Why the tech industry is focusing on diversity

Historically not a diverse industry, the tech sector is making it a priority to hire more women and minorities in tech jobs and leadership roles.

January 31, 2017

A study published in Harvard Business Review involving more than 1,800 professionals found that companies with the most diverse workforces were 45 percent more likely than their less diverse counterparts to report growing market share on the previous year and 70 percent more likely to have captured a new market.

Similarly, a McKinsey and Company study found that companies ranking in the top quartile for ethnic diversity were 35 percent more likely to outperform those in the bottom quartile.

Lack of talent or lack of opportunity?

Despite such statistics, the tech sector is struggling with a lack of diversity. Some tech leaders cite a lack of talent in the pipeline, given that minorities are under-represented in degree programs such as computer sciences and engineering, compared to their share of the U.S. population.

Yet, others dispute that view. “Diversity in technology is not a pipeline problem,” says Traci Doane, President of JLL Technology Solutions and the former CEO of BRG, which JLL acquired in 2016. “It is an industry problem, and ignoring it cuts a company off from a large pool of untapped talent and opportunities to improve your business.”

A better approach is to examine why so many women and minority students who study technical fields to an advanced level often wind up outside the tech sector. In fact, the disparity is steep. Hispanics and African-Americans constitute a combined 14 percent of computer science and engineering graduates—but only 5 percent of the tech workforce.

Tech companies taking a stand

Recognizing this reality, some leading technology companies are investing time and resources to create opportunities and growth for women and minorities. Tech giant Intel has established the $125 million Intel Capital Diversity Fund to invest in startups led by women and under-represented minorities, along with committing $300 million to a broad range of diversity initiatives.

Google unveiled its own $150-million-dollar initiative in 2015 to hire more women and minorities, while Apple is investing $50 million to partner with nonprofits that recruit talent from historically black colleges and universities. Companies like Facebook and Pinterest have also adopted concepts such as the Rooney Rule, which requires companies to consider at least one diverse candidate for every senior position opening.

In addition, tech companies are creating networks and action groups to address the issue of diversity. More than 30 leading companies have signed the Tech Inclusion Pledge promising to take concrete steps to recruit, retain and advance diverse talent, report on their progress and invest in talent development partnerships. The National Venture Capital Association—representing another markedly non-diverse sector—launched a task force in 2014 that has made some progress in helping its member actively develop, recruit and retain diverse talent.

“Companies are motivated by the need for talent and business success,” says Doane. “But they also are increasingly asked to respond to the concerns of the largest shareholders and clients who want their service providers to represent the diversity of their customers.”

Forging public-private partnerships

While industry initiatives are invaluable, public-private partnerships are also aiming to open doors for minorities at the community level beyond major clusters like San Francisco and Boston. According to JLL’s 2016 Tech Office Outlook report, the tech industry is spreading far and wide, triggering initiatives to foster diversity from the ground up.

In Oregon, for instance, several public and private organizations have teamed up to create the Elevate Inclusive Fund to invest in early-stage under-represented entrepreneurs in all sectors, but technology is an important one for the state. Portland has joined Indianapolis, New York City and San Jose in the Equitable Innovation Economies Initiative (EIE) a multi-year project to help cities pursue more inclusive growth strategies in innovation. The New York Economic Development Corporation created a community-sourced incubator to help support advanced manufacturing startups, particularly those led by women and minorities.

“Municipalities and the business community alike have a stake in enhancing the pipeline of diverse talent within their markets,” observes Steffen Kammerer, who leads JLL’s Technology Practice group. “These efforts will not only contribute to the long-term viability and resilience of a local market’s tech environment, but will also help to meet the ever-growing need for a tech-savvy labor force.”

As the tech sector is recognizing, diversity can drive a company’s innovation and financial success. While advancing the technology is the primary goal, at least some companies are discovering that getting to the cutting edge of technology starts with a diverse workforce—and that, too, can be engineered.