In the digital age, technology companies face relentless pressure to innovate before they are out-innovated or wholly disrupted. But many tech firms, by not making a concerted effort to assemble diverse leadership — including recruiting more women for senior executive and board roles — are undermining their ability to compete. They are also risking their long-term survival. That includes both well-established technology businesses and “born digital” players on the rise.
All technology companies need diverse and dynamic workforces that reflect the markets they want to serve. Without a broad mix of perspectives at the executive and board level, companies risk making decisions that can lead to the development of products and services that don’t resonate with all customers; thus, these firms are also at risk of underperforming relative to more diverse competitors.
Diversity in business leadership can certainly impact the bottom line: A recent study performed at the Peterson Institute for International Economics found that companies with an executive team that is 30 percent female can realize as many as six percentage points more in net profits. However, in the tech industry today only 21 percent of executives are women; in other sectors, that figure is only somewhat better — 36 percent. So, clearly, there is room for improvement across the business spectrum.
More Diverse Leadership Could Help Reduce Risk Exposure
Women also make up half of the total U.S. college-educated labor force, yet they account for less than a third (29 percent) of employees in the science and engineering workforce. And the current gender imbalance in science, technology, engineering and math (STEM) will have employers struggling to fill the millions of STEM jobs that will be created over the next decade. Without an ample supply of skilled talent, technology businesses won’t be able to keep pace with change, let alone drive it.
Staying ahead of the change curve is already a key concern for technology executives, according to the latest Executive Perspectives on Top Risks survey from Protiviti and North Carolina State University’s ERM Initiative. Technology, media and telecommunications leaders who responded to the 2018 survey identified the following as the top two risks for their organizations this year:
- Rapid speed of disruptive innovations and/or new technologies within the industry may outpace our organization’s ability to compete and/or manage the risk appropriately, without making significant changes to our business model.
- Our organization’s culture may not sufficiently encourage the timely identification and escalation of risk issues that have the potential to significantly affect our core operations and achievement of strategic objectives.
These risks are related and could be better managed through more diverse leadership, which can help to do two things. First, as explained earlier, a C-suite and board of directors that are more representative of what the real world (and hopefully, the company’s workforce) looks like will lead to better business decision-making and products and services that are more relevant to customers. Second, having a more diverse senior executive team and board helps to create a more open and collaborative corporate culture overall, where everyone is comfortable sharing ideas and speaking up about potential risks.
Diversity Matters to the Future Tech Workforce
The first step to change is, of course, admitting there is a problem to be solved. Tech firms need to take a hard look at the current makeup of their C-suite and board, and then set clear goals for improving diversity in both areas, if needed. It’s likely they’ll find plenty of opportunity for change. For example, according to the 2020 Gender Diversity Index, women held just 19.8 percent of board seats at companies in the 2017 Fortune 1000, and smaller and newer firms lag behind larger companies in finding women to serve on their boards.
A related trend for technology companies to keep in focus as they assess the level of diversity in their leadership ranks is the rapidly changing demographics in the workforce. In just a few years, Generation Z — those born between 1990 and 1999 — will make up more than 20 percent of the workforce. A recent report from Robert Half and nonprofit organization Enactus explains that Gen Z is more diverse than other generations currently in the workforce, and its members want to work for companies that share their views and values. Gen Zers also have an inclusive mindset.
So, if technology companies don’t commit now to improving workforce diversity throughout their entire organization, it will without question impact their ability to recruit and retain in-demand talent in the future. Brand cachet and other “cool factors” won’t be enough to satisfy a generation of professionals who expect to work in an inclusive environment guided by diverse leadership.
Go Bold in Setting a New Standard
The commitment to recruiting more women for leadership roles — and helping to increase the number of women working in STEM careers, generally — must be a bold initiative for the tech industry if real change is to occur. Technology businesses, large and small, old and new, should be asking themselves, “What are we doing to ensure we are creating an environment where women, who represent 50 percent of the workforce population, can participate meaningfully and rise up in our organization?” These organizations should also adopt strategies such as:
- Taking a chance on new talent — Because the current population of women in technology leadership roles is small, companies should consider recruiting up-and-coming female talent in the industry, including from startup companies. Tech leaders should turn to their own professional networks for ideas and recommendations, and explore resources such as theBoardlist, which is “a curated talent marketplace that connects highly qualified women leaders with opportunities to serve on private and public company boards.”
- Providing relevant training — Female attrition rates are higher in the tech industry than in other non-STEM fields, according to a report from the National Center for Women & Information Technology. One common reason that women leave technology jobs is the lack of opportunities for training and development. Providing such opportunities is important for attracting and retaining all tech talent, but employers will be wise to ensure they are targeting female tech professionals specifically.
- Charting the path up — Technology companies need to outline to their female employees exactly how they can advance in the organization. Over time, as more women assume top leadership roles at the company, this path will become more obvious. But management should never assume that the female tech professionals on their team already visualize the way up. Female staff should also be strongly encouraged to pursue leadership roles (if that’s what they aspire to). Managers should also work closely with women employees to help them set career goals, outline clear steps for achieving those objectives, and access the necessary support and resources.
These are just a few ways that technology companies can become more diverse, including at the top, over time. Another best practice: Making it easier for women to transition back into the workforce — or better yet, stay engaged in it — when they need to prioritize other obligations, such as raising young children or caring for elderly family members. Too often, companies let their female talent slip away because they don’t support these women enough at pivotal moments in their nonwork lives.
A final tip: Technology companies (and all businesses, really) should use digital transformation initiatives to raise the visibility of women employees and help them expand their skills. These complex efforts require extensive collaboration across the organization and new ways of thinking and working. This is new territory, and everyone has something to offer in shaping this landscape. So, as businesses pursue digital change, they should seize the opportunity to change the face of their workforce, too. Doing so will help position them for long-term success, as well as inspire more women to see their future in STEM careers.
For more on this topic, see “Gender Imbalance in STEM: A Growing Concern,” in the January 2018 issue of Protiviti’s PreView newsletter. And to learn about Protiviti’s commitment to promoting diversity and inclusion, visit https://www.protiviti.com/US-en/diversity-and-inclusion.