Running A Business

The Ultimate Guide to Cultivating a Diverse Workplace

Nov 29, 2020 • 10+ min read
Table of Contents

      America is becoming increasingly diverse. This shift is good news for small businesses, as inclusive workplaces with diverse demographics bring a host of benefits. First and foremost, you can rest easier at night knowing that you’re promoting a company culture that embraces all employees and empowers them to be their best.

      But the goodness doesn’t stop there. Research from McKinsey reveals that businesses that make a point to embrace diversity outperform the competition. Such businesses are “35% more likely to have financial returns above their respective national industry medians,” the research finds.

      Businesses that promote diversity showcase the kind of positive values most businesses merely put in their mission statements. People undoubtedly notice these positive actions, and your reputation will be elevated by them. Additional benefits enjoyed by diverse businesses include:

      • Healthier workplace culture
      • Higher community engagement
      • Higher retention
      • More internal perspectives
      • Better brand loyalty

      In other words, you should strive for diversity in your business because it’s the right thing to do. And by making ethical decisions, you’ll also see a lot of corresponding perks.

      “An inclusive work environment doesn’t just happen; it requires sustained effort,” explains a report on company culture from McKinsey. “Stresses from COVID-19 and extended isolation are driving a range of negative emotions in employees. On top of that, recent prominent examples of racial injustice have affected many employees in ways that cannot be left behind when work begins. This is especially true for Black employees. While the systemic nature of racism demands systemic action, individual actions are an important part of supporting employees and ensuring they can continue to make meaningful contributions.”

      In order to foster an inclusive workplace, you’ll need to make a concerted effort to bring in the right people. Once they’ve been welcomed and onboarded, you’ll then be tasked with continuing to treat them right.

      Why Aren’t More Businesses Doing This?

      Two People Shaking Hands at Conference

      Based on the information shared above, it seems like a slam dunk for businesses to be more diverse. Who wouldn’t want benefits such as better sales performance, happier employees, and stronger brand loyalty?

      But like most things in life, these principles are easier discussed than put into practice. You’ll often find that roadblocks hinder your progress, starting with the very foundation of the entrepreneurial world.

      The age-old profile for an entrepreneur is a white manand the system is set up to perpetuate that group’s dominance. A groundbreaking diversity study from the Harvard Business Review revealed that individuals who belonged to other identity groups, such as women and people of color, faced discrimination at nearly every turn. This sad truth was highlighted by research indicating that businesses headed by men receive 98% of the venture capital available.

      But these traditional barriers to equality are slowly crumbling: upward of 40% of new entrepreneurs are women. And their ranks are growing by 10%, compared to a 5% growth rate for men.

      Similarly, people of color are finding new ways to make their unique mark on the entrepreneurial world. It is estimated that 10% of America’s small businesses are owned by Latinx entrepreneurs, 7% by Black entrepreneurs, and 4% by Asian entrepreneurs.

      Where Diversity Starts

      Group of Professionals Celebrating

      There isn’t much opportunity for inclusivity in a homogenous workplace. So before you can flex your inclusivity muscles, you need to build your diversityand this starts with hiring women and people of color. Then you must give opportunities to those who most deserve them yet often have had them denied based on longstanding biases.

      Here are some tips to help ensure your hiring processes are fair and balanced:

      Create Policies Promoting Inclusion

      It’s a good start for everyone at your company to agree that inclusion is important. The next step: put policies in place that guide those intentions and make sure that everyone complies.

      Connect With the Groups You Hope to Attract

      In order to find the best employees for your diverse workplace, you’ll need to reach out to minority organizations, LGBTQ+ groups, women’s business networks, and historically Black college networks. These relationships will help you to establish a reputation as a diverse employer and also serve as conduits for top talent.

      Add Diversity to the Hiring Process

      You could follow these first 2 steps perfectly, but you’ll still come up short if you don’t include diverse individuals in the hiring process. Choose decision-makers who reflect the different perspectives that you’re hoping to attract. This way, job seekers will see firsthand how seriously you take inclusion.

