Does Having a Diverse Team Really Matter?

Why you should be building a diverse team -- and how to do it.

January 30th, 2020   |    By: The Startups Team

When it comes to building a startup, you are who you hire. Not only do the people you bring onto your team determine the direction and destiny of your product; they also shape what it will be like to come to work every day. So as you get started on the process of “who” your startup is going to be, we want to make sure you’re thinking about something major: team diversity.

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What is team diversity?

Team diversity refers to differences between members of startup team. Those differences can include demographic differences (like age, race, sex, ethnicity), personality (extrovert, introvert, and differing Myers-Briggs types) and functional (as in skill sets, like engineering, design, copywriting, and marketing).

Types of diversity

When we think about team diversity, particularly in startups and in tech, we tend to think along two major axes: race and gender. But while those two categories are definitely key, it’s important to think expansively when you’re evaluating diversity on your team.

“I like to think of diversity in many ways – gender, sexual orientation, race, age,” says Diane Flynn, co-founder and CEO of ReBoot Accel, a career accelerator for women. “I also like to look at the cognitive diversity that comes from different life experiences, like raising a family, pausing a career and other factors.”

Ultimately, the goal of increasing team diversity is to bring as many different perspectives and experiences to the table as possible. The more areas you can find to add dimension to your team’s experience, the more dimensional your team’s thinking will become.

Here are the three main types of team diversity you should be thinking about as you staff up your startup.

Demographic diversity

Demographic diversity is the one people usually think of first when they hear the word “diversity.” It includes gender, race, age, ethnicity — basically things you can more or less surmise from looking at a person.

It also includes less immediately obvious demographic characteristics, like sexuality (LGBTQIA+ people) and socioeconomic class.)

Personality diversity

Personality diversity is about the different ways people interact. This can include a combination of introverts and extroverts or even different Myers-Briggs types, to make sure that your team is approaching problem-solving from a wide range of perspectives.

Functional diversity

Functional diversity is about making sure your team has a wide range of skill sets, knowledge, and abilities. For example, a team made up entirely of engineers might struggle with marketing tasks or a team of only marketing might have no idea how to functionally design a website. You need all the types to have a successful startup.

Pros and cons of diverse teams

Team diversity is about much more than checking a box or minding the p’s and q’s of “political correctness.” Making diversity a priority on your team isn’t just the “right thing” (which, by the way, it totally is) – it’s the right thing for your business.

Pros of diverse teams

Greater innovation

There’s evidence that putting together people who come from a range of backgrounds leads to more innovative products. Think about it: When you’re working with a diverse teams, you’re working with all of their diverse knowledge and experience sets. When you’re working with a homogenous team, you really only have one set of knowledge and experience. Which is more likely to lead to innovation?

Better communication

Because more diverse teams don’t automatically “get” each other, there’s potential for better communication. That’s because the team has to work to get there, resulting in deeper and more meaningful connections between team members.

Higher ROI

The numbers are in: Increased diversity increases your bottom line. A 2015 McKinsey report that examined 366 public companies found that those with the most ethnic and racial diversity in upper management were 35 percent more likely to make more than their industry mean. Those with the most gender diversity were 15 percent more likely to make more than their industry mean.

Avoiding potential PR nightmares

Snapchat came under fire when it introduced a filter that bore a disturbing resemblance to racist depictions of East Asian people. The Snapchat team claimed the filter was an homage to anime characters. But East Asian critics looked at it and saw something different. It’s not hard to imagine that, if someone of Asian descent had been on the team and felt empowered to speak up, they might have raised the issue and the whole fiasco could have been avoided.

Granted, the Snapchat story ends with far less dire consequences. But it was still a no good, very bad day for the Snapchat team. It forced them onto the defensive, and diverted their energies toward damage control and away from the next awesome thing they wanted to build.

Cons of diverse teams

May be more difficult to manage

When everyone agrees on everything and comes from the exact same background, it’s pretty easy to get along. But when you have people coming from a multitude of different perspectives, things can get a little bit trickier. It takes a more talented manager to manage a diverse team than it does to manage a homogenous one.

How to build diverse teams

Hopefully by now you’re convinced that making team diversity a priority at your company is worth it. So the next question becomes: what steps can you take to ensure that you’re building the most awesome, diverse, and kickass team you can be?

