How to create a DEI strategy: A practical guide for small businesses

From spending too much money on avocado toast to replacing the doorbell industry with texts, millennials and Gen Z have shouldered the blame for all sorts of things. But that’s not an entirely fair representation of what these young generations bring to the table. Fueled by TikToks and lattes, they’re steadfast in their determination to create a more inclusive society. They’re even willing to turn down jobs to make it happen. So, if you haven’t given your DEI strategy the consideration it deserves, you better make it happen—and quick.

As these generations steadily become the majority of the American workforce, their demand for inclusive workplaces is only growing louder. They’re transforming diversity, equity, and inclusion (DEI) from an underutilized corporate buzzword to a non-negotiable business practice.

While mega-corporations have entire teams dedicated to this practice, small businesses can struggle to create an effective DEI strategy without additional resources. That doesn’t seem very equitable, so let’s level the playing field. In this article, you’ll learn how to create a DEI strategy and discover specific initiatives that will transform your company’s culture for the better.

Why a DEI strategy matters for small businesses

For those unfamiliar with the term, DEI stands for diversity, equity, and inclusion. DEI practices aim to create fair and inclusive work environments by addressing systemic barriers, promoting diversity, and ensuring equitable opportunities for all. More specifically, DEI practices strive to level the playing field for individuals in underrepresented groups like BIPOC individuals, LGBTQ+, women, people with disabilities, and more.

With value-driven millennials and Gen Z pushing for more equitable work environments, DEI practices are finally gaining the momentum required to make a difference. And, since these generations are expected to make up 75% of the American workforce by 2025, the message is clear. Small businesses need to invest in DEI initiatives now, to attract top talent and remain competitive for years to come.

5 benefits of DEI

Promoting diversity, equity, and inclusion (DEI) in your company goes beyond appeasing the incoming working generation. By implementing a DEI strategy, you can expect to achieve a multitude of benefits for your business, employees, and customers.

Here are a few perks you’re sure to see by incorporating strong a strong DEI strategy:

1. Greater innovation and problem-solving

A diverse team brings together individuals with different backgrounds, experiences, and perspectives. It’s these differences that can spark creativity and innovation. In turn, that creativity then leads to fresh ideas and more effective problem-solving. Cognitive diversity (different ways of thinking) alone can enhance your team’s innovation by up to 20%. With all those fresh ideas, your business has an edge to stay ahead of the competition.

2. Welcoming a broader customer base

When customers see themselves represented, they’re more likely to engage with and support your business. This can open new doors, extend your reach, and drive business growth. It’s important to do this in a genuine and authentic way. Think about the community you’re in as well: if your milkshake business operates near your city’s Little India, offer a mango lassi option in addition to plain old chocolate and vanilla.  

3. Improved employee engagement

Inclusive work environments allow employees to be their most authentic selves, regardless of what that looks like. This helps your employees feel valued and respected, and inspires them to go the extra mile at work. With a happier team, you can look forward to improved productivity and overall performance.

4. Attract top talent

When considering their next employer, 67% of job seekers look for diverse organizations. With an emphasis on a DEI strategy and implementation, small businesses attract a more qualified and diverse pool of candidates. Another bonus? Expect to see reduced employee turnover when your team feels seen and heard.

5. Positive brand reputation

According to a recent study, two out of three Americans choose to support businesses that align with their values. As a result, small businesses with a reputation for being diverse, equitable, and inclusive attract loyal customers, partnerships, and more favorable media attention—which is always good for business.

DEI statistics for small businesses in 2023

As a business owner, you understand the importance of data and numbers. So, let’s dive into some enlightening DEI statistics to better understand the mindset of job seekers, consumer buying power, and accessibility challenges.

Employee and job seeker statistics

According to a Glassdoor survey, more than 75% of job seekers and employees consider a diverse workforce an important factor when evaluating job offers.

• This number is even higher for Black (80%), Hispanic (80%), and LGBTQ (79%) job seekers and employees
• The same survey found 32% of employees and job seekers won’t apply for roles at a company that lacks diversity

Consumer buying power statistics

• By 2025, the buying power of minority groups is projected to reach $7 trillion
• Women either directly control or influence 85% of consumer spending
• 90% of Gen Z are more likely to purchase products they feel benefit society

Accessibility statistics

• The CDC reports that 27% of American adults live with some type of physical or mental disability
• Businesses without accessible websites lose $6.9B a year to competitors with more accessible websites
• The same study found that lack of accessibility causes two-thirds of blind consumers to abandon their online transactions

What is a DEI strategy?

