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How Diverse Is Your Workforce?
by Rieva Lesonsky
May 24, 2022

Small businesses have a leading role to play in America’s business practices. After all, the country’s 30 million small businesses make up 99.9% of US businesses and employ 59 million Americans, according to the latest figures from the SBA. In 2019, it’s more important than ever for entrepreneurs to not just talk the talk, but also walk the walk when it comes to modeling inclusion and diversity in the workplace.

So how well are small business owners doing at diversifying their workforces? Maybe not as well as they think.

A whopping 93% of small business owners in a recent survey by Gusto say they actively try to hire diverse team members. However, the same study found that the employee makeup of a small business tends to mirror its founder’s racial, ethnic, and gender characteristics.

  • Just 13% of white founders say a majority of their employees are racial or ethnic minorities, compared to 47% of minority founders.
  • Seven in 10 female founders say more than half of their employees are female; only 36% of male founders say the same.

Why increasing workforce diversity matters

Building a diverse workforce isn’t just the right thing to do—it’s also the profitable thing to do. A McKinsey study published last year reports companies that rank in the top quartile for gender diversity are 21% more likely to have above-average profits compared to companies that rank in the bottom quartile.

Having a heterogeneous workforce can hurt your business, too. Companies ranking in the lowest quartile for both gender and ethnic diversity are 29% more likely to have below-average profits, McKinsey found.

In addition to crippling your profitability and competitiveness, lack of diversity negatively affects your company’s image. In today’s competitive hiring environment, it’s essential that your business be perceived as a good place to work—for all kinds of people.

When it comes to diversity, remember that ethnicity and gender aren’t the only factors to consider. Diversity also means hiring employees with disabilities, employees from all age groups, and employees from a variety of geographical, experiential, and cultural backgrounds. Recent immigrants, first-generation Americans, military veterans, retirees, or mothers returning to the workforce—all of these people can bring different perspectives to the workforce.

How to diversify your business

Ready to diversify your team? Here are some tips to help.

1. Go beyond your traditional sources of job candidates.

Make it a point to reach out to people outside your general social circle and to share job openings on sites or with organizations that cater to minority, female or disabled workers. If you normally only recruit entry-level employees from local colleges, consider reaching out to organizations that cater to stay-at-home moms or retirees. Both of these demographic groups are often seeking part-time employment

2. Actively advertise for diversity.

Your website, social media, and job ads should let job seekers know that you’re actively recruiting for diversity. You can also attract more diverse job candidates by reaching out to local organizations that help jobseekers in specialized categories, such as economically disadvantaged people, military veterans, or people with disabilities, find employment.

3. Don’t focus so much on credentials.

If you restrict your hiring to employees with certain qualifications, such as a particular degree or specialized experience, you’re limiting the potential diversity of your applicant pool. Of course, credentials should be taken into account, but by giving equal weight to a candidate’s life experience and personal qualities, you may find a real gem.

4. Turn your employees into recruiters.

Encourage employees to let friends and family know when you’re hiring. Diverse employees who reach out to others in their social circles will likely bring more diverse job candidates into your orbit.

5. Look for employees outside your local area.

For example, since urban areas are often more diverse than rural or suburban locations, you may want to reach out to nearby cities if you're seeking a more diverse pool of job candidates. Hiring virtual or remote employees can help accomplish this goal: Just make sure you make remote employees feel part of the team and include them in everything from meetings to celebrations to ongoing Slack chats.

America has always been a melting pot, and that diversity is our country's strength. It can it strengthen your small business, too, if you embrace it.

Something else that can strengthen your small business: getting consulting and advice from SCORE. SCORE’s experienced mentors are a diverse group, and you can find someone in their ranks to help with whatever small business issue you’re facing.

About the author
Rieva Lesonsky
Rieva Lesonsky is president and CEO of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog
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