How to Implement Diversity, Equity, and Inclusion in a Small Business

Small businesses are increasingly adding diversity, equity, and inclusion initiatives, not just because it’s the right thing to do, but because it can help them compete for employees and customers.

By , Journalist

Your company culture can make or break your business success. A diverse, equitable, and inclusive culture instills trust and fosters innovation in your workforce. It also gives your business a competitive advantage.

What Is a Diversity, Equity, and Inclusion (DEI) Policy?

A diversity, equity, and inclusion (DEI) policy is an action plan that assists and guides companies in recruitment, hiring, promotion, and other human resource management functions. It aims to build a workforce that reflects the demographics of the larger community and a workplace that offers equal opportunities to all, regardless of their backgrounds, lifestyles, and beliefs. Companies whose DEI policies are known to the public sometimes gain a marketing edge over competitors, as customers gravitate towards companies whose social stances they admire.

DEI policies focus on three key values:

Diversity. The workforce should reflect the full range of demographic groups, including race, ethnicity, gender, culture, sexual orientation, and socioeconomic status.

Equity. The company's processes and programs, such as training and team building, should ensure equal access to opportunities for all employees.

Inclusion. The work environment should be designed to enable employees and customers to feel welcome, seen, and heard. It should honor and respect differences in backgrounds, beliefs, appearances, and communication styles.

Your business might need to take further steps for your policy to be meaningful and effective. For example, a company might use specific channels to recruit people with physical disabilities. But the business won't be successful at increasing the number of people with disabilities in its workforce if it doesn't provide ramp access to the facility.

How Does a DEI Policy Differ From Employment Laws?

Unlike employment laws, which mandate rules for hiring, staffing, and compensating employees, DEI policies are voluntary (although having one might assist an employer to defend against a discrimination lawsuit). These policies also tend to focus on the whole work experience, not just the hiring process.

Here's the difference between what your company must do and what it can do: Suppose the hiring manager at a wholesale distribution company faithfully applies employment laws like Title VII of the Civil Rights Act of 1964 (which prohibits employment discrimination based on characteristics like race and gender) by, for example, giving equal consideration to all applicants for its sales positions. Nevertheless, a staffing analysis shows that women represent only a tiny fraction of the sales force.

The hiring manager reviews hiring records and realizes that many of the women who were qualified and offered a position nonetheless turned down the position because it required a lot of travel. These women were unable to meet the travel requirements due to family responsibilities.

To attract more women to its sales jobs, this company might include an initiative in its DEI policy that restructures sales territories to create more positions that require little or no travel, thereby opening up sales opportunities to a larger number of women applicants.

What Characteristics and Attributes Does a DEI Policy Address?

The goal of a DEI policy is to create a workforce that reflects the larger community and a workplace that recognizes and embraces individual differences. The policy can focus on any number of characteristics, including:

  • race
  • national origin
  • religion
  • sexual orientation
  • gender and gender identity
  • physical ability
  • political affiliation
  • socioeconomic status
  • veteran status
  • family status, and
  • age.

You might not be able to specifically cover all of these characteristics in your employment practices. In your DEI policy, you should aim to promote equal access and opportunities for everyone. But the specific programs you implement can be designed to address recruitment and hiring based on a particular characteristic.

Why Is Diversity, Equity, and Inclusion So Important in a Small Business?

Making your business diverse, equitable, and inclusive is more than the latest management trend. A well-executed DEI policy can also give you a competitive advantage and improve your company's performance.

Let's look at the advantages of having an effective DEI policy.

  • Attracts customers. For many customers, a company's approach to how they treat their workforce is as important—and sometimes more important—than the product or service they're buying. A DEI policy demonstrates that your company is honest, respectful, and caring, three important elements in building trust.
  • Facilitates innovation. If you've spent any time in the workforce, you've probably come across (and been frustrated by) a coworker whose knee-jerk reaction to new ideas is, "This is the way we've always done it." A DEI policy can combat that kind of workplace culture because diversity brings different ideas to the table and gives workers the license to find new approaches.
  • Attracts talent. Employees want to work for companies that recognize their efforts and allow them to make meaningful contributions to the business. In many cases, that kind of job satisfaction can offset the more attractive pay and benefits packages that larger organizations offer, and can help a small business successfully compete for talent.
  • Reduces turnover. Workers who feel a sense of belonging and are happy in their jobs are going to be less likely to leave a company.

