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This article was contributed by Nancy Wang, GM for Data Protection Services at AWS and Founder and CEO of Advancing Women in Tech (AWIT)
What does an inclusive startup culture look like?
An inclusive culture is one where everyone in a company, including those who identify as members of underrepresented groups (whether by race, gender, socioeconomic background, or other affiliation), feels included in the conversation. A true meritocracy thrives on this characteristic: anyone is welcome to bring forth an opinion or discuss a concern that is valid and of merit openly and safely.
This is hard to achieve and even harder to maintain with any organization. The meritocracy that existed among a handful of founding employees becomes increasingly difficult to preserve across an ever-expanding organizational chart.
That is why it takes deliberate action and continuous monitoring from company leadership (for early-stage startups – that’s you, founders!) to make sure that the Day One inclusive culture stays that way.
Startup success can often be seen as going hand in hand with individual heroism. After all, Uber took hold as a result of Travis Kalanick’s insistence that taxi cabs must be where the demand was, down to the second. Google’s fantastic rise grew from Larry and Sergei’s persistence to pursue moonshots, such as building a next-gen search engine when consumers predominantly used Yahoo!
But sometimes, this level of focus and adoration on the CEO or a specific individual can create monocultures. Some former tech executives have actually penned books on the topic, such as Jessica Powell (former head of PR for Google), who suggests in her book that “many of Silicon Valley’s problems [arise from an] engineering-and-data-centric monoculture that excludes those who are not in the inner circle.”
For many early-stage startups, the inner circle means the founders and a handful of employees – usually software engineers and product managers.
As founders are eager to build out their team, they often hire those who are like them, who have similar life experiences and backgrounds. It is this path of greatest comfort and least resistance that gives rise to monoculture.
Why should we avoid monoculture and move towards an inclusive culture?
The global economy is here to stay. COVID is accelerating our movement to an economy without physical borders.
In this global economy, most companies cater to a global audience. Startups (and companies in general) put themselves at a disadvantage when they do not diversify the staff who build products for diverse audiences.
Furthermore, employees increasingly choose who they want to work for based in part on metrics such as the company’s relative inclusion index. According to Glassdoor, 76% of job seekers quoted diversity and inclusion (D&I) as a requirement when considering a job offer in 2021.
We are in the midst of the “Great Resignation.” This means, as companies are facing challenges staffing critical roles, employees have more influence over hiring practices. In particular, savvy employees are attuned to companies that treat D&I as a “performative act” rather than a core tenet and principle.
Employees make decisions with their feet. Especially for top tech talent, their decision to join an early-stage company instead of taking a steady and lucrative FAANG position involves in large part their personal commitment to the startup’s mission or calculation that their growth will leapfrog those who take steady FAANG positions. Therefore, top talent will judge the top leadership or the board and ask questions such as, “Can I trust this group of people to execute on their mission?” and “Do I trust the members of this group?” and “Do I feel enough affinity with this group to feel safe joining?”
It is also no secret that investors increasingly prefer to invest in startups with diverse founding teams. In terms of performance alone, diverse startups outperform those that are not by as much as 32 percent. Those results, combined with a strong emphasis on inclusive leadership teams (bolstered by recent mandates from the NYSE: “Initiative to Advance Board Diversity”), are making startup founders take note.
As a startup founder, how do you commit to making inclusion part of your Day One culture? You do so by starting with first principles: Leadership, Transparency, and Advancement.
First Principle: Inclusive leadership fosters inclusive teams
Once the company gets its initial round of funding, founders have the challenge of building an inclusive leadership team.
To build an inclusive culture, be intentional about how you source candidates.
Do not put off diversity leadership recruiting until you have a bigger organization, because it will be much harder to curate a diverse organization once the company is past Series B than it is to do right after getting Seed funding. Companies that reach the Series B round find it much harder to change established recruiting processes and add inclusivity as an afterthought.)
