Benefits of diversity and inclusivity for start-ups

Hiring staff can be a learning process for new business owners especially if you’re starting up without previous recruitment experience.

A diverse workforce that is inclusive of all employees can pay dividends to new businesses.

According to CBInsights, 23% of start-ups fail because they didn’t have the right team – and a lack of diversity may play a role in limiting decision-making or providing a wider perspective in critical business decisions.

UK businesses also have a legal obligation to ensure equality and diversity when hiring.

The Equality Act 2010 was introduced to prevent and protect individuals from discrimination in society and in the workplace.

This act makes it illegal for businesses to discriminate against individuals due to nine protected characteristics, including gender, age, ethnicity and religion.

There are numerous benefits to building a diverse, representative and inclusive workforce.

From hiring staff with more qualifications to supporting growth in new markets, hiring for diversity and inclusivity can help your business gain a competitive edge.

Bigger talent pool

Job seekers are attracted to organisations with a diverse workforce – which could expand the pool of applicants you can draw from when hiring.

The Millennial and Gen Z workforce is more socially conscious than previous generations and they value workplace diversity and equality in their job searching.

Job site Glassdoor reported that 76% of US job seekers consider diversity a key factor when evaluating companies and their vacancies.

Wide variety of skills and experience

Start-ups with a diverse team can have a greater variety of viewpoints, skills, and experience.

Research by Cloverpop and Bain & Co found that diverse teams make better decisions 87% of the time compared to all-male teams (55%).

Improved business performance

Research by McKinsey found that companies with more diverse teams were more likely to outperform market averages.

It assessed businesses in the US, UK, Europe, Asia and Latin America and found that ethnically diverse businesses had a 36% greater likelihood of overperformance.

Gender diverse businesses had a 25% greater chance of financial overperformance.

New market opportunities

By hiring inclusively, start-ups with a diverse range of employees can discover new market possibilities.

With a range of geographical, social and cultural backgrounds shaping the strategy of a business, the different insights these provide can help your start-up expand into new markets.

Diverse teams can bring a different set of skills to solve business challenges such as providing insights into new markets and territories.

From a deeper cultural understanding to business etiquette when setting up business partnerships overseas to access to in-house language and translation skills, multicultural workforces can play a pivotal role in exporting business success.

Better brand reputation

Not only can a diverse team highlight new market opportunities, but they can also give your start-up a brand boost.

Businesses that are visibly diverse can enjoy an increased brand reputation with both customers and with industry professionals.

A study by YouGov found that 67% of consumers would make further purchases from brands committed to diversity and inclusion.

Increased innovation

Although there aren’t any specific statistics for UK start-ups, BCG reported that US businesses with above-average diversity in their management teams had 19% higher innovation revenue than those who had a below-average level of diversity.

It found that people from different backgrounds and experiences can provide different perspectives and arrive at a wide range of solutions, increasing the chance of innovation success.