Not Just Ticking A Box: What DEI Really Means For Tech Startups
“DEI.”
Like most buzzwords and acronyms, it’s tossed around to the point of ambiguity.
It isn’t a new term, either—most employers (94%) say they’ve already committed to promoting diversity and inclusion within their companies.
It’s one thing to make a commitment, but another to actually follow through on it.
What Does DEI Mean In The Startup World?
DEI (diversity, equity, and inclusion) describes a commitment to creating and maintaining workplace cultures that promote opportunities for all people.
When you see headlines, articles, and job board posts that talk about a company’s “DEI initiatives,” what they’re really saying is, “We’re actively working to create a welcoming and inclusive culture.”
Since 92% of employees consider it one of the most critical factors when looking for employment, companies have to take these measures and become more inclusive—if they actually want to hire anyone, that is.
That’s where the grey area starts to emerge.
What do these “DEI initiatives” look like in practice?
Can anyone shout their culture of inclusivity from the mountaintops?
In a startup context, DEI means more than just diversity in hiring practices or a company-wide policy on inclusion.
It’s not just ticking the box of having an employer diversity statement. It’s about creating a workplace where everyone feels safe and respected, capabilities are maximized, and innovation is encouraged.
3 Common Misconceptions About DEI In Startup Culture
Since DEI is such a broad, nebulous concept, it’s easy to get confused. I’ll explain exactly what it entails (it’s not exactly what you think).
DEI Isn’t Just A Numbers Game. It’s A Mindset Shift.
Some DEI initiatives are quantifiable—hence the abundance of topically relevant statistics and data.
Underneath all the numbers, trends analyses, and line graphs lies a deeper root, inexplicable by numbers alone: creating a culture that prioritizes kindness, fairness, and understanding.
As a startup founder, you’ll attract plenty of great hires with stats showing your commitment to hiring women, POCs, and other statistically underrepresented groups. But you won’t keep them if you don’t engage them properly—an issue for over half of U.S. employees.
To truly embody a culture of diversity and inclusion, you’ll need to ensure that everyone feels welcomed, respected, and included in your company.
Making Hires From Underrepresented Groups Does Not Make Your Company “Diverse.”
The buck doesn’t stop at hiring a diverse team—it’s just the first step.
The main goal of startups (any business, really) is to make money. When you make a hire for your startup, you’re assembling the future of your company, including its successes, failures, and bottom line.
Hiring underrepresented groups is a great place to start. And hiring a female executive and African-American junior developer sounds good on paper.
But what matters is the impact they make once they join the company. If they aren’t the right fit for other reasons, hiring them will do nothing for your bottom line.
DEI Is An Ongoing Commitment.
To approach DEI from a holistic perspective, founders need to shift how they think about it.
It isn’t a one-time checklist you can parse through and forget about—it needs to become the foundation of your company culture. You have to regularly engage in DEI initiatives through recruiting programs, employee onboarding, and open-door policies.
What Actually Makes A Company Diverse?
As a company with a female co-founder born and raised in Iran, HopHR is already more diverse on paper than the average tech startup.
Its first hire was an African-American female Ph.D. graduate. She was the first of many—in just a few short years, the HopHR team comprised 70% women and people of color.
While these numbers are impressive, what makes HopHR truly diverse isn’t the gender and ethnicity of its employees—it’s the way they work together.
In a startup context, there are four main kinds of diversity.
1. Internal Diversity
Internal diversity refers to a person’s unchangeable traits, such as their race, ethnicity, sexual orientation, and age.
37% of US startup founders indicate age as the dominating factor influencing investor bias against them. By comparison, 28% and 26% list gender and race, respectively.
Although older startup founders statistically outperform younger ones, ageism is particularly commonplace in these environments because investors tend to favor those who are younger, thinking they’re more likely to take risks, handle failure, and embrace technology.
This preconceived notion trickles down to those responsible for hiring decisions. We see a lot of young founders hire new team members that are closer in age, background, and life experience to them.
2. External Diversity
External diversity includes factors your employees aren’t necessarily born with but heavily influence their thinking and behavior. They include citizenship, appearance, hobbies, interests, and educational backgrounds.
Compared to companies that only hire team members from a few areas (e.g., major U.S. cities), teams with members from all over offer unique insights into how people value or use products in different regions.
3. Organizational Diversity
Organizational diversity represents the structure of your team. It’s the mix of different functional roles, career paths, and professional backgrounds.