How to Implement a DEI Policy for Your Small Business

Once you've decided to create a DEI policy for your business, you need to take the appropriate steps to put one in action. Look at your company's current culture, set goals for your business, and make plans to meet these goals.

Assess Your Starting Point

Before you can begin to formulate a DEI policy, you'll need to consider your company's current practices and challenges, and what you want to accomplish.

  • Review your current employee roster and compare it against the labor market to determine whether any demographic groups are underrepresented.
  • Evaluate paths to career advancement and identify the employees who have—and don't have—access to them. Are all employees able to attend meetings where decisions are made? How are teams chosen for special projects? Are mentorship and coaching available to all?
  • Gather feedback from employees. Consider anonymous surveys or one-on-one discussions with a neutral third party. Ask employees questions such as, "Do you feel your opinions count?"; "Does the company provide you with opportunities for advancement?"; and "Do you feel you can be yourself at work?"
  • Gather customer feedback from online reviews and social media comments. Look for indications that customers feel they haven't been treated fairly or their needs weren't addressed.
  • Evaluate your advertising and marketing materials. Do they depict diversity?

Set Goals

When you have a good understanding of what your company looks like at present, decide how you want it to look in the future.

Set objectives. Set clear, measurable objectives for what you want your policy to accomplish. Do you want to increase eligibility for promotions among certain groups of employees? Do you want to solicit feedback about company operations from team members? Do you want to focus recruiting efforts on disadvantaged groups? Do you want to add products that target the needs of certain groups of customers? Don't be afraid to put specific numbers in your DEI policy. For example, you could say that your goal by the end of the year is for leadership positions to be made up of at least 50% women. Just make sure that these numbers are reasonably attainable.

Create an action plan. Create a plan of action for each objective, including the quantifiable results you want to achieve. For example, if you want to solicit feedback about company operations, you might establish monthly meetings where team members can share their thoughts. If you want to increase eligibility for promotions, you might assign coaches who regularly meet with those employees.

Put Your DEI Policy in Writing

Resources and templates are available from sources such as the Society for Human Resource Management. When you use a template, make sure you tailor it to your company and your DEI objectives.

  • Begin with a simple, declarative statement about your company's commitment to diversity, equity, and inclusion.
  • Include the functions your policy will focus on, such as hiring, compensation, promotions, and layoffs.
  • Establish expectations for employee participation, such as attendance at diversity training.
  • Provide a process for reporting problems.

Communicate Your DEI Policy

Don't just distribute your policy by email and expect employees to read it. Hold a company meeting and consider following up with smaller group meetings where employees can feel free to comment and express concerns.

Conduct Diversity Training

Diversity training, whether online or (better) in person, serves two purposes: It's an occasion for employees to voice their concerns, hopes, and expectations for the workplace. Secondly, those voices are themselves the people who can convert these views into action. For the training to be effective, everyone needs to feel safe to speak out and everyone must be open to learning.

Choose a trainer from inside or outside the company. Remember that biases can be unintentional and unconscious. You'll need trainers who are able to encourage free and open dialogue, so managers shouldn't be in charge of training their direct reports. Instead, consider hiring an outside consultant or using your in-house HR specialist, if you have one. A professional trainer can help to create an environment that fosters open discussion and provides constructive feedback.

Include managers as well as team members. Team members might not have authority over others, but their attitudes and actions can seep into the company culture.

Measure and Assess Results

You need to evaluate the impact of the goals you set and the initiatives you carry out. Otherwise, you won't know whether your policy is making a meaningful difference in your company's experience and translating into measurable results.

Set up a timetable. Assess and measure your progress periodically and revise your procedures as needed. For example, if your action plan calls for hiring employees from certain demographic groups like women or people of color, make sure you record and track the gender or racial makeup of your new hires. Review your progress on a quarterly or bi-annual basis, depending on the frequency and the number of employees your company hires.

Determine the core issue. If your results don't meet the goals you initially set, find the reason for this lower-than-anticipated performance. Do you need to revisit the program itself or should you try different ways to carry out the plan?

Report results. Remember to keep employees as well as managers apprised of your progress.

It Takes Time to Create Change

Creating change in organizations takes continual reinforcement, especially when it comes to company culture. You'll need patience and vigilance in equal measure to put your diversity, equity, and inclusion policy into practice.

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