In 2021 it doesn’t even need to be said that diversity is important. As more companies come to terms with this, we’ve seen great strides towards fairer representation. That means not only a closing of the gender gap but also more ethnic minorities, people with disabilities and LGBTQ people taking on leadership roles and greater responsibility. True equality, however, is still a long way off.
By Joanne Dewar, Chief Executive Officer at Global Processing Services
Tech is an industry where a lack of diversity is often painfully visible. STEM disciplines (Science, Technology, Engineering and Maths) are traditionally male-dominated fields where women struggle to get a seat at the table. It has become clear, however, that tradition is holding us back, not only on an interpersonal level but even when it comes to doing good business.
Diversity as a Business Decision
Research shows that a diverse workforce leads to greater success. According to McKinsey, the most ethnically diverse companies are 35% more likely to see financial returns that are above the industry average. Meanwhile, companies with the most gender diversity are 15% more likely to see above-average returns. When it comes to tech, the data paints an even clearer picture. Research from Boston Consulting Group shows that female-founded startups deliver more than twice as much revenue per dollar invested than male-founded startups. This is despite the fact that startups founded or co-founded by women receive on average less than half the funding awarded to their male-founded counterparts.
The numbers make an incredibly strong case. But is the data having the impact it should?
Slow, Small Changes
Even at the very highest levels of the tech industry, diversity is arriving at a snail’s pace. Let’s take Apple as an example. Apple employees are 54% white, which is just 1% less than it was in 2014. The number of Asian employees has gone up by 5% over the same time period, while Black and Hispanic people have seen a 2% increase each. In terms of gender diversity, Apple now has 29% female leaders, compared with 28% in 2016. Diversity statistics provided by Google tell a very similar story.
According to Colorintech’s FTSE Tech Diversity Report, 17% of leadership positions in leading US tech companies are held by ethnic minorities. In the UK this figure is much lower, at just 2.6%. Meanwhile, there are 26% women in top leadership positions at UK tech firms, compared to 20% in the US.
When we look at a wider spectrum of the biggest tech companies, most have only increased their ratio of female employees by 2-5% in the last year. Many have seen no change since the year before and some even have fewer female employees than they did in 2016.
When it comes to ethnic diversity, Intel is one of the forerunners, despite only having reduced their number of white employees by 13% from 2016-2017. The company increased their percentage of Asian employees by 12% over the same period, so there was barely any change to the tiny percentage of Black and Hispanic employees. Overall in tech, Asians have much more opportunity than other ethnic minorities, while Black and Hispanic people are chronically under-represented.
It’s also close to impossible to get accurate statistics regarding the hiring of LGBTQ people and people with disabilities at tech firms – a lack of clear visibility is just one of many reasons why. As a result, it’s difficult to know how these numbers are shifting, positively or negatively. A lack of data leads to a lack of awareness, which means that tech companies don’t feel as much pressure as they should to embrace inclusion.
New Pathways at Startups
Though most entrepreneurs are still male and men still get the most funding, the tech startup landscape is a place where change can happen more quickly. Startups are free of the shackles of traditionalist corporate culture that reverberates down the decades. Founders are usually younger, more aware and more open to flexible, personalised ways of working.
Take Fintech companies, for example. Banking and Financial Services, more than any other industry, has the reputation of being a boys club. Fintech companies are in prime position to disrupt that. At Global Processing Services we have actively worked to create a diverse workplace by hiring more women and foreign nationals (who now make up 40% of the workforce). GPS also managed to achieve one of the UK’s biggest B2B Fintech financing deals in 2018 so far, acquiring £44 million in funding from private equity house Dunedin.
Ways to do Better
Many tech companies, when faced with their lack of diversity, will cite the so-called “Pipeline Problem”, claiming that there aren’t enough diverse individuals with the right qualifications. This simply doesn’t make sense when you consider, for example, that around half the students in US high-school science and maths classes are girls.
Rather than blaming the Pipeline Problem, tech companies need to rethink their own hiring practices. A study from the University of Stanford shows that tech companies consistently alienate women at recruiting sessions by use of gendered stereotypes, gendered speech and a lack of female presenters. This, immediately, is an easy fix.
Other steps tech companies can take include creating dedicated positions on leadership teams, for example by hiring a Chief Diversity Officer. Training also needs to be undertaken on every level of the business – it shouldn’t simply be left to the HR team to hire the right number of minorities. Instead, managers across the company should be provided with up-to-date and interactive training on diversity, inclusion and awareness. Engagement with a holistic, company-wide inclusion policy should be encouraged for every single employee, right down to the temps and interns.
Those who forge the way ahead are proving that diversity leads to happier, more productive, more innovative workplaces. In the end, that translates to higher revenues, which is compelling motivation for even the most conservative and regressive firms. In five years time, chances are good that we’ll see a positive change that goes well beyond just a few percentage points.