A DEI strategy, or DEI plan, is a comprehensive framework that businesses use to promote diversity, equity, and inclusion. With this framework, businesses can more effectively achieve their DEI objectives, provide relevant staff training, and foster a more inclusive and equitable work environment.

Key components of a DEI strategic plan

While the precise objectives of your DEI strategy may differ from those of other small businesses, it should include the following essential components.

Mission statement

Just like a business plan, your DEI strategy should be guided by an overarching mission statement. This mission statement should clearly articulate your business’s commitment to diversity, equity, and inclusion as well as your vision for creating an inclusive workplace.

Responsible leadership

To drive DEI initiatives and promote accountability, designate specific leadership roles and responsibilities. Depending on the size of your business, this could be a single DEI officer, a task force, or an entire committee.

Initial assessment

This next step requires a bit of self-reflection. Collect and assess data like employee demographics. Conduct surveys and review existing policies and practices to determine your starting point. With this information in mind, you can easily identify areas of improvement and establish measurable goals that lead to positive change.

Goals and objectives

Like any initiative, your DEI strategy should be guided by specific, measurable, achievable, relevant, and time-sensitive (SMART) goals. These goals should align with your mission statement and address the areas of improvement identified during your initial assessment.

Strategic initiatives

Once your DEI goals and objectives have been clearly identified, it’s time to develop the strategies that will help you achieve them. This can include anything from new recruitment, hiring, and training programs to more inclusive policies and practices. Ensure you’re including your DEI goals and policies for your team in a digital welcome packet for all new hires—and share them with existing hires as well.

Team training

To promote systemic change and inclusive behavior at all levels, introduce diversity and inclusion training programs. Use your DEI goals and objectives to guide your curriculum. Some useful topics include: how to identify and address unconscious biases, examples of problematic behavior, and respectful alternatives. The more comprehensive the training, the better.

Communication

Create effective communication channels to provide updates on DEI initiatives and achievements, and encourage employee feedback. A team communication app is a great way to not only share updates, but also to have all work-related talk stay in one (monitored) place.

Evaluation and improvement

Establish ways to evaluate the effectiveness of your DEI initiatives and gauge your progress towards established goals. This requires regular assessments, data analysis, and employee feedback. Commit to continuously learning about DEI best practices and be open to adjusting your DEI strategy based on these insights and feedback.

Case study: DEI strategic plan for The Cozy Nook

We’ve covered the key elements of an effective DEI strategy, so let’s explore what that looks like in action. To do that, we’ll focus on the goals and objectives portion of the DEI strategy of a hypothetical retail shop called The Cozy Nook.

Mission: At Cozy Nook, we’re committed to cultivating an inclusive and welcoming environment where all customers and employees feel valued and respected. We believe that embracing diversity in all its forms, providing equal opportunities, and creating an inclusive culture are essential to the success and growth of our shop.

Goals and objectives: The goals and objectives section of our DEI strategy highlights our specific targets and measurable goals. These goals provide a clear focus for our efforts, enable us to track progress, and promote accountability.  

Increase workforce diversity

• Increase representation of underrepresented groups by X% over the next six months.
• Introduce new recruiting and hiring practices that attract diverse talent. This will include blind resume screening to minimize bias, diversity training for hiring managers, and partnerships with local organizations with diverse candidate pipelines.
• Routinely review our team’s demographic data to measure progress and identify areas of improvement.

Create an inclusive workplace culture

• Conduct employee surveys every 6 months to measure employees’ sense of inclusion, belonging, and satisfaction.
• Introduce diversity and inclusion training at all levels with the aim of achieving a minimum of X% participation rate.
• Encourage open communication and feedback from our team via manager and employee regular meetings, and our team communication app.

Enhance employee advancement opportunities

• Increase representation of underrepresented groups in leadership positions by X% within the next year.
• Create mentor programs to support the professional advancement of employees from underrepresented groups.
• Carry out pay equity analysis to identify pay disparities based on race, gender, and other individual characteristics.

