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Why LGBTQIA+ Inclusion Still Matters in 2025

Updated: Jun 13

As we settle into mid-2025, two decades after the landmark Lawrence v. Texas decision and a decade since marriage equality became law, the landscape for LGBTQIA+ workers has undoubtedly improved. Yet, discrimination and concealment linger. Recent research finds that 39 percent of LGBTQIA+ employees still feel compelled to hide their identities at work, and 36 percent have overheard derogatory remarks targeting LGBTQIA+ colleagues (Stonewall, 2025). Another analysis shows that 15 percent of LGBTQIA+ individuals experience workplace discrimination annually, compared to 6 percent of their non-LGBTQIA+ peers (Williams Institute, 2023).


For small and medium-sized businesses (SMBs), these figures should serve as a wake-up call. Unlike large corporations with vast Human Resources infrastructures, SMBs must lean on culture and community reputation to attract and retain talent. Inclusive strategies aren’t just an ethical imperative; they directly influence revenue, employee engagement, innovation, and overall resiliency. In this blog, I’ll share a comprehensive, data-driven look at the current state of LGBTQIA+ inclusion, explain why SMBs must lead by example, highlight the measurable business impacts, discuss additional organizational benefits, and offer actionable steps any SMB can implement immediately.


Current State of LGBTQIA+ Workplace Inclusion (with Recent Data)


By 2025, large organizations have made significant strides: 1,449 companies participated in the Corporate Equality Index, with 765 earning a perfect score, a 28 percent increase from the previous year. These high-ranking companies typically have explicit nondiscrimination policies covering both “sexual orientation” and “gender identity,” as well as transgender-inclusive health benefits (HRC, 2025).


Yet, the lived reality for many LGBTQIA+ individuals remains fraught. Recent research shows:


  • 39 percent conceal their LGBTQIA+ identity at work (Stonewall, 2025).

  • 36 percent overheard discriminatory comments targeting LGBTQIA+ colleagues (Stonewall, 2025).

  • 26 percent experienced negative remarks or behaviors from clients or customers (Stonewall, 2025).

  • 12 percent believe they were fired or forced out due to their LGBTQIA+ status (Stonewall, 2025).


Another analysis finds that LGBTQIA+ employees earn on average 11 percent less than their non-LGBTQIA+ counterparts, with transgender individuals facing up to a 32 percent wage gap (HRC, 2024). These disparities not only harm individuals but also suppress overall consumer purchasing power, particularly relevant for SMBs operating within local markets.


A 2025 retention study highlights the business consequences of exclusion: 97 percent of LGBTQIA+ employees who experience positive workplace inclusion plan to stay another year, compared with just 38 percent in non-inclusive environments (Scale Jobs, 2025). That gap translates directly into turnover costs for SMBs already operating on tight margins.


Finally, distributed companies, common among modern SMBs, face unique inclusion challenges. Best practices include creating virtual “safe spaces,” hosting ongoing allyship activities, and maintaining consistent communication so that remote LGBTQIA+ employees feel seen and supported. Without intentional action, subtle microaggressions can go unchecked when team members aren’t under one roof.


Taken together, these data paint a dual narrative: while corporate leaders make progress on paper, many LGBTQIA+ workers, especially in smaller businesses or remote setups, still struggle with discrimination, concealment, and economic inequity. SMBs cannot afford to remain passive.


The Role of SMBs: Why Small/Medium Businesses Must Lead by Example


Large corporations often take credit for bold DEI budgets and high-visibility campaigns. Yet SMBs possess distinct advantages and responsibilities to forge genuinely inclusive cultures:


  1. Proximity Enables Faster Cultural Shift With fewer employees, SMB leaders often know team members personally. This intimacy accelerates policy changes and fosters trust. For example, Oyster HR, a fully distributed company of fewer than 500 employees, commits to a monthly virtual Pride celebration and “safe spaces” channels, reinforcing that every team member can bring their authentic self to work. Their agility shows that even without a large HR department, SMBs can rapidly implement inclusion practices.


  2. Community Reputation and Talent Attraction In metropolitan areas, word spreads quickly about an employer’s values. A recent analysis found that 67 percent of job seekers, especially younger demographics, prioritize companies with visible LGBTQIA+ policies and practices (Workrise Network, 2024). Many SMBs that have implemented inclusive programs see significant retention improvements, as employees feel supported and valued.