Organizational diversity can help your startup break down silos by encouraging people to think beyond their own areas of expertise. Startups need employees who can move between different disciplines and think on their feet.
This isn’t to say that your data scientist needs quick wits and sales acumen. But hiring people that aren’t just one-trick ponies can help you make better decisions, pivot faster, and stay competitive as your business grows and evolves.
4. Worldview Diversity
Worldview diversity describes the experiences and observations that shape the way your employees think. It includes different cultures, religions, and life experiences—all of which affect how they solve problems.
Most companies overlook worldview diversity because they can’t mark it off with a number. But it’s absolutely critical for both developing your product and bringing it to market. Team members need to be well-versed in the needs and preferences of diverse buyers, and that’s only possible when they themselves have unique personal experiences that shape the way they see the world.
The Current State Of Diversity And Inclusion In Tech Companies
As a whole, tech founders are already on the right track. According to the latest data from Zippia, racial diversity across the entire industry is as follows:
- White: 62%
- Black: 7%
- Latinx Americans: 8%
- Asian Americans: 20%
These figures almost represent the US population, but 68% of company leaders still report a lack of diversity in their tech workforce.
The reason: Gender gaps and racial discrimination impact companies’ organizational structures.
The Tech Industry’s Gender Gap
It’s undeniable: Men dominate the tech industry.
The Pew Research Center published an article revealing that women make up just a quarter of computer-science-related roles and even fewer (14%) of those in engineering.
Women of color hold 15% of all entry-level positions, but their representation rapidly decreases when you look higher up the rungs of the corporate ladder.
Companies also frequently build products without considering the perspectives of women and people of color.
Women, in particular, control around $20 trillion in consumer spending. But they often feel ignored by companies, underscoring a significant opportunity for new startup founders: Prioritizing DEI means more well-informed product and feature development.
Racial Discrimination In The Workplace
Tech as a whole has a major problem with racial diversity. Facebook and Microsoft, two companies that should be leading by example in DEI initiatives, miss the mark significantly.
At Facebook, just 2.1% of tech jobs are held by Black employees. Black team members at Microsoft only make up 4.7% of the total workforce, while Hispanics hold only 6.4% of jobs at the tech giant. In both companies, the vast majority of employees are White and Asian.
Discrimination is an even bigger problem for people of color, a Pew Research survey suggests. 62% of Black workers and 42% of Hispanic workers said they have experienced discrimination at work for reasons including pay inequalities, less support from senior leadership, and denial of growth and development opportunities.
It’s no surprise they aren’t working at these companies in big numbers—the ones who do aren’t treated as they should be.
“As someone who was born and raised in Iran, I understand the strong emphasis placed by Persian people on relationships and social connections. I recognize that these traits may sometimes conflict with Western culture’s norms, but I have learned to balance them while using them to create a welcoming work environment and excellent customer service.” – Nazli Nadem, President, HopHR
Sourcing New Talent With A DEI Focus
Founders and small teams wield lots of power when it comes to the future of their companies. When they make their first hires, they’re laying the groundwork for the future of their culture.
For some, this is their greatest strength. For others, it’s their Achilles heel.
It’s much easier to plan for diversity and inclusion from the start than to try to fix a broken culture.
At HopHR, we’ve prioritized DEI from the very beginning—a factor critical to our current success (and that of our clients)
When asked about it, HopHR founder and President Nazli Nadem references her own experiences:
One of the best ways to make sure you’re following your DEI initiative is to have clear and specific goals while doing your best to ignore your own internal biases.
1. Change The Way You Think About Diversity.
Like we mentioned previously, diversity and inclusion aren’t exactly the most natural things to think about for startup founders. And when we do think about it, we usually think in terms of black and white (no pun intended).
Shifting your mindset about DEI before making any changes or implementations will save you lots of time and energy.
Startups need to hire with all four types of diversity in mind, not just one. Hiring a woman of color just for the sake of “checking off a box” won’t do much to improve your company culture if her worldview and thought process eventually contributes to groupthink.
Organizations shouldn’t think of diversity solely in terms of race and gender. Founders sometimes favor less-represented groups in their hiring initiatives, but they fail to recognize other forms of diversity. If you prioritize out-of-the-box thinking and unique skill sets and talents, your talent pool will diversify without you needing to look into those factors.