Practice diversity recruiting as soon as possible. For example, if you and your co-founder share the same background, intentionally recruit a third founder whose attributes are different, whether it is age, gender, race, disability, or socioeconomic origin.
It is a very different ballgame recruiting for your founding team than it is to recruit for your first 10 employees. The founding team (as it is only a select few) are typically brought in for their “superpowers”: maybe someone is the world expert on distributed systems, or another founder is the queen of channel sales. But once the founding team is established, the next cohort of employees need to be attracted, or sought after – and these highly skilled employees need to find a sense of attachment or alignment with the company and its ethos.
Personally reach out to communities of underrepresented talent. These can include women in tech, engineering, or product communities (e.g., Women in Product, Advancing Women in Tech, Society of Women Engineers, Black Girls Code) and ask them how you can participate in their programs to increase your and your startup’s visibility among diverse groups. By investing C-suite or executive leadership time into working with these communities, you can create sustainable programs or processes for attracting, retaining, and promoting talent. My nonprofit, Advancing Women in Tech (AWIT), is an example of such a community.
Likewise, I recommend you communicate to recruiters at search firms that diversity is important to you. In my experience, this is something recruiters love to hear, and makes them all the more enthusiastic when representing you to prospects.
Founders can also use the interview panel strategically as an opportunity to showcase that their company prioritizes diversity. Diverse executives have told me anecdotally that a more diverse interview panel makes the candidates feel more “at home” and demonstrates that D&I is not just a performance at that company. As your organization grows, use caution to distribute the interviewing load fairly, so that your most diverse colleagues are not covering an excessive number of interviews.
A few factors to consider when selecting your interview panel: gender, education, socioeconomic status, disability, or race/ethnicity.
Good intentions notwithstanding, many founders ask: “How can I find a diverse candidate when there are no underrepresented individuals at the right level of the disciplines for which I am trying to recruit.”
A startup founder once told me, “I never thought to ask the recruiter to spend additional time seeking Black female executives for my Chief Product Officer role. But once I specified, I was presented with over 100 candidates for that single role.”
The lesson here: look in places or post your jobs on boards where there is a higher probability of them being viewed by diverse candidates and encourage your recruiting firms to do the same.
First Principle: Transparency with organizational metrics builds trust
Organizational transparency is a powerful recruiting tool. One recent trend is pay equality as championed by startups like Syndio, a Seattle-based SaaS startup that works with companies to establish equity pay governance. Syndio’s CEO, Maria Colacurcio, is a firm believer of a world where “everyone is valued solely for who they are and what they contribute to their organization’s success, without bias.”
Instead of making broad statements such as, “we need to make more diverse hires this year”, set reach (yet realistic) goals for hiring and publicly report on progress achieved. This will build trust with employees and again, prove that inclusion is not just a performance for the company but a key goal – and have the same weight as a profit or global expansion goal.
A leader in the employee statistics transparency movement is Accenture, whose CEO Julie Sweet aptly said, “Transparency is needed to create trust.”
Accenture’s annual report on gender and racial diversity sends a strong signal to the rest of the private sector that transparency on metrics is a necessary starting step.
Crowdsourced platforms provide guardrails on common practices that need to be avoided.
According to Blind, an anonymous online community where employees discuss topics ranging from pay equity to promotions and performance management, nearly 60% of the 9,000 users surveyed experienced pay secrecy. (Pay secrecy occurs when employers discourage employees from discussing salary information with coworkers.)
Pay secrecy also impacts diverse populations, such as women, disproportionately more – which works against creating an inclusive culture. For example, the Pew Research Center found that in 2020, women earned 84% of what men earned. Based on this estimate, it would take an extra 42 days of work for women to earn what men did in 2020.
And according to Bureau of Labor Statistics data, in 2020, women’s annual earnings were 82.3% of men’s, and the gap is even wider for many women of color.
Proactive transparent reporting sends a strong message to prospective candidates that your startup is not just talking about D&I but it is putting it in practice. By publishing your statistics on workforce diversity and retention rates, you stand to increase trust with both your existing as well as prospective employees.
