Talent & Leadership
How to Build Diversity, Equity, and Inclusion Into Your Startup
In a year of transformational changes across the landscape of work, having an intentional focus on diversity, equity, and inclusion (DEI) has emerged as one of the most important things that a company can do to be successful. This is a long overdue development since the research has been overwhelmingly clear that companies that prioritize DEI—on the leadership team, org level, and board level—see better returns.
McKinsey recently released a report stating that “companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. That this relationship continues to be strong suggests that inclusion of highly diverse [teams]—and the myriad ways in which diversity exists beyond gender (e.g., LGBTQ+, age/generation, international experience)—can be a key differentiator among companies.”
That should not be surprising. Companies with more diverse teams are able to take a broader and more empathetic perspective of their customers. They're more likely to generate unique ideas and innovate faster, manage team conflict better, and—by reducing groupthink—make higher quality decisions.
But of course diversity alone is not enough. To leverage your company’s diversity and to keep attracting, engaging, developing, and retaining talented and passionate team members, companies have to prioritize a culture of equity and inclusion.
Beyond the clear financial impact of focusing on DEI, it can also ensure you’re creating a workplace where every employee can feel psychologically safe and do their best work, regardless of their background. Organizations with strong DEI cultures are more likely to have employees with greater job satisfaction, higher degrees of trust, and overall higher engagement.
And yet when working with the earliest stage companies, many founders still believe that a focus on DEI is a “nice-to-have,” something they can work on when the company gets larger and more mature. We're here today to tell you that isn't true.
Just as with culture and values, you want DEI to be built into the very architecture of your People Systems at the earliest possible stage. It will help ensure a strong foundation of shared beliefs, and it will make it easier to incorporate best practices into your systems later on as well. What’s more, diversity begets diversity—so the sooner you start, the easier all future hires become. (We will cover the topic of hiring and recruiting in a future guide.) As a thought experiment, imagine hiring your first Black and/or female engineer onto a team of three White males versus a team of 30 White males. The time to prioritize DEI is now.
Now that you’re ready to prioritize DEI work, it’s time to figure out what that actually means at your company. A simple first step is to define key DEI terms. What makes definitions useful? Defining terms ensures your team is talking about the same thing and makes it possible to measure whether your DEI efforts are working.
Here are examples of how we’ve defined DEI-related terms at LifeLabs Learning:
- Diversity = Presence of differences, such as race, ethnicity, gender identity, gender expression, sexual orientation, age, socioeconomic class/status, (dis)ability, nationality, body size, and spirituality or religion. (Note that a person cannot be "diverse," but a group can.)
- Equity = Individualized resources and support that ensure everyone has access to opportunities and is set up for success.
- Inclusion = Creating systems and taking individual action so that people are invited to participate, have access to information and opportunities, and feel safe bringing their real selves to work.
- Anti-bias = Processes and policies that actively mitigate the impact of individual and systemic bias—with an intentional prioritization of marginalized groups.
- Belonging = A feeling of support, security, and being accepted for who you really are.
- Allyship = The practice of taking deliberate action to advance the presence of diversity, equity, inclusion, and anti-bias for others—particularly individuals from oppressed or marginalized groups.
- Antiracism = The acknowledgement of, and intentional fight against, racism and racialized practices, policies, and procedures. (Note that many companies are still trying to identify ways that white supremacy shows up in their cultures and measure and report progress on their antiracism initiatives.)
To make sure your definitions are practical, put them through the following two tests:
1. The sentence test: Do these words work well together so we can talk about these topics easily? What are examples of how we can use these words in our workplace?
- Ex: We include diverse voices in our decisions. (Do not use “we just hired a diverse candidate,” please!)
- Ex: We make equitable accommodations in our hiring process.
2. The question test: Will these words help us ask questions on a regular basis that create a more diverse, equitable, inclusive, and anti-bias workplace? What questions should our team get in the habit of asking?
- Ex: How can I educate myself about others’ experiences in order to be more deliberately inclusive?
- Ex: How can I ensure an anti-bias decision-making process?
Bonus: For even greater conversational capacity and skill, invite an expert to offer training to your employees in understanding bias and deliberately practicing behaviors of inclusion. Through our inclusion workshops at LifeLabs Learning, we have seen that employees are eager to go beyond mere awareness and actually practice DEI skills.
How to set DEI metrics
Shared definitions alone will give your team greater capacity to have DEI conversations. To make your DEI initiatives even more strategic and achievable, use your definitions to set success metrics.
Why? What gets measured gets managed. Setting concrete metrics and goals around DEI elevates the priority of the conversation and ensures accountability. It’s never too early to put these goals in place.
One of the benefits of setting metrics early on is that you can establish baseline data, identify priorities, and measure the impact of your DEI work as you scale. You may already be measuring diversity. (One of the most common ways companies are doing this is with EEOC data in hiring.) But there’s a lot more to successful DEI work than just the D.
Here are some questions to ask when coming up with your DEI success metrics:
- How can we measure each of the DEI-related words we’ve defined?
- How do we currently collect DEI-relevant data from our team (e.g., engagement surveys, 1:1s, self-reported demographics)?
- What types of benchmarks exist (e.g., comparing our data to companies of a similar size and industry)?
- Do we have lead indicators that show us we’re on track before it’s too late?
- What DEI metrics align with our vision, values, mission, and strategy?
- How will we share the data with others (to create shared commitment, accountability, and to celebrate progress)?
- What roles and systems do we have in place (or can we establish) to take action if we’re not achieving the desired results?
