Our guest today is Lyneir Richardson, Assistant Professor of Professional Practice and Executive Director of The Center for Urban Entrepreneurship and Economic Development (CUEED) at Rutgers Business School. He serves (and has served) on numerous non-profit and civic boards, committees and commissions.
What does diversity hiring mean to startups?
Building great products requires a diversity of thought. Hiring people having different backgrounds or world views leads to positive tension in the team, more challenging conversations, more interaction and a better product. The same is valid for conversations with investors as having all essential skills and expertise onboard builds trust. Often, startups successfully complete their first funding round because a member of the team understands the mindset of the investors and can walk in their shoes. In a few instances I have seen that investors can connect with and be inspired by one particular member of the team. In the startup world, people don’t necessarily recognise the value and importance of a diverse team. These are different voices, different personalities, different connection points that complement each other and result in more profitable and viable ventures.
Many entrepreneurs read Transformify HR Blog, we’ve even developed the ‘’Market Entry Pack for Startups’’ for them. Would you give them a piece of advice on how to build diverse thought teams?
Well, it starts with a very basic recognition of strengths and weaknesses. Even before going to gender diversity and ratios, I would go to diversity of thought. It comes first. When I advise entrepreneurs, I ask them to identify what their team members are good at. Some people naturally have superb communication skills and are good at sales and marketing, others are inspired by numbers and good at managing budgets and convincing investors in what the potential ROI might be, others are great engineers. Some people are detail oriented and prefer to be focused on product development rather than on interacting with others. Entrepreneurs need to understand the dynamics of their teams and hire accordingly to compensate any deficiencies.
I am a lawyer and over the years, as an entrepreneur, I had to understand numbers and financials. Still, I felt best when there was someone who understands finance and is good at telling the story through numbers as much as I am good at pitching and legal arrangements. In a startup, it is difficult because you don’t have lots of money to spend on building a team. To me, it starts with having team members that have complementing skills sufficient to deliver a quality service or product. Then, it is the diversity of thought and having people with different life experiences, world views and backgrounds who could see problems, solutions and even opportunities in different ways. As an African American, I may see something as an opportunity while others may see it only as a problem. Maybe I will be able to identify the problem and rest of the team may see the solution and vice versa. So, to the extent that entrepreneurs can embrace diversity of thought, gender and age diversity, they may build better teams and products, raise more funding and build sustainable businesses.
What about cultural diversity? Transformify expanded globally and what I found to be very important was having onboard someone who understands the culture and the local ecosystem before entering a new market.
To me, cultural diversity is sensitivity to cultural norms, and it is fundamental. You can’t do business development strategically without understanding cultural nuances. Understanding norms, partnerships, what the right institutions are to go to for support, how presentations and formality of presentations happen, is fundamental in the global world we live in. I would never consider introducing my product or service into China without having Chinese expertise on my team. Cultural diversity is all about understanding how to identify opportunities and challenges, how to communicate and establish partnerships on ground while adhering to the local cultural norms.
What are some good diversity hiring practices you have seen so far?
I like the fact that you are approaching diversity form a startup point of view. To this point, at least in the US, the diversity and inclusion work was focused largely on the big publicly traded companies and it was about convincing them to hire more diverse workforce or sign agreements with more diverse contractors, etc. Supplier diversity is supposed to help small entrepreneurial companies, but they still face challenges securing contracts and working with corporates.
What I have seen as a great initiative is the so-called CEO Action for Diversity & Inclusion that provides enterprises with a network of CEOs who have made a commitment on improving diversity and inclusion within their organizations. The CEO Action has best practices, offers training services and is really focused on CEO level, on identifying issues and sharing what has been done. What I am hopeful for is that the CEO Action will be relevant also to mid-sized companies. Maybe the small entrepreneurial companies will find relevance in what the CEO Action is doing. Even though these small companies may not have HR Directors or dedicated diversity and inclusion budgets, their leaders may still read articles and reports and try to implement some good practices that are relevant to their organisations. I think that for entrepreneurs early on, it is the diversity of thought and having diverse skills on their teams that matter the most.
I do believe that the concept of CEO Action for Diversity & Inclusion can be beneficial to small companies and startups as their leaders need a network of people having the same objectives to share ideas with and learn from. People who have different backgrounds, life experience, skills and businesses but complement each other and can help each other. In the startup world, quite often, the solution is there, and it is simple, but there is no one who can provide guidance to the entrepreneur.
Absolutely and this is the core of one of the programs we have here at Rutgers Business School. Our programs are really focused on what we call ‘’urban entrepreneurs’’. 70% are people of color, Asian American or Latin American, 60% are women, 50% are first time entrepreneurs. One of the key components of these programs is sustainability. We’ve had about 400 entrepreneurs so far, this year we are celebrating our 10th birthday, and 78% of these entrepreneurs are still in business. We take entrepreneurs generating less than a million in revenue and help them to scale, raise funding or get them into accelerators. What is most interesting about these programs is not the class instructions that go on, it’s the peer to peer networking. Entrepreneurs form peer counseling groups to address diversity of thought and share their skills and expertise with each other as hiring experts is not always something they could afford.
Congratulations! That's a very impressive success rate. Statistically, 50 % of small businesses fail after 5 years in business. Last but not least, what are the challenges when it comes to diversity hiring?
The biggest diversity and inclusion hiring challenge is something people refer to as ‘’unconscious bias’’. It’s wanting to work with and finding it easier to connect with people who look like us, have the same background as us, have the same world views as us. It’s about building a team of people we are comfortable with.
At Rutgers Business School, we are teaching startups to build teams of people who have different skills and challenge each other. If entrepreneurs have the understanding that building diverse teams will make their ventures more profitable and viable, they will put an extra effort on developing a strategy to reach outside of what’s most comfortable to them.
About the author
Lilia Stoyanov is CEO and angel investor at Transformify. A fintech and digital transformation expert, she is also a professor at Zigurat Business School and expert evaluator Horizon 2020 at the European Commission.
About Transformify
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