  3. Cost-Effectiveness of Early Adoption Unlike large firms that can weather budget swings, SMBs must be judicious with every dollar. Fortunately, many best practices are low-cost. One recommendation is updating nondiscrimination language in employee handbooks to explicitly include “sexual orientation” and “gender identity,” which requires minimal legal expense (Williams Institute, 2023). Similarly, establishing an LGBTQIA+ Employee Resource Group (ERG) only requires a few hours of coordination and an executive sponsor, yet can yield significant retention benefits (Workrise Network, 2024).


  4. Bravery Against Backlash In 2024, at least a dozen major corporations faced public pressure and scaled back DEI commitments. SMBs, unencumbered by shareholder concerns, can choose to uphold inclusive values even amid political headwinds. Some SMBs, when larger companies rolled back benefits, reaffirmed their commitments and saw increased candidate interest, reinforcing that staying true to inclusive values strengthens both reputation and talent pipeline.


Business Impact: How Inclusive Strategies Drive Revenue, Retention, Innovation, etc.


For SMB leaders juggling limited resources, every initiative must demonstrate ROI. Multiple studies in 2024–2025 make clear that LGBTQIA+ inclusion bolsters the bottom line:


  1. Retention & Reduced Turnover Costs Inclusive workplaces see 97 percent of LGBTQIA+ employees remain year-over-year, versus 38 percent in hostile environments (Scale Jobs, 2025). With an average fully loaded employee cost of $80,000, retaining even two additional employees can save over $100,000 annually. Furthermore, companies with active ERGs experience 17 percent lower turnover among marginalized employees compared to those without ERGs (Catalyst, 2024). For a 50-person SMB, that equates to roughly $80,000 in savings.


  2. Enhanced Productivity & Innovation When individuals feel psychologically safe, they innovate. Some SMBs have reported improved project delivery times after instituting LGBTQIA+-inclusive benefits, as employees felt less distracted by health or identity concerns. Another analysis found that inclusive policies, like gender-neutral restrooms and pronoun education, lead to a 9 percent uptick in reported “creative collaboration” among teams (Workrise Network, 2024).


  3. Stronger Employer Brand & Market Differentiation In 2025, 765 major employers achieved perfect CEI scores (HRC, 2025). However, SMBs can leverage inclusivity just as effectively. SMBs that showcase inclusive credentials, such as CEI scores or testimonials, often see increased inquiries and client trust, demonstrating how inclusive policies attract both talent and customers.


  4. Pay Equity and Economic Stability National data reveal LGBTQIA+ workers earn on average 11 percent less than their non-LGBTQIA+ counterparts, with transgender employees facing up to a 32 percent gap (HRC, 2024). For SMBs, closing these pay gaps fosters loyalty and increases disposable income among local consumers—particularly crucial for businesses whose customer base includes LGBTQIA+ households.


  5. Community & Client Loyalty Younger consumers are 64 percent more likely to patronize brands with robust LGBTQIA+ policies (Stonewall, 2025). SMBs that sponsor local LGBTQIA+ initiatives often see upticks in social media sentiment and client renewals, confirming that inclusive SMBs not only retain top talent but also strengthen customer loyalty, leading to sustainable revenue growth.


Beyond Dollars: Other Organizational Benefits


While financial metrics often dominate boardroom conversations, several critical cultural dividends flow from LGBTQIA+ inclusion:


  1. Psychological Safety & Employee Well-Being LGBTQIA+ workers fearful of discrimination are 2.5 times more likely to experience anxiety or depression (Williams Institute, 2023). Another study shows 31 percent of LGBTQIA+ employees feel they cannot be themselves at work, and of those, 53 percent have experienced discrimination (Stonewall, 2025). By establishing trust, through initiatives like anonymous reporting and open allyship, SMBs can improve mental health, reduce absenteeism, and foster a culture where employees thrive.


  2. Robust Talent Pipeline 67 percent of Gen Z and millennial job seekers consider LGBTQIA+ inclusion a deal-breaker (Workrise Network, 2024). SMBs that highlight inclusive policies and ERG activities on job postings see 50 percent more applications from diverse candidates (Workrise Network, 2024). Over time, an inclusive reputation fuels a steady pipeline of young talent, ensuring organizational continuity.


  3. Organizational Agility & Resilience Companies with well-established ERGs and allyship programs are 30 percent more likely to adapt quickly to market disruptions, because diverse teams bring broader perspectives to problem-solving (Catalyst, 2024). SMBs that foster LGBTQIA+ inclusion cultivate cross-functional collaboration and open communication, allowing them to pivot faster during economic downturns or industry shifts.