Prioritize diversity from Day 1

Step one: make sure you’re building diversity into your hiring processes right out of the gate.

“It’s important to include a variety of candidates in your interview pool,” Diane says. “Some companies won’t interview unless the recruiter brings at least 30-50% women to the table, for instance, or people of color.”

Once you plant that seed in the early round, make sure you carry it through all the way to the final rounds of interviews. “Many companies require that an individual from an underrepresented background be included in final round interviews,” Diane observes.

It’s important to note that ensuring diverse candidates are included in your later rounds of interviews doesn’t mean lowering your standards when it comes to the skills and qualifications you’re looking for. But a funny thing happens when underrepresented candidates make it into those final rounds of interviews, Diane says. “Oftentimes, they prove to be the best candidate.”

“The fact that they increase your diversity is great, but it’s not the reason you hired that person specifically,” Didier Elzinga, CEO of Culture Amp, adds. “You hired them because they’re amazing.”

Implement the concept of “diversity debt”

Didier borrowed the concept of technical debt from software engineers and created the idea of “diversity debt.” It applies to hiring practices in any company, where every time you make a new hire, you’re either incurring more diversity debt or paying it down. If that hire matches the demographics of your existing team pretty closely, your diversity debt goes up. If they don’t, your debt goes down.

When Didier founded Culture Amp, the company’s diversity debt was maxed out. He’s a forty-something, brunette white man with a background in IT and his co-founders are three other forty-something, brunette white men with a background in IT. And when they turned to their own networks for new hires, they found that the people in those networks looked a lot like them.

White. Male. Forty-something. Maybe a couple of blondes thrown in for some spice. Lots of technical experience.

Just like engineers making a calculated decision about technical debt, the Culture Amp team decided that this massive diversity debt was okay, for now. But they also knew they’d have to pay it down, soon.

Focus on inclusion, not just diversity

“Inclusion is not just about unconscious bias,” Didier says. “Inclusion is about looking around the room and seeing somebody that no one else is talking to and introducing yourself.”

Didier and his team rely on that image — of the lonely person at a conference or a networking event — to push the idea of inclusion within their own company. “People know what it’s like to be that person,” he says.

Imagining being that person activates our empathy. And when empathy is activated, it’s easier to reach out to and include a person who looks different than we do or comes from a different background.

Empathy is a skill that has to be practiced, however, and Didier says that “creating a culture where it’s okay to share stories” is essential for empathy-building.

“A lot of it comes down to helping people understand other people’s experiences,” he says. “That tends to break down walls and change behavior much more than anything else. How do you help people understand what it’s like to have the opportunity? To not belong? To not be included?”

Focus on measurable goals

Companies often start working on diversity by organizing an event or announcing an initiative, but Michele Perras, Director, Global Ecosystem and Alliances for Pivotal Software, points out that organizations are often missing a key element: “I think companies need to start somewhere, but sometimes those starting points do not necessarily have measurable impact behind them.”

When it comes to profits or user retention, leaders can often recite numbers with ease, but “having metrics, and being flexible around the point of those metrics, is something that companies may not always do” when working on diversity and inclusion, according to Michele.

Without a clear vision of the outcomes you’re looking to drive, metrics and key performance indicators, it is impossible to know if programs are helping you get closer to the goals.

Test for skills first, experience second

There’s a natural inclination to ask about someone’s past work experiences. However, at Uber, they test for skills first by administering real life case studies that reflect what you would actually be working on in the role.

If you’ve enjoyed doing those assignments – whether that’s structuring a marketing campaign, writing a blog post, organizing operational flow – then both sides actually get a sense of if you would thrive in that role. And this method also corrects for the fact that people from underrepresented backgrounds might not have the same experience level as white men, simply because it’s that much harder to get in the door in the first place.

If you’re on the hiring side, ask these questions: “Are they structured in their thinking? Are they articulate? Are they creative? Can they pick up on a hint and build upon it?” Ask questions about a puzzle you are trying to figure out, and see how they analyze the pieces.

About the Author

The Startups Team

Startups is the world's largest startup platform, helping over 1 million startup companies find customers, funding, mentors, and world-class education.

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