First Principle: Inclusive career advancement builds lasting trust
Once candidates come in the door, continue building trust with them by making equity and fair advancement practices a frequent topic of discussion within the company. Enable employees to voice their concerns anonymously.
Tina Achorn, a Senior HR Leader at Amazon, says: “Creating an inclusive culture goes beyond being treated fairly and respectfully; it requires showing appreciation for everyone’s unique abilities and value-add.”
Tina gives the following advice for startup founders who want to create a safe space in their companies for inclusive conversations.
“Consider staffing project teams with attention to diversity of thought. Bring together different levels of expertise and backgrounds that you wouldn’t typically bring together on a project team. This provides development opportunities for those who may not necessarily be the first to be thought of (decreasing unconscious bias) but it’s also a way to inject fresh ideas.”
“Next, set aside time on a regular basis to dedicate time and space to increase learning on what inclusion means and encourage sharing of diverse perspectives on the team. These activities can range from reading an article, watching a video, or sharing tips for inclusive behaviors with the goal of ensuring everyone’s point of view is heard. If verbal participation is difficult for your team, you can send the content and key questions ahead of the meeting and ask all participants to prepare a brief summary of their views in writing to be shared.”
A Deloitte study found that even though 63% of respondents said that they felt they witnessed bias regarding advancement, only 29% of respondents say they actually speak up when they perceive bias, and nearly one-third ignore it.
When underrepresented employees feel safe to voice their opinions, a more meritocratic culture can emerge. A meritocratic culture can also manifest in the way promotions are viewed within the company.
MIT researchers found that when managers “establish clear processes, and monitor and evaluate the outcomes of those processes while ensuring that those processes are fair,” it goes a long way to fostering a meritocratic and inclusive environment.
Therefore, don’t automatically assume that the company is inclusive and will always stay that way. Make it a point to hold regular process evaluations with transparent scorecards for how well you did in terms of rewarding employees (measure that against industry benchmarks), retaining employees (measure how many employees in good standing left the company), and promoting employees (measure average time in level, and subdivide those numbers by gender, ethnicity, and other characteristics).
A McKinsey study found: “For every 100 men promoted to managerial roles, only 85 women were promoted—and this gap was even larger for some women: only 58 Black women and 71 Latinas were promoted. As a result, women remained significantly outnumbered in entry-level management at the beginning of 2020—they held just 38 percent of manager-level positions, while men held 62 percent.”
Honest examination of numbers like this leads to transparent dialogues about blockers to advancement: is it due to a lack of opportunities, a lack of willing sponsors, or an unconscious bias in the promotion process that can be corrected?
A radical proposal to cement inclusion into your company’s HR practices would be to tie inclusion efforts to executive compensation. In the same way business outcomes (i.e., by how much the ARR increased that way, growth in headcount) are a part of an executive’s performance evaluation, so should inclusion progress: how much diverse talent was hired that year, promoted, and rewarded? How do these trends compare other cohorts in the company?
Walk the walk by making inclusive culture a priority for everyone in the company
For a startup, inclusive Leadership, Transparency, and Advancement can seem like a lot to keep in mind, when the race is on to acquire customers and earn the first $1M in ARR to get to Series A/B.
But a Day One, proactive approach is a long-term investment that will pay off in the long run: in investment opportunities, long-term financial returns and exits, and a positive perception of the company culture that will be very helpful with acquiring top talent.
Building repeatable processes can ensure that inclusive culture is cultivated alongside early product development and becomes just as core to the company as is their P&L.
Founders, you can make inclusive tech culture a reality. Do not delay, start today.
Nancy Wang is the General Manager for Data Protection Services at Amazon Web Services (AWS) and the founder and CEO of Advancing Women in Tech (AWIT), a 501(c)(3) non-profit dedicated to aiding in the career advancement of more than 16,000 women and underrepresented groups across the globe.
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