Companies and Small Businesses Must Embrace Authentic Diversity, Equity, and Inclusion

As consumer social awareness increases and priorities shift, more and more companies recognize the importance of DEI, or Diversity, Equity, and Inclusion, following the road paved by small business owners.?

Consumer purchasing habits have shown that more and more U.S. consumers?are putting their money behind brands that align with their values. A survey conducted by Dynata showed that 60% of consumers prioritize shopping Black-owned businesses. In another study, 31% of consumers had shopped from a minority-owned business* in the past 12 months, showing that supporting the value and mission-oriented businesses is top of mind.

Larger businesses are beginning to adapt to the changing political landscape and consumer demands for more socially-conscious, inclusive brands.. In 2022, the use of DEI task forces increased the representation rate of minority groups from 9% to 30% in corporate environments. However, only 20% of corporations have these task forces. Meanwhile, minority* groups own over 8 million small businesses and employ 8.7 million people, ultimately giving them a competitive advantage in the marketplace. With these structural changes, it’s important for us to continue to demand these organizations and businesses to address DEI issues in an effective and authentic manner.

*Please note that “minority-owned” and “minority” are used to reference the data from external organizations. However, these terms are not often used at Start Small Think Big’s language due to the demographic ambiguity of “minority.”?

Small Businesses Using DEI as a Competitive Advantage

By Dr. Lowell C. Matthews, Associate Professor of Organizational Leadership | Southern New Hampshire University

Over the past five years we have seen increased attention on diversity, equity, and inclusion (DEI). You observe it proudly announced and showcased on the websites and marketing materials of companies both small and large. The financial growth and investment in this area is astonishing. For example, consider that in 2017 organizations spent close to $8 billion on DEI. This will easily reach $9.3 billion in 2022 and is projected to reach $15.4 billion by 2026.?

Why the sudden increase in growth? The primary reason is that large businesses are trying to do what smaller businesses have been doing all along, leveraging resources to meet consumer demand through a diverse, equitable, and inclusive lens.

The Advantages of Embracing DEI?

Small businesses are uniquely positioned to take advantage of the increased interest in DEI because it is simply what they do to survive. DEI has always been and continues to be one of the strongest competitive advantages for small businesses.?

DEI is the DNA of small businesses that allows the organization’s culture to be a space where everyone is welcomed, supported, and has the resources needed to grow and thrive.

To better understand this fact the first step is to examine what these terms mean from a small business perspective. DEI is the DNA of small businesses that allows the organization’s culture to be a space where everyone is welcomed, supported, and has the resources needed to grow and thrive.

Diversity

Small businesses are innately more open to a diverse way of conducting business and performing daily operations. Unlike large businesses that find it necessary to establish procedures and protocol to ensure that certain standards are met, small businesses can easily adapt and make changes based on the needs of their customers.?

This adaptability requires small businesses to be innovative when it comes to hiring employees. Recognizing that they cannot compete with larger companies that offer very attractive compensation and benefits packages, small businesses must be creative with their recruitment strategies. This creativity provides an opportunity to infuse diversity into the organization by seeking applicants through nontraditional avenues such as reentry and work-release programs, apprenticeships, and youth job training programs.?

Intentionally bringing individuals into the organization from different social and ethnic backgrounds provides for new ideas and innovations to be shared. Having a workforce that is comprised of different genders, age, sexual orientations, political affiliations, and lived experiences is an asset to the organization.?

President Lyndon B. Johnson stated it best:

“Our beautiful America was built by a nation of strangers. From a hundred different places or more they have poured forth into an empty land, joining and blending in one mighty and irresistible tide. The land flourished because it was fed from so many sources – because it was nourished by so many cultures and traditions and peoples. And from this experience, almost unique in the history of nations, has come America's attitude toward the rest of the world. We, because of what we are, feel safer and stronger in a world as varied as the people who make it up – a world where no country rules another and all countries can deal with the basic problems of human dignity and deal with those problems in their own way.”

Equity

Small businesses are also aware of the importance of equity. Through the small business lens, equity is the ability to provide your employees and customers with what is needed when it is needed. Equity requires the recognition and acknowledgment that things are not always equal.?

Today, the inequities that consumers observe and experience have led to approximately 40% of Americans having little or no confidence in large businesses, according to the Harvard Business Review. Large businesses are often faced with the challenge of dealing with internal politics that make it difficult and sometimes impossible to provide their employees and consumers with what they need.?

To further complicate matters, many large organizations continue to rely on the traditional vertical organizational structure that distributes power based on your position on the organizational chart. The higher you are on the chart the more power you possess, and this requires those that at the lower level to first get approval before addressing situations. By the time approval is received to move forward, the need may no longer exist or has evolved into something completely new.?

This is very different from the structure of many small businesses. Small businesses, typically those that are led by the founder of the company, follow a horizontal structure where the power moves to the individual with the skill set to address the problem. This horizontal structure makes it easier to distribute power equitably, empowering employees to take ownership of problems and thus giving small businesses a competitive advantage.?

Inclusion

There is no doubt that small businesses recognize the importance of inclusion. In order to grow your business and increase market share you have to include individuals and customers from all walks of life. Inclusion is the ability to put into action the practice of welcoming others to have a seat at the table and ensuring their voices are not only heard but also valued.?

One of the advantages of owning a small business is the opportunity to follow your passion and using this to benefit both individuals and communities. According to the Small Business Administration, businesses with fewer than 100 people on their teams represent the largest share of employment. In addition, racial minorities make up 24.8% of workers and own 19.4% of small businesses. Small businesses contribute greatly to local economies, provide gainful employment to many, and recognize the value of bringing differences together as they pursue their mission and vision.

Why is DEI Hard??

A final key question to consider is, if DEI is truly a competitive advantage why do so many organizations have a hard time moving forward? The main reason is that they do not understand that DEI is more than creating a website that looks diverse, you have to do the work.?

In light of recent social events, organizational leaders are clear on the why and what of the work related to DEI but are struggling with the how. For example, according to “Hiring Discrimination Against Black Americans Hasn’t Declined in 25 Years,” published by the Harvard Business Review (October 2017), the degree of discrimination faced by Black Americans in the hiring process has not improved. It is not by chance that we see many Black Americans starting their own businesses as way to counter discrimination they face in the workplace.??

While many in society believe that things are not as bad as they once were, there are still areas of concern.?

The Equal Pay Act was passed in 1963 and prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions. Although there has been progress with narrowing the pay gap between men and women, in 2020 women earned 83 cents to every dollar earned by men, according to the U.S. Census Bureau. Almost 60 years later, we are still not there.?

Small businesses are able to make changes quickly because they empower their employees to address problems when issues arise.

We understand the why and what but have not successfully figured out the how. Doing the work is what small businesses are good at. Small businesses are able to make changes quickly because they empower their employees to address problems when issues arise. They bring multiple perspectives to the table when considering decisions and their organizational structure makes it easier for DEI to be carried out on daily basis.?

Small businesses that embody the attributes of DEI have a competitive advantage and can use this advantage to successfully position themselves in the market.?

Dr. Lowell Matthews is an associate professor of organizational leadership at Southern New Hampshire University where he is the director of the Campus Honors Program and Project AIM, a new initiative to provide higher education access to incarcerated individuals.

Southern New Hampshire University does not endorse or sponsor any commercial product, service or activity offered on this website.