May 2, 2019
Roadmap to Diversity and Inclusion
Because promises to try harder don’t work
For three years, CEOs, diversity advocates, and reporters have asked the same burning question:
What is the one thing that companies can do to become diverse and inclusive?
The answer is diversity and inclusion (D&I) requires more than a single action; there is no silver bullet. But there may be a first milestone that can focus and accelerate your entire journey.
Project Include has been advocating one key path for meaningful progress: metrics. And today we strongly recommend specific targets. We’ve seen more and more startups set targets for diversity demographics, just as they would for any other business imperative, and it works. When objectives and key performance indicators are created, communicated, and assigned, employees prioritize D&I work and hold each other accountable for reaching targets.
Targets transform D&I from a “nice to have” to a “must have,” changing mindsets, attitudes, and behavior; they become the launchpad for doing the hard work, having the uncomfortable conversations, and making the difficult decisions.
But with D&I today, startups want to know how high to set targets. Big companies have had stagnant low numbers for years, and often miss their low targets, and we all know that’s not enough.
We know startups can do better. Teams should eventually reflect the US workforce population. And if the primary roadblock is not knowing where to begin, we have a real-world, data-driven recommendation.
Metrics To Drive Diversity On Day One: 10–10–5–45
We’ve worked with enough startups to see what is possible, and we used actual top quartile startup results to set four D&I targets: 10–10–5–45 in 2 years.
Let’s talk race.
The first two metrics set demographic targets for two underrepresented groups:
- 10% of employees should be Black/African American/African
- 10% of employees should be Latinx/Hispanic
Eventually, these 10–10 targets should rise until they match overall US workforce percentages of 13% and 17% — and they should include more groups.
The world is not binary.
The third and fourth metrics, “5,” and “45,” are about creating possibilities:
- 5% of an inclusive company’s workforce will likely be nonbinary.
- The remaining employees should be an even balance of men and women with a hard target of 45% identifying as women.
While gender demographic targets of 50-50 are a step forward, they fail to include our increasingly nonbinary world. A recent UCLA study reported that 27% of California youth are viewed as gender nonconforming by their peers. At the startups we worked with, nearly 5% of employees self-identified as nonbinary — and that doesn’t count employees who chose not to answer to protect their privacy.
Companies should make their nonbinary and transgender employees feel included. Easy starting points are in areas like infrastructure (all-gender bathrooms), communications (options to identify as nonbinary, individualized pronouns, nonbinary options in documents), benefits (medical and insurance benefits that support transition-related care), and interpersonal interactions (following individuals’ gender identity preferences, correct use of individualized pronouns). Your code of conduct should include ways to report and respond to violations. And of course, processes for hiring, managing, compensating, and promoting employees should try to eliminate gender and other bias.
Implementation matters, and we have three specific implementation rules for 10–10–5–45 targets:
- Reinforce targets across the whole recruiting and retention processes. If the process is flawed from the start, even the Rooney Rule can’t make qualified hires magically appear at the end.
- Apply targets cross-functionally and up the full length of the corporate ladder. Establish clear promotion paths that offer all talented employees a fair shot at senior positions. Many companies recruit employees of color at junior and lower management positions, but then limit career progression. Research on the “bamboo ceiling” shows that Asian employees are least likely of any group to make it to senior roles.
- Apply the 5% nonbinary guideline to racial/ethnic groups, with at least 45% of employees in all groups identifying as binary women. Intersectionality matters.
In general, treat targets the same way you treat your other objectives and key performance indicators. That probably means assessing them at least twice a year and as part of employee and team reviews. It means evolving over time to consider categories like sexual orientation, veteran status, immigrant status, disability status, or age.
For startups aspiring to be diverse and inclusive, two clear predictors are (1) meaningful, early engagement on D&I by the CEO and (2) diverse executive teams. Start the work and set expectations early.
The most encouraging result we’ve seen is that hiring teams with gender and race diversity early on creates a flywheel effect that makes attracting, hiring and retaining candidates from all underrepresented backgrounds dramatically easier.
Diverse teams can attract and close candidates who are inclusive and from different backgrounds. Startups focused on both gender and race targets have better demographics and retention in more areas, because improving processes to source, vet and retain talent impacts all groups. Our startups with the highest percentages of Black and Latinx employees also had higher percentages of Pacific Islander employees (2%) and employees who self-identified as having more than one race or ethnicity (15%).
The converse of the flywheel also holds: Homogenous teams have difficulty identifying, attracting, hiring, and retaining candidates from underrepresented backgrounds. The bigger they are, the harder it is; the longer they wait to implement these processes, the more it takes to course-correct.
No one has ever said they wish they had waited longer to start working on D&I.
If the “10–10–5–45” targets seem too aggressive, realize that they are actually lower than the percentages for the overall workforce, and they are comparable or only slightly higher than the percentages for the STEM workforce.
We have seen startups achieve these results even without targets.
For startup CEOs who are reluctant to set 10–10–5–45 targets: What is holding you back? Figure out why they make you uncomfortable and non-committal. What obstacles concern you? Do your employees still blame the “pipeline?”
For startups asking for the “one thing” that they can do to build diverse and inclusive teams, we know targets are milestones that guide and focus efforts.
We also know we are forging new paths, and we will evolve these metrics as we learn. In the meantime we encourage your adoption and feedback so we can charge ahead together.
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Endnotes:
- Process: These numbers offer a realistic roadmap. They come from actual metrics from the top-quartile startups we’ve worked with, so we know they’re achievable within two years — even in the Bay Area. Our data came from a small group of start-ups in Startup Include and VC Include that we’ve worked with over the past two years. We included only startups with at least 25 employees, where numbers start to be more meaningful. We also excluded a company with 65% Latinx employees as an outlier. We defined top quartile as having the greatest percentage of underrepresented employees of color.
- In the nonbinary category, we included answers such as “not sure,” “nonbinary,” “genderfluid,” and “other.”
