Diversity is good for business
The debate around participation of women and people of colour in the tech industry has intensified in the aftermath of the anti-diversity memo written by a subsequently-terminated Google employee. Sales platform company Altify undertook a survey that looks at business performance in relation to diversity, among other issues, across all business sectors. It found that 65% of respondents in the tech industry believe that a diversity policy has an impact on the business performance of the organisation.
Altify carried out the study between November 2016 and January 2017 benchmarking 833 companies to understand the perspectives of their employees. Each was given a relative and an absolute score. In tech, 60% believe that their company’s track record on diversity is good or great, and companies across the board with a positive track record on diversity have a 50% better customer retention performance, 17% better win rate and 17% shorter sales cycle. According to McKinsey, gender-diverse companies financially outperform companies that aren’t by 15%. Ethnically-diverse companies outperform by 35%.
Speaking to DataIQ, Altify’s executive chairman Donal Daly dived deeper into the findings to analyse sentiments towards diversity specifically in the technology industry. He said: “A core point that comes out of this is, if you have a track record on diversity, you’ve got to care about your people and, if that’s the case, then you’ve got to care about your customers, and, if that’s the case, you should have a better business performance.” He stated that for companies that are “purely capitalist focused”, it makes sense to be progressive or broad-minded in terms of diversity.
Altify’s findings did, however, highlight differences in perspective about diversity across seniority levels. Daly noted that in “high tech,” managers care more about diversity than executives. “Three out of four managers felt it is important to have a diversity policy, whereas two out of three executives felt it is important to have one. I would put that down to managers seeing the positive and negative effect of a diversity policy and the executives might be a little bit more distant or feel insulated from it,” he said.
According to Daly, having a good track record on diversity can be seen from a moral or a business perspective. He stated: “We can either say it is the right thing to do, which is not a balance sheet item. Or we can say it delivers higher financial returns so that is a balance sheet item. I would say you have three financial metrics that are materially moved if you have a good track record in diversity, so it makes sense to do that.”
Daly suggested that among venture capital-funded companies, a scorecard or leader board could be set up so that venture capitalists could see how diversity of the companies in their portfolios or the companies they may want to invest in was having an impact. He added that Altify provides its benchmarking service for free, whether a company is an Altify customer or not.
He pointed out that lack of diversity is not a problem that is exclusive to tech companies. He said: “Tech is mostly dominated by a single homogenous group of middle-class white guys, so therefore it is most visible. But I don’t think it is only tech. However, I think that tech has the power to do good or damage.”
As an example of damage, Daly pointed towards many technologies being based on artificial intelligence and said the if "tech folks" with embedded bias write the algorithms on which the AI is based, that is “a scary thought”. In April, FaceApp created a selfie filter that made users “hot” or more attractive by making their facial features more European. FaceApp removed the filter and the CEO apologised, blaming “the underlying neural network caused by the training set bias.” Daly said there should be some kind of quality control function on the invisible algorithms that checks for bias and diversity.
Expanding on how the tech industry has the power to do good, Daly said it has to come from leadership within the sector. He named LinkedIn co-founder Reid Hoffman as a figure who has raised this issue in the industry. Daly said: “It is incumbent on some of those folks in the industry and the industry itself to take a position. Only they can measure where they put their investment and whose products people buy.”