UK startups face culture of complacency on diversity and inclusion

While many UK startups are prioritising diversity and inclusion, significant numbers could do more

UK startups are increasingly committing to diversity and inclusion in the year ahead, with 63% making workforce diversity a strategic priority.

This comes from innovation agency, Innovate UK; which also found that 77% of startups that are actively recruiting are looking for diverse candidates. Out of this cohort, 71% have diversity targets, regardless of whether they are currently recruiting or not.

What UK startups are doing right

The findings also reveal positive attitudes among startups about the business gains of workforce diversity. Nearly three quarters (73%) say it improves company innovation while 66% say it’s an important part of the company’s ethos, 58% say it helps attract the best talent and 56% say it boosts commercial performance.

Despite improvements in the ways startups acknowledge the importance and value of workforce diversity, there are still significant numbers still failing to take diversity and inclusion measures seriously, including communicating their positive economic impact on businesses.

What they could do better

A significant 22% of startups have done “some work to make their workforce more diverse but could do more” and 16% say making their workforce more diverse is not a strategic priority. A substantial 66% of startups say a diverse workforce is not more attractive to investors, however, this finding shows that firms must work harder to demonstrate the benefits of diversity in businesses to funders.

Over half of companies in the study report difficulty in finding and recruiting diverse talent, with three quarters citing a barrier that can prevent them from hiring more diverse talent.

These barriers include a lack of applications and not enough opportunities to interview diverse talent (24%) and a lack of candidates with experience in similar roles (13%).

However, these can be overcome by firms stating their desire for diverse talent to apply in job postings, thereby encouraging diverse applications. They should also make the criteria for candidates less rigid, enabling a more diverse talent pool of talent to apply for roles that can refer to their transferable experience.

Significant numbers of startups also believe education can help more diverse talent enter their sector, with 34% believing that incentives to study STEM subjects at schools and universities, including publicly funded apprenticeships, work placements and secondments could make a difference.

Yet again, the startups themselves can do more. If financially able, they should offer their own apprenticeships specifically for diverse talent such as for women, ethnic minorities and those from less advantaged backgrounds. They can also make these placements more inclusive by offering remote options, allowing apprentices or work experience candidates to complete their time with the company at home, and free from the costs of travel. This way, companies can build their own talent pipeline of diverse and upskilled candidates.

Jonny Voon, Head of the Sustainable Innovation Fund at Innovate UK said: “It’s no surprise that startups are choosing to prioritise diversity. Our research shows that a diverse workforce brings immense benefits to startup life, boosting everything from workplace culture to research and development (R&D) and business performance. But while start-ups are keen to expand the diversity of their workforces, it’s clear that finding the right talent remains challenging.

“Some of the key barriers centre around access to the education and work experience opportunities that help diverse candidates gain entry to key innovation sectors. There is clearly more work that can be done to expand education and career pathways, but also to demonstrate the power of diverse teams to investors so that the best businesses get the funding they deserve. This can help deliver game-changing companies led by a range of diverse talent who, through their success, can inspire the next generation.”

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