How Startups Can Diversify Hiring and Be More Inclusive

Insights, News

16th June 2022

Diverse teams bring a multitude of benefits. Research suggests that diversity can have a profound effect on an organization’s performance and development. Here are a few examples:

  • Stronger Financial Performance: Ethnically diverse companies are 35% more likely to financially outperform their industry peers.
  • Increased innovation and creativity: Inclusive employers are 1.7x more likely to be innovation leaders within their market. 
  • Reduced employee turnover: Companies that hire employees with diverse backgrounds report a lower turnover rate than their non-diverse competitors.
  • Improved Company Attractiveness: Diversity and inclusion initiatives are among the top criteria influencing candidates’ decisions to accept a job offer. This is particularly true for female applicants. 

Even though there are clear advantages, many founders struggle to source and screen diverse candidates effectively. That’s why we wanted to share some best practices for diverse and inclusive hiring. 

Sourcing Candidates

Include a Diversity & Inclusion statement when you advertise new positions: Companies large and small are putting such statements onto their websites and integrating them into their recruiting materials. A company’s purpose is top of mind for many top talents, and communicating a commitment to D&I can have a profound effect on how prospective recruits view your company,  especially high potentials from underrepresented communities.

Show your existing team diversity: Publicly promoting your team’s diversity can be very encouraging for potential applicants. And even if your team has not yet achieved its diversity goals, promoting your commitment can have a positive impact and signal to prospective candidates that the environment you want to create is inclusive

Use gender-neutral language: Without realising it, we all use language that is “gender-coded”. Specific words are regarded as more “masculine” (e.g. fearless), while others are more female-coded words (e.g. sensitive). Hence, the language used in your job ad will have a strong influence on the applications you’ll receive. 

💡btov recommendation: Use tools like Textio or Gender Decoder to check the language within your company and especially in your job ads. When building a culture of belonging, every word counts!

Community and network

Set up a referral program with special incentivisation: Encourage your employees to refer people from their network that might be a good fit. There is no better advertising than happy employees. However, try to create incentives for recommending diverse candidates, such as a bonus system or additional bonus if a recruit is from an underrepresented community. 

Invest in diverse communities: To meet new profiles, it can be beneficial to set up partnerships with diverse communities like 2hearts or Women Who Code. Especially engaging in events is useful to get out of your comfort zone and meet new people.

💡In our Startup Resources, we have gathered a wide range of (tech-based) communities focusing on diversity and inclusion. 

Set up internal training programs: Finding STEM profiles from underrepresented communities is challenging. Hence, one opportunity to find smart and motivated people might be to set up a training program in e.g. software development to develop talent in-house. 

Our portfolio company Ledgy set up an internal program called “Women in Web”. The program allows female applicants who don’t have a background in computer science to join the tech team at Ledgy and learn the essential skills needed. And they’ve been successful too, recently promoting two trainees to Software Engineers.

Recruiters: This is usually one of the most costly forms of recruiting, however, can also help with finding more diverse candidates.

💡btov recommendation: We can highly recommend Julia Dous who operates Grow Diverse, a Berlin-based boutique firm for talent advisory with special focus on diversity. 

Screening Candidates

Performance-based recruiting vs. CV recruiting: CVs have several weaknesses: information is not accurate, some people oversell, while others undersell. Thus it can be useful to test candidates for job-specific skills.

💡btov recommendation: We can highly recommend TestGorilla as a software solution. Its screening tests identify the best candidates and make hiring decisions faster, easier, and bias-free.

Interviews 

Unconscious biases training for interviewers: It is essential to acknowledge that we all have unconscious biases. The trouble is that we often leave them unchecked and hence jump to stereotypes in decision-making. For obvious reasons, this has a highly negative impact on hiring decisions. Hence, we recommend our portfolio companies to regularly conduct unconscious bias training sessions. It does not always have to be a full training session, organized by a coach, however, it definitely does not hurt to have a discussion with your team around this topic once in a while. Our portfolio company, SumUp, for example, offers monthly training for their leadership teams to make them aware of inclusive hiring practices and biases.

Diversify your interview panel: Interviewers are the most important asset in the hiring process. They can help candidates to feel connected to a company and are critical for communicating the organization’s values, as well as what it means to belong. Hence, we highly recommend not always choosing the same people for interviews. 

Use the Rooney Rule: The Rooney Rule, named for Pittsburgh Steelers owner Dan Rooney, was introduced into the American National Football League and requires teams to interview at least one minority candidate when they have a head coaching vacancy. It has since been applied across many different industries. 

💡btov recommendation: It might be useful to ask your investors to conduct certain interviews to give the interviewee a chance to talk to someone outside the company that still has very good but most likely different insights. 

Offers

Making equitable offers: An offer is the starting point to ensuring equal and fair pay. If you want diverse talent (and most likely top talent in general) to join and stay at your company, you have to make a fair and equitable offer. Some of our portfolio companies, such as Blacklane, regularly checks its gender pay gap and conducts salary adjustments accordingly. 

One tool to check the existing gender pay gap is Figures which provides a detailed view of your gender equality positioningAnother option is to recognize that not everyone in your organization is good at negotiating salaries. Hence, encouraging hiring managers to offer what the respective candidate deserves based on common benchmarks, even if this is higher than the proposed salary by the candidate themselves can be very beneficial. This makes sense over the long term anyway – comparable positions with vastly different salaries are not good for performance or group cohesion.  

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You can find guidance such as this, as well as many other similar documents about startup topics on our newly launched website btov Startup Resources.

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