Why should you worry about diversity and inclusion in your small business?

Apr 12, 2021 | Business Principles

To many small business owners, busy trying to cover every aspect of running a business, focusing on  diversity and inclusion (D&I) initiatives may seem like a bit of an unnecessary luxury. But is it really? Here are some of the key reasons you should consider making diversity and inclusion a priority.

It’s the right thing to do

We often focus on the business case, and quite rightly so; in a small business where money is often tight, and management time at a premium, a good business case representing a commercial benefit to doing something is often important.

But actually, although there are commercial benefits, prioritising D&I has a strong moral case as well. Even the smallest business has the potential to make an impact and contribute to a more inclusive, diverse society, within its own community and reach.

As a wider society, we want to address inequality and unfairness, and we want to enable everyone, regardless of their protected characteristics or background, to have the same opportunities.

Organisations play a key part in society as a whole achieving those aims, and by celebrating and prioritising diversity in your small business, you are making your contribution.

Improved business performance

There are statistics showing that organisations who perform well, and teams who perform well, are also more diverse, and improved business performance is often cited as a good reason to prioritise diversity and inclusion. Research is fairly limited, and is challenging to conduct in a robust statistical manner, and there is a clear case of arguing that correlation doesn’t equal causation; in other words, it could be that the management approach of an organisation prioritising D&I will also result in higher business performance.

But it stands to reason that within an organisation which values diversity, and fosters an inclusive culture and workplace, employee wellbeing is likely to be higher, and employees are more likely to feel valued and supported, which in turns naturally leads to higher performance, reduced absence and improved rates of retention.

Innovation is also a key business performance area mentioned in relation to increased diversity. And again, that stands to reason – if your teams are full of people from the same backgrounds and same life experiences, innovation and challenging of ideas and practices may be more difficult. New perspectives from a more diverse group of individuals can foster innovation in a way that benefits any business.

Diversity could certainly also help your business performance by ensuring your workforce are representative of the customers you serve, helping you gain insight into sensible marketing initiatives and effective external communications. 

Prevention and defence of legal claims

It’s a rather cynical reason for prioritising D&I and certainly shouldn’t be the main focus. But reducing the likelihood of legal claims, and putting your business in a good position to defend any that do arise, is certainly another benefit of prioritising D&I, and can be added to the business case.

A culture where diversity is valued and inclusion prioritised, where employees are clear that discrimination and harassment are unacceptable, and where people feel comfortable raising concerns, is clearly less likely to be the subject of tribunal claims for unlawful discrimination or harassment, or constructive unfair dismissal.

And in the event a claim does arise, if you can demonstrate to a tribunal that you made every reasonable effort to prevent and address unlawful behaviour, that will greatly improve your position in terms of a defence.

Corporate responsibility and the PR impact

There is certainly a PR benefit to prioritising D&I. Corporate responsibility is something many prospective employees want to see when applying for jobs, and D&I is part of that. If you struggle to attract good candidates, improving your D&I may help. Similarly, when customers are making decisions about companies they want to purchase from or work with, good corporate responsibility is often a factor.

However, many organisations make the mistake of focusing too much on the appearance of a strong D&I focus rather than on the actual real impact. This risks looking like empty virtue signalling rather than actually genuinely considering the diversity of your workforce and fostering inclusion into your working practices. D&I initiatives designed mainly for appearances aren’t going to have the impact you want them to on your workforce.

But you can certainly combine ‘real’ D&I with an effective communication strategy to make sure that genuine commitments and initiatives you are putting in place are also reflected in your public-facing materials such as your website, social media, marketing materials and recruitment campaigns.


It can be seen that there are several potential business benefits to strongly considering improving diversity and inclusion in your small business. But most small business owners want to be good employers, and do the right thing, and want to feel they are making the right impact and supporting their workforce. So even without the commercial business case, giving consideration to improving diversity and inclusion should be on the priority list for every small business owner.


If you’d like some advice on looking at diversity and inclusion in your small business, do get in touch.