      Keep Resumes Nameless

      Unconscious biases are realand they’re easier to stamp out when you remove names from the resumes you’re considering. Anonymous resumes will put all candidates on level ground, giving them the chance to move forward in the hiring process based on their unique qualifications.

      Maintain Balanced Offers

      Pay disparities based on gender or other identity-based classifications are unethical and can hurt team morale. We’ll talk more about rooting them out a little later, but it’s important to note that you can make such gaps less likely by extending balanced offers. For example, research reveals that women don’t negotiate pay as often during the hiring process. By creating an offer structure that doesn’t include major disparities between those who negotiate and those who don’t, you can create more balance down the road.

      Each of these steps works together to support the othersand by following such practices, your entire team can embrace a culture of fairness and inclusivity. Many people want to do better, but they have a hard time breaking free of traditional stereotypes and prejudices. Putting policies and practices in place empowers your employees to be their best selves, which in turn helps your business to reach its full potential.

      Maintaining Diversity for the Long Term

      Group of employees analyze data

      Making hiring improvements is a noble effort that will pay dividends for your employees and your bottom linebut you need to extend inclusivity initiatives throughout your organization. This means that people hired in past years are afforded the same fairness of pay and that new hires have a clear, balance-promoting path ahead of them.

      Follow these recommendations to keep your inclusivity strong from top to bottom:

      Make Development a Priority

      There will always be aggressive individuals in your business who negotiate promotions and push for new opportunities. Those from traditionally marginalized groups are less likely to do so, as a lifetime of experiencing prejudice can make them more cautious. 

      Thus, it’s essential for you to create development plans for all your people. Look for ways to highlight and promote individuals who might otherwise get shoved into the corner.

      Check the Pay Balance

      Your employees want to be compensated fairlyand you want to compensate them fairly. One of the only obstacles standing in the way is knowing where change is needed and how to make it right.

      Conduct a pay gap analysis to see if disparities exist among your team members. By taking a closer look at salaries and bonus rates, you can find any issues and begin to make them right.

      Improve Your Compensation

      You don’t necessarily need to pay all your employees more money. Most small businesses run on thin margins and don’t always have the resources to bolster pay across the board.

      What’s essential: narrowing the gaps identified in the earlier step. Raise pay where necessary and ensure that bonus structures and promotion opportunities are equitable so that your team can continue growing together.

      Listen To Your Employees

      It’s hard to know where all your inclusivity issues lie. After all, terms like unconscious bias get their names for a reason. The best way to identify opportunities for improvement is to talk to your teamfind out what they value and what they feel is missing.

      “Every interaction you have, with individuals or in groups, exposes your listening strengths and deficiencies,” advises a report from Forbes. “The evidence you provide is visible, vocal, overwhelming, and easy to assess. People can see through your mannerisms and body language if you’re not paying attention. They can hear your constant interruptions while they are trying to speak. They can tell through your tone and words when you feel threatened and become defensive. You may be totally unaware that you are doing it. It doesn’t change the impression others have, however, when they observe your behaviors firsthand.”

      In addition to candid conversations, you’ll also want to provide a confidential channel for team members to submit concerns that they don’t feel comfortable talking about openly. This empowers your entire team to make their voices heard. Unsurprisingly, some of the most important insights for your business will likely come through this channel.

      Take Swift Action

      Communication is a 2-way street. When team members share concerns either directly or confidentially, it falls on you to take the next step.

      You aren’t expected to make the decisions alone. Consult with your leadership team. Consider talking to your employees to get their perspectives. Then be sure to communicate with everyone what steps you will (or won’t) be taking.

      Inclusivity is an ongoing process of learning and improving, so there’s not some handy checklist to complete—and you may not catch every issue at the outset. Your team will always be composed of unique individuals who require equally unique support to help them to continue feeling valued and set up for success.

      The Harvard Business Review suggests an easy method for evaluating your diversity—take a team photo with all your employees. Sounds simple enough, but the image can provide a much-needed gut check.

