Encouraging diversity in portfolio companies
We take an active role in most of our portfolio companies, in many cases taking a board director or observer seat. Many of our companies have all-male founding teams, and unless they take intentional action, there is a high risk that the next few hires will also be male. We try to use our platform in the company to support them in making more diverse hiring decisions.
Leaving aside moral arguments about equality and representation, improved diversity = improved innovation = improved profitability. Having different experiences, skills and perspectives on your team will enable you to evaluate risk better, come up with different ideas and perform better as a team. It’s my belief that the majority of company management teams are not yet fully on board with this idea, and that’s why they don’t put more effort into improving diversity - because they don’t see the connection with increased performance.
There are many studies and sources of data that support this, but this McKinsey article is good place to start.
“Companies with more than 30 percent women on their executive teams are significantly more likely to outperform those with between 10 and 30 percent women, and these companies in turn are more likely to outperform those with fewer or no women executives. As a result, there is a substantial performance differential - 48 percent - between the most and least gender-diverse companies.”
I’ve put together some simple, no-regrets choices any company can make to improve diversity when hiring, most of which we have trialled ourselves - and any VC can encourage portfolio companies to make. I’m going to talk primarily about gender diversity but I think these steps could be applied to other forms of under-representation - would welcome your thoughts.
Make it a priority - many start-ups we see have all-male founding teams, and then the first few hires are also male. We get it, you’re so busy, it’s easiest to hire people you already know or can find in your network. But there is a negative feedback loop at work here. The more you hire people who are like you, the harder it is to break the cycle. Your company’s network won’t diversify, and potential hires will look at your team page and draw conclusions about your company culture.
Make it a stated intent - put it on your job ad that you welcome applications from under-represented groups. Put it on your LinkedIn post sharing the job. Tell people that you are asking to share the job ad. That alone will make it more likely that people from underrepresented groups will reshare to their networks, and more likely that you will attract diverse applicants.
Do what you can - maybe there are so few women that have the specific qualifications you need for that it’s close to impossible to hire one. But that won’t be true of all your open roles - make sure you try hard where you have a wider potential candidate group and perhaps hiring is less time-sensitive - think finance, strategy, marketing. Think non-executive directors, chairs, advisors, interns [Also - really - are there no women with the right qualifications? Try and find and interview at least one].
Sanity check the job ad - we know a VC who wrote a job ad glamorising the networking side of an Associate role - “are you ready to jump on a plane at a minute’s notice?”. If you have dependents, probably not! Get a few different people from your target group to read your job ad, and listen to the feedback. Look out for unnecessary qualification/experience requests which might put people off. Avoid acronyms and jargon. Use a gender bias decoder (like this one) to look for unconscious bias.
Be authentic - share why it’s important to you to hire someone from a differentiated group. We know a VC hiring for his team who wrote a post about how all the applications he had received so far had been male, and he spoke from the heart about the importance of strong female influences in his life and how he really wanted to hear from female applicants. It was enough to get over my “repost activation energy” and I shared with my networks, he got more female applicants and hired one of them.
Be open - let’s say someone is interested in working at your company. If they can’t find your job ad, they can’t apply. Make sure all your open positions are posted on LinkedIn and also on a “Jobs” page on your website, and keep it up to date.
Cast a wider net - now you’ve got all your job ads on your website and LinkedIn, ask all your stakeholders to reshare. Your investors, your board, your current employees, your networks on LinkedIn, your friends.
Target new networks - the people you are trying to find will belong to groups. Do you come from a university ecosystem, or belong to a professional group, like the Royal Society of Chemistry? Is there a trade body for your sector? Ask them if they have a group for women (or other under-represented groups), most of them do, and ask them if they could share your job posting with the group.
Find allies - you must know someone who is closer to your target group than you are. Ask them for help! Ask them if they know of any groups, Slack/What’sApp communities, and individuals who could be interested.
Learn from others - do you know another early-stage start-up who has managed to find more diverse employees? Ask them what worked for them.
Set goals - If you are working with a recruiter (internal or external), have targets for how many CVs you want to see from your target group.
Anonymise - if you are working with a recruiter, ask them to remove anything which could trigger your unconscious biases - name, university etc.
Be a champion! When you’ve managed to hire your diverse team, evangelise to other CEOs in your peer group about what you did and why. Offer to help by sharing their job ads with your new networks.
What ideas do you have to increase diversity in your company / your portfolio companies? Please share in comments.
Some useful resources:
The IMechE has a Diversity & Inclusion training programme (free, online)