Why is Silicon Valley still struggling with diversity?
12/21/2016

We’ve all got good intentions on diversity. But what we need is action.

By Pat Renzi, Principal, Life Technology Solutions, Milliman.

Why is diversity such a hard problem to solve? The goal is so straightforward: hire a workforce that reflects society at large. Yet even the most well-meaning companies seem to fall short.

Facebook is committed to diversity, yet has made little progress. Just 4% of its U.S. employees are Hispanic, and 2% are black, unchanged from two years ago. Women make up 33% of the Facebook workforce, up two percentage points.

Bloomberg this year asked, “Why doesn’t Silicon Valley hire black coders?” African-Americans, which make up 13% of the population, make up 1% of technical employees at Google.

The key reason is that measuring the issue is not enough. We need action.

Software engineer and diversity campaigner Tracy Chou nailed this, saying: “There’s starting to be a shift in the conversation: we can’t just put the diversity data out there.” She says the true solution lies in asking: “What can we do to move the data in the right direction?”

So what should we do?

Action starts by establishing the business case for diversity. When it’s a profit and loss (P&L) issue, every department will buy in and make it their mission to achieve success. The evidence that diversity creates stronger, more profitable companies is overwhelming.

A McKinsey study, “Diversity Matters,” examined data sets for 366 public companies in Canada, Latin America, the UK, and the United States, and found companies in the top quartile of racial diversity are 35% more likely to outperform. In terms of gender, balanced companies were 15% more likely to have financial returns above their industry medians. Homogeneous companies were stuck in the lowest performance quartile.

A detailed study by Catalyst found diverse companies are better at problem solving, correlated positively with innovation, enjoy reduced board conflict, and even get stock price boosts when appointing senior women.

A wonderful report by the Center for Talent and Innovation, based in New York, showed that when teams have one or more members who represent a target-end user, the entire team was as much as 158% more likely to understand that end-user’s needs, and innovate accordingly.

With total buy-in from all departments, there is a long list of actions with the potential to make a difference.

1) Work out what you are doing wrong. Communications platform Slack identified faults in its hiring techniques. They included using the same pools of talent, and unconscious bias. Fixing them led to a rise in black representation in engineering of 7%, above the industry average of 1% to 2%.

2) Challenge assumptions. For example, after-hours socializing is seen as a good way for employees to bond. But do women with children enjoy it as much as young singles? Do Muslim or abstinent employees feel left out? Zenefits.com has banned alcohol at company events to reduce social pressure on staff.

3) Go to nonwhite universities. Facebook’s Be Bold, Move Fast tour targets ethnically diverse campuses in order to discover the best talent.

4) Look abroad for ideas. Silicon Valley was built by sucking in ideas (and people) from around the world. Diversity can be cracked with the same ethos. For example, Scandinavia is a generation ahead of the rest of the world in terms of gender diversity. In 2003, Norway passed a law mandating 40% of boards must be female. The benefits are disputed: Sweden recently opted not to do the same. This is a global problem: your approach should harness ideas from distant shores.

5) Write a master plan. Graphics card maker Nvidia has a clear plan, backed by resources and commitment from the top. It covers antiharassment, LGBTQ issues, inspiring children to work in robotics and science, and rewriting job descriptions to appeal to all candidates.

6) Fund progressive programs. Google set aside $150 million for diversity initiatives. Apple pledged $50 million for nonprofits, including the Thurgood Marshall College Fund, focused on historically black colleges, and the National Center for Women and Information Technology.

There’s a huge amount of work to do. There are more men called John than women running large companies in the United States.

We know the goodwill is there. What we need now is action.

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