      “Armed with the visual representation from your photo, you’ll be able to target your efforts,” suggests the article. “If you already have strong representation from women, perhaps you should make a goal to develop the racial minorities you currently employ and also hire more in the future. The point is, every company is different. But the more you can do to bring diversity to your team photo, the more your company will stand out in positive, meaningful, and lucrative ways.”

      If your photo is high-quality, you may want to actually frame it and hang it on your wall. But its most important purpose is reflection. It sometimes takes looking at things from a different perspective to get a more holistic view of what’s happening in your company.

      Pay Attention to Your Words

      Business People in a Meeting

      Of course, fostering an inclusive culture in your workplace extends far beyond optics. You can implement policies and try to build up an image all you want, but the words used by your team often act as a truth serum. If they are offensive and non-inclusive, the damage can be severe. Words will always be a powerful representation of whether or not you really care about supporting others and want to help them feel welcome.

      Too often, the speech in our workplaces isolates others and makes them feel targeted, eroding trust and sinking morale. If you have never experienced any of these negative emotions, you likely belong to a traditionally privileged group here in the US. Those individuals who belong to marginalized groups understand perfectly what it’s like to be ostracized or bullied through the words of their coworkers.

      In order for everyone in your office to relate to the experience of these coworkers, empathy must reign. When we’re able to look outside of our own experiences, it becomes impossible to merely shrug your shoulders and say “things seem fine to me.”

      Language plays a major role in this empathetic approach to inclusivity. Certain jokes and phrases will erode your culture. At best, they put others down. At worst, they dehumanize your coworkers.

      Let’s take a look at some common examples of inclusivity-killing communications:

      • Terms that are unnecessarily gender-specific: There are plenty of examples of such terms that can pop up in our daily speech. Perhaps you’re referring to a “spokesman” or “chairman.” Or you might mention “manpower” or the necessity to “man up.” By using gender-neutral language, such as “spokesperson” or “chairperson,” you can make all your team members relevant in the discussion.
      • Analogies tied to sports: It’s a tale as old as time—a boss gets up in front of the team and attempts to fire everyone up with sports-related terminology. Whether it’s referring to a “full-court press” or suggesting that the business is “in the red zone and just needs to punch it in,” these types of examples simply won’t work for some of your employees. If you truly care about your entire team, avoid speaking in ways that leave some of them in the dark.
      • Terms that are insensitive to individuals with disabilities: This type of language has been prevalent in the US for far too long. Examples include jokes about people being deaf, saying people are mentally handicapped, or simply saying that a person must be blind for not noticing something that is obvious to you. When in doubt, don’t say anything that would hurt your own feelings if you had a loved one with any specific disability.
      • Terms that are insensitive to individuals in the LGBTQ+ community: There are plenty of examples of hurtful speech related to this community in our country. Perhaps you’re already aware of terms or phrases in your lexicon that need to be eliminated. If you’re unsure whether something is offensive, err on the side of cautionor take the opportunity to speak with a member of the LGBTQ+ community and get their perspective.
      • Terms that exclude other groups: Many of these common phrases are tied to cruel stereotypes and derogatory language of the past. This includes examples such as “sold down the river,” “paddy wagons,” and “old wives’ tale.” Your goal should be to communicate in a way that allows everyone to understand and for nobody to feel maligned.

      Many of the examples above deal with language that mocks other groups. At the very least, these terms and phrases create unnecessary distinctions. Inclusive workplaces focus on team members’ unique strengths and common goals, not personal details that could lead people to feel targeted.

      This thoughtful approach to communication needs to be embraced by leadership in order to be effective. Talk to your team candidly to learn where improvements can be made, then show your commitment to inclusion by putting the lessons into practice.

      There will always be verbal slip-ups and inadvertent offenses. We are imperfect beings, and blunders are woven into the tapestry of our life experience. What matters is that we strive to learn from these mistakes and try to see the world through new eyes.

      If we can apply this same open-mindedness to all our interactions, we’ll do more than improve the diversity and inclusiveness in our officewe’ll help to make the world a better place. There will always be people who wish things were better. Let’s take the steps necessary to start bringing about the positive change we all crave.

      About the author
      Grant Olsen

      Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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