Expand customer representation

• Conduct market research (including customer surveys) to ensure our products, marketing, and customer service reflect our diverse community.
• Consciously select diverse suppliers and vendors.
• Partner with community organizations that support diverse customer groups.

Measure progress

• Establish key performance indicators (KPIs) to track the progress of our DEI initiatives
• Perform annual DEI audits to evaluate our program’s effectiveness and identify areas of improvement.
• Publish an annual DEI report to share our progress, challenges, and future goals with stakeholders.

By setting measurable goals, regularly monitoring progress, and adjusting when necessary, The Cozy Nook is well-positioned to drive meaningful change, create a more inclusive work environment, and ensure our business reflects the diversity of its workforce, customers, and community.

7 diversity initiatives to include in your strategy

Still unsure how to put these DEI practices into action? We’ve got you. Use any or all of these real-world diversity initiatives in your DEI strategy to achieve measurable results like the ones described above.

1. Inclusive hiring practices

To attract and hire candidates from diverse backgrounds, introduce inclusive recruitment practices, like blind resume screening. Expand your job posting reach, and use diverse recruitment channels.

2. Diversity training

Regular diversity and inclusion training will promote awareness and enhance knowledge and skills related to DEI. When conducting the training, look to hire someone actually trained in specific DEI strategies who can be an outside source of up-to-date information.

3. Employee resource groups

Provide a platform for your employees to contribute to your DEI goals by supporting the formation of resource groups. This could be as simple as a casual group chat where your team can connect and share experiences, or a more formal recurring meeting.

4. Inclusive leadership and mentorship programs

Change starts from the top, so it’s important to offer inclusive leadership programs that teach skills like empathy, active listening, and the ability to develop diverse teams. Include mentorship programs as part of this training to help underrepresented employees advance in their careers.

5. Policy review

Review your existing policies to identify and eliminate any barriers or biases that may hinder your diversity and inclusion initiatives. If you need HR support, Homebase offers trained professionals who can help you create actionable policies.

6. Employee demographic analysis

To assess progress and identify areas for improvement, analyze employee data. Take a look and review your various demographics, representation at different levels, and retention rates.

Supplier diversity program

Create a supplier diversity program that promotes economic equity by supporting diverse-owned businesses. Change starts at all levels.

7. Community outreach

Seek out opportunities for collaboration with local communities and organizations that promote diversity and inclusion. Sponsor or participate in events like fundraisers that support DEI initiatives in your area.

Diversity, equity, and inclusion resources for small businesses

Unlike large corporations, your small business probably doesn’t have the resources available to hire an entire DEI team. Luckily, there are plenty of free resources that can help you create a DEI strategy that makes all your employees feel valued. Here are a few places you can start.

• Berkeley’s DEI checklist: Use this checklist to identify areas of improvement and guide your DEI policies and practices.
• Website accessibility test: This free tool allows you to test the accessibility of your website.
• Inclusive language guide for marketers: Identify commonly used terms that can come off as offensive and learn how to use inclusive language in your marketing material.
• Homebase HR: New and more inclusive hiring practices require refreshed job postings, onboarding paperwork, and training. Luckily, Homebase’s applicant tracking system makes it easy to blindly screen applicants, schedule interviews, and share application links on social media to maximize visibility and attract more diverse applicants. You can even use Homebase to store, manage, and track DEI training materials in one convenient place.

As value-driven generations increasingly take over the American workforce, small businesses that have prioritized diversity, equity, and inclusivity will be their top choice. Spend more time making your team feel valued and less time managing paperwork with Homebase. Try it today.

DEI strategy FAQS

What is DEI?

DEI stands for diversity, equity, and inclusion. As a business practice, it aims to address systemic barriers and create a fair and inclusive work environment for everyone.

Why should you prioritize DEI for small businesses?

Prioritizing DEI for small businesses is crucial for long-term success. Not only will it help you attract and retain the talent required to remain competitive, it will also expand your customer base and strengthen your relationships within the community.

How do you implement a DEI strategy for small businesses?

Implementing a DEI strategy for small businesses starts with a diversity and inclusion assessment. From there, it’s easier to identify areas of improvement, establish your overarching DEI principles, and set goals and objectives. With this information in mind, small businesses can then develop DEI practices and provide staff training to foster awareness and understanding. From there, it’s a matter of seeking feedback, continuously evaluating and adjusting your strategy, and celebrating diversity at every level.