4 ways small-business owners can retain diverse talent, including mentorship programs and employee surveys

• Since the recent racial reckoning, many industries have been working to diversify their workforces.
• Retaining talent from historically marginalized backgrounds remains a problem for some employers.
• Leadership consultants and executives share tips for businesses looking to retain diverse talent.

When Gena Cox entered the corporate world in 1995, she was accustomed to almost always being the only Black woman, immigrant, and person of color in the room.

"I was definitely a first and an only at the company, yet I felt like my talent was valued," Cox, who was born in Barbados, said.

But later in her career, Cox faced bias and exclusion from colleagues, which prompted her to leave those employers. Cox isn't alone: Many workers from underrepresented backgrounds report leaving companies because they didn't feel respected or included.

Since the racial reckoning prompted by George Floyd's murder in 2020, many industries, from finance to retail, have been working to diversify their employee bases and leadership. But retaining talent from historically marginalized backgrounds remains a key problem for some employers, especially during the labor shortage.

Cox, leadership consultants, and executives from underrepresented groups reflected on their experiences and shared multiple takeaways for companies looking to retain diverse talent. They identified four important steps, including investing in employee-mentorship opportunities.

"If you hire people from underrepresented backgrounds, and they are ignored, not respected, or don't get access to opportunity, they're going to leave," Cox said.

1. Chief diversity officers aren't always necessary

While having a C-suite leader dedicated to advancing diversity can help companies achieve important work, it's not the only way to advance equity, the executives and consultants Insider interviewed said. In fact, some say that having a chief diversity officer encourages CEOs and other leaders to funnel diversity and inclusion issues to that person, instead of taking them on themselves.

"Instead of focusing on having a chief diversity officer, focus on effective leadership for all your leaders," Cox said.

For example, managers should be educated in psychological safety — a term used by mental-health experts to describe a space where people feel they can be authentic, supported, and validated — Cox said.

In day-to-day work, psychological safety means having workplaces where employees feel safe to share their ideas. To develop this skill, leaders should practice giving open, honest, and constructive feedback, make time to listen to employees, treat workers with respect, and express gratitude. If you're unsure of where to start, consider tapping the expertise of a human-resources professional or the advice of a consultant.

"Practice listening with empathy. Listen to understand and don't listen to respond," Soumaya Khalifa, the CEO of the leadership consultancy Khalifa Consulting, said. "Create a safe space where employees are comfortable and feel secure to share their true concerns at work."

2. Get your employees involved in important conversations

If you're not aware of diversity, equity, and inclusion problems at your company, there's no way to begin addressing them. To better understand the issues at your company, ask your workers what they see as problems, said Yolanda Collins, a DEI and marketing strategist who runs her own consulting firm, Straight Outta Corporate.

"Allow employees to define what inclusion means to them and create what that looks like," Collins said via email.

Otherwise, leaders may be tempted to implement their own solutions, which can create a top-down approach that feels forced or won't be as effective, she added.

Conducting anonymous employee surveys about the company culture is a good way to take a pulse on how your employees feel, Khalifa said. It can help you identify areas that need work, and once issues are identified, leaders can follow up using focus groups.

For example, you might discover through a survey that your Muslim employees feel they don't have the time or physical space to pray during the day, which makes them feel disrespected, Khalifa said. Getting that feedback could help you establish a company rule where employees are allowed to take prayer breaks in a dedicated room after submitting a written request.

"This is about leading with equity by providing each employee what they need to perform their job well," she added.

3. Invest in mentorship and sponsorship

Mariana Cogan, the chief marketing officer of the software company People.AI, said the companies she stayed with the longest were ones that gave her career-growth opportunities.

"The different challenges and added responsibilities there allowed me to grow," Cogan, who is Hispanic, said. "Even though there were no senior Latin executives at the time, they all could see beyond my cultural differences and appreciate my talent."

To effectively retain talent from marginalized backgrounds, managers have to spend time mentoring them, Cogan added. They also have to be willing to advocate for them when it comes time for raises and promotions.

"Mentorship is really critical in investment and creating inclusion," Jyl Feliciano, the global head and vice president of diversity, equity, inclusion, and belonging at the software company Highspot, said. "Mentorship allows professionals to connect with others and then bring back new insights to the company."

4. Pay attention to how you divvy up opportunities and raises

Cox has a simple line for managers to remember when it comes to inclusive leadership: "Put me in and show me the money." In other words, tap into the talent and passion of all of your employees, then compensate them accordingly as they add value to your company.

"One of the really frustrating things that I hear from people who are marginalized is that they're overeducated, overprepared, but underutilized as leaders," Cox said.

Managers should pay attention to employees who go above and beyond and encourage that behavior when allocating opportunities, resources, and raises.

For example, in making diversity and inclusion an imperative at your company, you may notice some employees volunteer to take on additional responsibilities or show leadership qualities in mentoring others. Reward that involvement with additional compensation and opportunities.

"It's not about compensation for compensation's sake but compensation for value and recognition," Cox said.