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Can diversity improve profit for small businesses?

Ring Central Blog

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Sep 24, 2020

As an immigrant who came to the U.S. seeking political asylum, I’m honored to be living the American dream. This country’s entrepreneurial spirit made an early impression on me and shaped my career. My parents own a small business. I got my first job at a small company. Today, RingCentral has outgrown SMB status, but when I joined the company it resembled your typical startup.

I believe small businesses are the heart and soul of our country, and I want to do everything I can to help their owners succeed and build better lives for their families, just as my parents did.

As RingCentral has grown, we’ve steadfastly committed to diversity and inclusion. In fact, it’s one of the three pillars of our culture. Strangely, I don’t find much discussion about the benefits of a diverse workforce for small businesses. That’s unfortunate because the benefits of hiring people of all ages, genders, religions, heritage, and thought processes are indisputable — diversity enhances all businesses.

What is a small diverse business?

We tend to think about diversity in terms of gender and race, but it’s a great deal more than that. A genuinely diverse and inclusive workplace accounts for factors like age, religion, socioeconomic background, nationality, and culture. An older team member brings a different perspective than a new hire straight out of college — both can add value to a discussion. The same goes for someone who grew up in another country or — like myself — has had to adapt to a new culture. Varied backgrounds mean more new ideas and different approaches to problem-solving.

How do I make my business more diverse?

The most common hiring frameworks have unintentional blindspots and lean towards the creation of a homogenous organization. We hire referrals from current employees and people we know. This isn’t necessarily bad, but we need to be intentional about recruiting from the entire talent pool. A recruitment strategy that prioritizes diversity is all about getting the best possible people.

One way to accomplish that is to set standards. For example, at least one candidate should be from outside of your normal hiring pool. You should also make it a priority to find people who are eager to be part of your company but don’t think exactly the same way as your current team. Prioritizing diversity means opening your SMB up to a larger talent pool. While individuals may have blind spots, a diverse team ensures your organization sees the whole playing field.

Do you need to change your culture to embrace diversity?

To get the best from your team, each person must feel valued. Studies show that workers who feel included give more effort and are more likely to suggest new products or processes. Conversely, the feeling of exclusion or not belonging is experienced with the same trauma as physical pain. If you want people to perform well, they have to feel appreciated and a sense of belonging.

LinkedIn recently published a survey on what gives employees a sense of belonging at work. Unsurprisingly, recognition for achievements was the top answer, but there was a three-way tie for second place:

The onus is on leaders to make sure their people have a forum where they can freely share their voices. It’s not enough to hire from a diverse talent pool.

How does diversity contribute to a successful business?

No matter the business, customers are rarely a uniform group. Different clients prioritize different benefits, and a diverse team makes SMBs more agile and better able to address a diverse audience. A marketing team of only men risks misinterpreting the selling points for women, and vice-versa.

I once worked with an awesome husband-and-wife-owned real estate firm. As the female realtor showed me around a home, it was clear she was both well-versed in the house’s structural elements and able to connect those features to things that were important to me. As a female buyer, that was really cool. It put me at ease and made me want to buy from them. For a male customer, the husband might have stepped in to highlight those same features but with different benefits.

There is ample data proving that diversity boosts results for SMBs. Gender-diverse teams are 21% more likely to outperform their non-diversified counterparts. That number swells to 33% among ethnically diverse SMBs. Diverse firms have 19% higher revenue from innovation and make decisions twice as fast. In short, a better mix of people produces better results.

As a small business owner, you are constantly on the move, doing everything you can to improve your business. Being intentional about fostering a diverse team and attracting diverse talent is a proven way to improve business outcomes. More than that, it’s an area where spending a little time now will pay big dividends in the long run.

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