What is Diversity and how Does it Benefit your Startup Team?
There are a few fundamentals when it comes to creating a powerful startup team: solidifying your team structure, creating a supportive culture, streamlining workflows, ensuring psychological safety, and easy access to nutritious food and beverages. But there’s one more element that needs to be at the root of that – diversity.
Now we all know that there’s a hype around being politically correct and having all the colors of the rainbow represented in your organization. But that’s not necessarily what diversity is about, and political correctness should never be an organizational goal as such. In this article, we dive into the concept of diversity and what the benefits for your team are.
In our next article, we discuss how you can effectively achieve diversity within your team.
What is diversity?
In-team differences that lead to diversity can of course stem from having female and male members from various racial and ethnical backgrounds. However, there are way more diversifying factors across your team members:
- Age and life phase: 2 team members may both be students or young professionals, but one might be married with kids and own a house, while the other is single and living in a studio.
- Religious and spiritual conviction: one might simply be raised religiously, while another actively practices spiritual endeavors on a regular basis.
- Education and extracurricular experience: even with the same study background, one may have served in an association board and done 2 internships, while another only did what was mandatory.
- Skills and professional experience: some start to work from the age of 12 onward, others simply party and develop social skills, and yet another may spend his or her time on hobbies and hence develop autodidactic skills.
- Socioeconomic background and status: from rags to riches, or the other way around? The way you grow up determines a lot, but how you progress from there matters even more!
As you can see, it’s not just about the bullet points on one’s resume, it’s more about how a person approached each one of them.
Did someone study with conviction and commitment or was studying simply a pastime? And how does this translate to the endeavor that your team pursues? Are they in it to pay the bills, or do they come in everyday aspiring for a higher cause? All these factors diversify even people with the most similar backgrounds.
How does diversity benefit team productivity?
Diversity embraces the fact that the go-getter is not necessarily better than the slacker. Bill Gates famously explained that if he has a complicated problem, he gives it to the laziest employee he had. The reasoning behind Gates’ approach is that the laziest person naturally finds the simplest solution to any problem.
So, while the go-getter is needed to activate the team, the slacker is essential for efficiency and pointing out the obvious to those who like to get into the weeds.
If you don’t know what “groupthink” is, it probably sounds like a positive concept. However, groupthink involves acting and making decisions in a way that retains group harmony above all.
The result? The group makes irrational decisions that are unproductive to the actual group pursuit. So, while harmonious relationships within a team are indeed very important, this does not mean that you cannot push back on one another and challenge ideas and decisions.
More innovative and creative solutions
Since a diverse team comprises different experiences, attitudes, and backgrounds, it naturally reasons from different perspectives. In effect, groupthink is easily prevented. Moreover, the constant challenging of seemingly “normal” ideas and solutions and the bringing forth of unique perspectives and experiences fostered by in-team diversity spurs innovation and creativity.
These effects of team diversification are reflected in recent company analyses. This 2015 study on “Cultural Diversity, Innovation, and Entrepreneurship,” for example, shows that companies made up of diverse cultures are more likely to innovate their products. Also, this gender diversity research of 2011 demonstrates increased innovation within the R&D departments that included more women.
Diversification for an increased ROI
Besides innovation and creativity, also the ROI (Return on Investment) is higher in teams that are more diverse. In this 2015 analysis of 366 public companies, McKinsey reports that increased gender diversity results in 15% more ROI compared to average. Moreover, the same analysis shows that increased ethnic diversity even results in 35% more ROI compared to average.
Once again, much of this comes back to an absence of groupthink within more diverse teams, with better decisions for the organization as a result. A recent white paper demonstrates that diverse and inclusive teams not just lead to “better business decisions” for “87 percent of the time,” but also “drive decision-making 2x faster with half the meetings” needed and improve decision team results by 60 percent.”
Since an organization lives off sustaining its team members from its revenue, an increased ROI naturally follows from improved decision-making on the organizational level.
Diversity for getting and keeping your employees
It turns out that not just employers benefit from in-team diversity; employees factor it in their comparison of job vacancies as well. This 2020 survey by Glassdoor shows that of all job seekers, 76% weigh diversity in their decision-making.
Moreover, a diverse team doesn’t just attract new talent, it retains it as well. In this 2018 questionnaire of young people from 36 different countries, Deloitte found that 69% experiences diversity in management as “motivating and stimulating.” And if you’re in a motivating and stimulating environment, you’re far more likely to stick around as an employee, which is reaffirmed by also 69% of employees “saying they would stay beyond five years.”
Diversity is a diverse concept
As we alluded to earlier in this article, regardless of all of us being familiar with the standard social markers, there’s no universal conceptualization of diversity. Once again, the Deloitte survey points out that millennials and Gen Zs see “tolerance, inclusiveness, and openness; respect and an acknowledgement of the individual; and different ideas or ways of thinking” all as important markers of diversity as well.
So, with the complexity and significance of diversity established, we’ve laid the foundation of our next article, where we’ll detail how you can effectively create diversity within your team.