges when it comes to D&I. “Big companies have resources to throw at D&I development. They can hire consultants who bill at $500 an hour to train their workforce. Small businesses don’t have that luxury, but one of the things I’ve learned in studying the strategies of bigger companies is that getting the knowledge of an expert in the topic is always worth it.”
Hill says though he can’t hire a consultant to train, he’s invested in professionally-hosted webinars and private sessions with speakers who are knowledgeable in the topic—BIPOC who worked in the field or studied the psychology of workforce bias and how to combat it. Says Hill, “This is a good step any business can take. It costs very little and can make a world of difference.”