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Equal rights: how diversifying your staff can improve your bottomline

Written by Eric Johansson on Friday, 13 October 2017. Posted in Diversity, People

While James Damore argued that women are naturally less suited for some roles, startups have much to win by taking equality seriously from the get-go

Equal rights: how diversifying your staff can improve your bottomline

Tech startups are changing, with more businesses taking action to boost the number of female employees among their staff. However, when James Damore posted his now infamous memo in July, the ex-Google engineer demonstrated that the sector still has a long way to go. “His argument is based on the idea that men and women are wired differently and as a result each sex is more suited to certain roles,” says Jonathan Atkins, managing psychologist at Pearn Kandola, the business psychology consultancy. Leaving the accuracy of his ideas aside – although plenty of those in the science community have dismissed his arguments and even one of the researchers Damore quoted said that he misrepresented the studies – views like Damore’s highlight how the industry is still struggling to come to terms with its equality problem. And it’s hardly a mystery why these companies are eager to fix the issue as failing to do so can have lasting ramifications for startups. “The tech industry is seen as lacking in diversity and many companies therefore appear to be highly unattractive places to work for women and people from ethnic backgrounds,” says Atikins.

And there’s good reason for founders to pursue an equal work environment from the beginning. “It’s important that a startup is inclusive from the beginning as it ensures that all employees feel valued and appreciated in the workplace,” says Jonathan Richards, CEO and founder of breatheHR, the HR-software developer. And while it may seem like an odd priority when a new venture is still trying to ensure its own survival, getting equality right will have long-lasting benefits. “Setting this norm at the start will ensure the culture goes from strength to strength and the company’s values are at the centre of it,” says Richards.

Fortunately, while big companies may be slow to change their ways, new ventures are not saddled with the same legacy issues. “Startups have the unique opportunity to create inclusive frameworks from the word go,” says Atkins. And it’s vital that entrepreneurs take this chance or risk ending up like Uber: struggling with discrimination lawsuits and a slew of accusations concerning sexual harassment. Having taken the wheel of the company in September, CEO Dara Khosrowshahi is now hard at work attempting to change the perception of the brand but transforming the culture will prove to be no easy task. “It’s very difficult for established organisations to change a culture that’s been part of their company for years,” says Atkins. “But startups have a chance to build an inclusive culture that welcomes diversity from the ground up.”

Not only will setting a great example early on help ensure startups have a more open culture but it will also provide a clear financial benefit. “There is five decades’ worth of research on diversity and inclusion, which almost universally show that it fosters productivity, engagement, motivation, innovation, attraction and retention of talent, as well as financial success,” says Atkins. For instance, when Sodexo, a food services and facilities company, looked at the performance of its own 50,000 managers around the world it found that gender-balanced units were 13% more likely to deliver consistent organic growth and that 23% had a higher likelihood of increasing their gross profit. And if you ask Atkins, that’s not unusual. “Diverse organisations almost always outperform their non-diverse competitors,” he says.

And it’s not difficult to see why having a diverse workforce can boost sales as it will bring more varied perspectives to the table. “As a startup you need to be competitive, which means being able to differentiate yourself from the rest and to be able to connect with your customers,” says Monica Eaton-Cardone, COO and co-founder at The Chargeback Company, the risk-mitigation company. “For the best approach you need to have as many views as possible when you’re targeting your audience.” Given that more different people there are looking at a subject the better the results, it’s hardly a mystery that more equal companies are 15% more likely to outperform less diverse businesses, according to research from McKinsey. And for a startup, those percentages could prove paramount. “Being able to find an advantage your competitors are lacking can be the difference between success and failure,” Eaton-Cardone says.

However, recruiting female engineers to join tech companies is easier said than done. “There simply aren’t enough women,” says Eaton-Cardone. And a survey from the Institute of Engineering and Technology backs her up, highlighting that only 9% of engineering and technology employees were women in 2016. Additionally, it seems this won’t change anytime soon as male students studying STEM subjects still outnumber female students. “This is one of the challenges that we all face as a society,” says Eaton-Cardone.

Fortunately, tech startups do have an advantage when it comes to scooping up the female talent that is out there. “Startups have the advantage that they can offer somebody the opportunity to be more than just a cog in the machine,” says Eaton-Cardone. She explains that while big organisations may be able to provide lavish pay packages, startups can offer a chance to be heard. “A lot of women working for huge companies feel that their voices aren’t listened to and that they are just a number,” says Eaton-Cardone. “In a startup environment, no one is a number. You don’t have the luxury of being one. You can’t hide in a cubicle: it’s not big enough for that. Everybody has a voice.” And given that having a wide range of voices is one of the advantages of having a diverse workforce, this is a win-win for entrepreneurs.

But hiring women is only the first step: entrepreneurs must also ensure that the new venture has an environment that boosts retention. To accomplish this, founders must ensure that their employees live and breathe their values of inclusivity. “Culture is particularly important for retaining a diverse workforce, as one of the key reasons people leave an organisation is because they don’t feel valued or included,” says Atkins. That means that startups cannot just pay lip service to equality but that they must actively work towards having a culture that enables it. “Businesses must strive to create an atmosphere of psychological safety in which staff feel comfortable and confident enough to express their views without fear of punishment or retribution,” says Atkins.

Given the advantages ensuring a startup has a gender-equal and diverse workforce can bestow, entrepreneurs better think twice before reading too much into the ramblings of a sacked Google employee.

About the Author

Eric Johansson

As feature writer and resident Viking, Johansson ensures EB is filled with engaging and eclectic entrepreneurial stories. While one of our freshest faces, he has sharpened his editorial teeth by writing about business, entertainment and fitness.

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