Etsy's Ecosystem: Navigating Structure and Diversity in a Creative Marketplace

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Etsy, known for its unique and creative products, has effectively utilized a powerful business strategy to achieve success. The specialized market has given millions of artists, craftsmen, designers, and creators a place to sell their products in an eCommerce environment designed just for them. Despite being established in 2005, Etsy has gained a strong reputation. What might be the cause of this? Their commitment to social responsibility is one key factor.

Etsy's mission is to give a voice to micro-entrepreneurs in their interactions with local and federal government. Etsy has taken a proactive approach to support small entrepreneurs who focus on creativity and crafting, a level of commitment that few businesses are willing to match. They have a dedicated team in the United States and Europe that supports policy changes to simplify the process for sellers and small business owners to operate. In September 2016, Etsy organized a gathering of numerous sellers in Washington D.C. to have in-person meetings with congress members regarding topics that impact their businesses.

They also support forward-thinking positions on urgent matters, like establishing financial stability for everyone, particularly individuals not covered by the typical employer-employee dynamic. This dedication to improving society encourages more entrepreneurs to join their network, knowing Etsy will safeguard their benefits and rights.

Etsy’s Organizational Structure

Etsy employs a blend of hierarchical and matrix structures to manage its operations. Organizational structure involves dividing tasks into specific duties and coordinating them through established methods. An organizational structure outlines the formal division, grouping, and coordination of job tasks, influencing relationships, formality, and work output. Etsy's approach to structure has helped them balance efficient decision-making and innovation, two critical components of their success.

Hierarchical Structure

Etsy's hierarchical setup includes distinct management and reporting lines, enabling effective decision-making and communication. While bureaucracy can offer efficiency and standardization, it may hinder innovation and adaptability, potentially stifling diverse ideas and perspectives. However, Etsy has managed to overcome these challenges by incorporating a matrix structure to complement its hierarchy.

Matrix Structure

Etsy’s matrix structure promotes knowledge transfer and flexibility, enabling staff to contribute across departments and projects. Teams, or squads, consist of 10 members: six engineers, a designer, a product manager, and an analyst. Each squad is assigned tasks and meets monthly with the CEO and leadership to discuss progress. This approach fosters collaboration, allowing the company to leverage diverse talents and viewpoints in achieving organizational goals.

Organizational Culture and Diversity at Etsy

Diversity, equity, and inclusion are integral to Etsy’s culture, fostering a workplace where all individuals can thrive. Strong organizational behavior principles often lead to superior financial performance and employee satisfaction. Etsy's culture prioritizes diversity, aligning with its mission to "Keep Commerce Human." The company sets ambitious goals rooted in transparency and accountability. More than 50% of Etsy’s executive team and board of directors are women, with over 30% of engineers identifying as women/non-binary and people of color.

Organizational Culture

Etsy fosters inclusion throughout the employee lifecycle, from recruitment to retention. Initiatives include sponsoring conferences for underrepresented groups and establishing Employee Resource Groups (ERGs) with executive sponsors. These efforts ensure direct feedback and empower diverse voices. Etsy’s leadership invests in mentoring talent and women’s advancement, using tangible tactics, regular feedback, and measurable results to drive success.

Diversity at Etsy

Etsy embodies deep-level diversity, where employees share core characteristics like values. Rather than focusing solely on metrics, Etsy prioritizes building a culture that gives everyone a voice and fosters frank dialogue for improvement. Gender diversity is a key focus for Etsy. To address the male-female gap, Etsy launched “Etsy Hacker Grants” to support women engineers in gaining hands-on experience. Employees can self-report gender identity, reflecting inclusivity and belonging.

Etsy acknowledges gender is not binary and creates gender-inclusive environments, enhancing employee satisfaction. Their diversity efforts extend beyond recruitment, supporting employees throughout their lifecycle. ERGs pivoted to virtual events in 2020, fostering community and professional development. In 2021, Etsy added an ERG focused on mental health, strengthening community and well-being. They upgraded their “Diversity & Inclusion” program to “Diversity, Equity, & Inclusion” to ensure fair hiring, pay, and promotion processes.

Barriers and Benefits Faced by Etsy

While Etsy faces some challenges in maintaining authentic inclusion and addressing deep-level diversity, they have made significant strides in enhancing innovation and creativity through diverse teams. Their commitment to equity and inclusivity strengthens their business and aligns with their core values. Etsy's approach to diversity has resulted in a positive public image and brand strength, attracting talent and customers who value inclusivity and diversity.

Etsy can enhance its diversity initiatives by expanding its training programs and strengthening internal communication channels. Specialized training sessions for different departments and leadership teams can ensure a comprehensive understanding of inclusivity and cultural sensitivity. By updating these programs with the latest best practices and legal guidelines, Etsy can maintain a progressive stance on diversity. Additionally, fostering ongoing dialogues about diversity and inclusion through regular forums or discussion groups will create a more inclusive environment. Leadership should actively participate in these discussions to demonstrate commitment and set an inspiring example for employees.

A systematic approach to regularly assessing and adjusting diversity strategies is essential. By leveraging employee and stakeholder feedback, Etsy can continuously refine its efforts and address emerging barriers, ensuring the company remains responsive to the changing needs of its diverse workforce. Expanding diversity metrics to include measures of inclusion and belonging can provide a more comprehensive view of employee integration and value. Promoting cross-functional collaboration through Etsy's existing matrix structure can further leverage diverse talents and viewpoints, fostering innovation and enhancing employees' sense of value and inclusion.

For diversity initiatives to be effective, Etsy's top management must demonstrate genuine commitment and role modeling. Regularly reviewing and updating diversity policies will ensure alignment with best practices and evolving legal and cultural landscapes. Promoting a culture of inclusivity and engagement by providing platforms for diverse perspectives to be valued and celebrated will strengthen integration into all company operations. By implementing these recommendations, Etsy can solidify its position as a leader in diversity and inclusion, creating a workplace where all employees feel valued and empowered to contribute to the company’s success. This proactive approach will ensure Etsy remains at the forefront of diversity and inclusion, adapting to new challenges and opportunities as they arise.

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