  4. Stronger Community Leadership SMBs embedded in local communities can become beacons of acceptance by sponsoring neighborhood Pride festivals or partnering with LGBTQIA+ nonprofits. SMBs that support local LGBTQIA+ nonprofits generate goodwill and strengthen both employee and customer loyalty, reinforcing authenticity and community trust.


  5. Legal & Regulatory Preparedness State-level variations in LGBTQIA+ protections create risks for SMBs operating across borders. In early 2025, several Midwestern states debated repealing local nondiscrimination ordinances, placing employees in a precarious position. SMBs that had already codified “sexual orientation” and “gender identity” in company-wide policies avoided last-minute legal scrambles and demonstrated stability to their workforce (Workrise Network, 2024).


Key Recommendations: Practical Steps SMB Leaders Can Take Immediately


In my time building Relate Search, I’ve learned that meaningful change often springs from simple, deliberate actions. The following seven steps can be implemented this quarter:


  1. Update Nondiscrimination Policy Immediately Revise your employee handbook to explicitly include “sexual orientation,” “gender identity,” and “gender expression.” This language change costs minimal legal fees yet sends a powerful message. Explicit policy language discourages bias and empowers employees to speak up (Williams Institute, 2023).


  2. Audit & Adjust Compensation for Pay Equity Use a simple spreadsheet to compare LGBTQIA+ and non-LGBTQIA+ salaries for comparable roles. National data show trans employees face up to a 32 percent pay disparity (HRC, 2024). By correcting these imbalances, you not only demonstrate fairness but also increase LGBTQIA+ employees’ economic stability; translating to higher engagement and retention.


  3. Offer Transgender-Inclusive Benefits Work with your broker or insurance provider to include at least one transgender-inclusive health plan. Offering gender-affirming care can reduce turnover and improve project delivery times, as employees feel less distracted by health concerns (Scale Jobs, 2025).


  4. Launch or Strengthen an ERG with Active Allyship Establish an LGBTQIA+ ERG and recruit at least one executive sponsor. Employee Resource Groups with active ally participation experience 17 percent lower turnover among marginalized employees (Catalyst, 2024). Provide a budget for quarterly events, virtual or in-person, and encourage allies to participate, amplifying the ERG’s impact.


  5. Train Managers on Inclusive Leadership & Allyship Schedule a two-hour workshop for all people managers on LGBTQIA+-friendly language, pronoun usage, and how to intervene when witnessing bias. Inclusive leadership training reduces microaggressions by 22 percent (Catalyst, 2024). Whether through external trainers or curated online modules, this investment cultivates psychological safety.


  6. Celebrate LGBTQIA+ Milestones & Solicit Anonymous Feedback Dedicate a portion of your monthly town hall to highlight LGBTQIA+ history milestones or share local nonprofit spotlights. Solicit anonymous feedback with questions like “Do you feel comfortable expressing your identity at work?” and “Have you experienced or witnessed discrimination recently?” Anonymous feedback mechanisms help bridge trust gaps; 31 percent of LGBTQIA+ employees wouldn’t feel comfortable reporting discrimination without anonymity (Stonewall, 2025).


  7. Highlight Inclusion in Employer Branding and Recruitment Update job postings to explicitly mention LGBTQIA+ inclusion, healthcare benefits, and ERG support. Postings touting inclusive policies receive 50 percent more applications from diverse candidates (Workrise Network, 2024). Consider showcasing CEI scores (if applicable) or testimonials from LGBTQIA+ employees to reinforce authenticity.


Conclusion: A Rallying-Cry Call to Action


Large corporations may dominate headlines with massive DEI budgets, but SMBs hold a unique power to drive genuine change. By weaving inclusive policies into the fabric of your organization today, through nondiscrimination language, pay-equity audits, ERG support, manager training, and authentic allyship, your small or medium-sized business can achieve outsized benefits. If you’re an SMB leader committed to building a more inclusive team, reach out to me, David Armendariz at Relate Search. We specialize in partnering with SMBs to design recruitment and retention strategies that embed LGBTQIA+ inclusion into your culture, ensuring you not only meet but exceed the expectations of employees, clients, and your community. Let’s work together to demonstrate that authentic LGBTQIA+ inclusion isn’t just a checkbox; it’s the foundation for enduring success in 2025 and beyond.


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