Stop looking for a “diversity hire” and focus on finding the right person. If you’re looking for the right qualities in your candidates, they’ll be diverse in at least one of the aforementioned ways. A stagnant and homogenous team is certainly problematic. But choosing a candidate for the wrong reasons is an even bigger mistake.
A general rule of thumb: If any element of your hiring process can be considered “exclusionary,” you probably need to reevaluate it.
2. Decide What Is Best For Your Team Before Hiring.
In the context of diversity, founders should think about their (future) team’s unique characteristics.
- What backgrounds will support and improve our company mission?
- Where can we look for talent that suits our company’s needs?
- What kinds of diversity are most important to our bottom line at our current stage of growth?
- Are we prioritizing that diversity for the right reasons?
When HopHR was just starting to grow, we decided to build our team globally. Latin America emerged as the most feasible destination for its high concentration of affordable tech talent and rich cultural diversity from country to country.
Hiring across South and Central America meant that our team spoke multiple languages, gave us a new outlook on growing our business, and showed us gaps in the market we weren’t even thinking about.
Larger companies have rigid requirements for hiring (e.g., a specific degree, in-office work required, etc.). Startups should avoid these constraints in favor of what’s truly important: finding people who can build their unique culture.
3. Create Policies That Encourage Diverse Hiring.
To attract diverse candidates, startups need to make sure their policies reflect a commitment to DEI.
These include:
- Work-from-home policies. 35% of employees work from home some or all of the time, but 97% would prefer to. Flexible working arrangements allow you to cater to your employees, source from a global talent pool, and provide them with more freedom outside of work. They will also help you retain your employees, many of whom would abandon your company for one that allows them this freedom.
- Transparency in salaries and benefits packages. Money is a touchy subject in American culture, and standardizing employee salaries for their respective positions eliminates the need to talk about it. If two team members perform the same job under the same title, you need to compensate them equitably.
- Nondiscriminatory language. Review job descriptions, interviews, and other hiring operations to ensure they are free from discriminatory language and stereotypes. Ensure your team is well-trained in recognizing and avoiding bias while they work.
4. Recruit Anonymously To Eliminate Bias.
You might not realize it, but subconscious triggers (e.g., names) disadvantage certain candidates over others. Indicators of a candidate’s race, ethnicity, or gender don’t have anything to do with their ability to perform the actual work—they only make it more difficult for hiring teams to spot a great candidate.
Removing as much personal information as possible saves you from making decisions based on something other than qualifications (or lack thereof).
Research in Sweden, France, and Germany reveals that anonymous resume reviews produce fairer candidate selection outcomes for underrepresented groups. Across the body of research, 41% of applicants believed their chances of receiving an interview invitation were higher with anonymous job applications, while about 33% thought their chances were equal.
Here are three tips to guide your anonymous recruitment process:
- Remove any identifiers from resumes (e.g., names and educational institutions).
- Use gender-neutral language (e.g., salesperson vs. salesman).
- Train interviewers to avoid asking traditional demographic questions during the selection process.
Note: Anonymous recruitment is not a substitute for fixing your subconscious biases (although it can partially compensate for them). Since you will likely communicate with job candidates through LinkedIn or Twitter, you can’t expect anonymous recruitment to solve all problems.
5. Implement DEI-Focused Training And Initiatives.
As you scale your team, you have to train them on proper DEI initiatives. They should understand the importance of having a diverse, inclusive workplace and know what it takes to maintain one.
This means conducting regular training on subconscious biases (even if it’s online) and regularly monitoring the atmosphere within your organization—in meetings, out-of-office gatherings, brainstorming sessions, and beyond.
6. Collect Feedback On Company DEI From Employees.
Everything is a learning experience in startup culture. To learn, you need feedback from those around you.
Companywide surveys asking employees how included they feel in their current environment give businesses quantifiable data they can use to benchmark DEI initiatives and make improvements.
Anonymous chat allows employees to report or suggest solutions for any issues or incidents that may have transpired in real time.
In-person discussions, focus groups, and interviews help executive leadership relate to their team members, especially as their relationship becomes more disparate.
DEI Benefits Everyone, Not Just Underrepresented Employees.
An inclusive culture and diverse workforce make for happy employees and strong talent prospects.
Your customers and partners will love the improved products and higher-quality work they produce.
And your investors will be pleased to see the financial returns of a well-rounded, capable team.
At your startup, taking DEI seriously is an absolute must. Implementing these strategies and collecting feedback from your team means you create an environment where everyone feels respected and included—the perfect formula for success in any business.