Try this exercise to create your DEI metrics:
Pro tip: Make sure that any DEI contributions are compensated in the same way that any other critical business contributions would be. This work is important and should be valued in the same way that any other business-critical tasks would. That doesn’t necessarily mean an extra stipend—the simplest way to do this is to carve out dedicated time in people’s roles during the course of their contribution and make sure those leaders are recognized and rewarded like any other high performer.
How to design inclusive systems
Once you have the conversational capacity to talk about DEI (thanks to your definitions) and the strategic metrics to set DEI goals, you’ll be able to start deliberately designing your People Ops systems with DEI in mind. The sooner you do this, the better equipped you'll be to harness diversity within your organization.
In our Inclusive Systems Thinking workshop at LifeLabs Learning, we teach a model we call “FAIR” that you can use as a checklist for any system you want to build or improve. FAIR stands for:
Forthright: Are we making processes and criteria explicit and clear to all?
For example: Have we made performance criteria clear? Have we shared the criteria with all? Are our org-level goals and priorities clear, or are people guessing?
Accessible: Are we setting up each person for success and checking for unintended consequences on all groups?
For example: Are our benefits flexible/equitable enough that people can apply them to meet their unique needs? Do we have adequate representation of people from different groups on our website, making jobs accessible to apply for? Is everyone given the necessary technology training to fully contribute when working remotely?
Involved: Do we get input from all those impacted before making decisions and to continue iterating?
For example: Do we regularly involve impacted parties in the decision-making process (using the rule “nothing about me without me”)? Do we welcome ongoing feedback? Do we look at input from individuals from different demographics versus make decisions based on overall averages?
Rigorous: Have we put consistent measures in place to mitigate bias?
For example: Do we hold all people to the same exact standards when it comes to hiring, salaries, and promotions? Do we distribute decision-making authority for bias-prone decisions (e.g., for hiring, promotion, termination decisions) so one person can’t decide alone? Do we rotate meeting facilitators and notetakers so everyone takes turns in higher and lower power roles?
How to audit the FAIRness of your existing People Systems
Try this exercise: Gather your leadership team and four to six DEI advocates at your company (again, making sure to honor this time as high priority work rather than volunteering) and select a different People System to audit every quarter using the FAIR framework. Below are the systems that tend to make the most positive impact (or negative impact if left unchecked):
Hiring & Recruiting
Questions to ask:
- Forthright: Have we shared clear success criteria with all candidates?
- Accessible: Have we removed all unnecessary barriers to entry (e.g. requiring top-tier universities)?
- Involved: Do we have a diverse interview panel? (This ensures both a breadth of perspective in the hiring process, and a more Accessible candidate experience.) Are we overrelying on homogenous referrals from our network?
- Rigorous: Do we ensure that we have a representative amount of diversity at every stage of the funnel? Do we have a standardized interview process?
- Research has shown that including two candidates with different demographics in the interview process yields meaningful results in achieving diversity.
- Whenever possible, include at least two candidates from non-majority backgrounds in the final interview round. Ensure they’re getting every opportunity to win the job.
- We know this may take more time in the hiring process, but we promise it will lead to better outcomes and a higher talent bar.
Compensation & Benefits
Questions to ask:
- Forthright: Do we make our pay and promotion criteria clear to all?
- Accessible: Do our benefits benefit everyone? Do our learning and development efforts close promotion-readiness gaps?
- Involved: Do we collect compensation and benefits feedback from all of our members of staff?
- Rigorous: Are people of all demographics getting salary increases at the same rate? During your comp review cycle, it’s a good idea to measure the increases and adjustments for your demographic groups to make sure they're consistently applied with no adverse impact.
How much does negotiation at offer stage factor into compensation? People from underrepresented groups are less likely to negotiate strongly for their salary. Even with the best of intentions, this can lead to broader pay equity differences for people. Consider having narrow compensation bands and leading with your “last, best offer.”
- One way that systemic bias often shows up in the compensation process is when we adjust the pay increases to current salary levels. If people from different backgrounds are already at disparate salary levels, giving equivalent increases will just reinforce the differences.
- Be certain that people doing similar work at a similar level of impact are receiving equivalent salaries—even if that means you need to increase someone more to catch them up. Tools like Compaas can help.
Assessment, Development & Promotion
Questions to ask:
- Forthright: Are our success criteria for performance clear?
- Accessible: Do we consider and meet people's unique learning needs? This can be via employee resource groups (ERGs), mentoring, or training sessions designed for different learning styles.
- Involved: Do we have similar satisfaction ratings across demographics on our development opportunities? How about assessment fairness?
- Rigorous: When looking at performance feedback and ratings, are there any noticeable differences between demographic groups? Are we using the same assessment criteria? Are we giving everyone equal development opportunities?
This is an opportunity to pay attention to any potential unconscious bias in how your company does reviews, making sure you’re evaluating everyone equally on the same standards and metrics.
These are just examples of the types of common areas to look at. For each system, go around and share what aspects of the current system are Forthright, Accessible, Involved, and Rigorous and what aspects of this system can be improved (even by 10%) in each area.
Decide on the individual or task force that will drive progress and make decisions in making this system more FAIR. For best results, decide how you’ll measure success before you get started so that you can track progress along the way.
Bonus: Try the Inclusive Systems Audit from LifeLabs Learning.
Takeaways & next steps
In summary, it’s never too early to start building a culture and People Systems that prioritize diversity, equity, and inclusion. To make rapid progress, align on DEI-related definitions, offer training, establish metrics, and optimize your systems by using the FAIR framework.
As a first step: Gather your leadership team and a small group of DEI advocates at your company and begin by agreeing to definitions. Use the list we provided as a starting point and make edits and adjustments to align with your culture, mission, and values.
For more tips, check out this DEI playbook from LifeLabs Learning: