An In-Depth Look At The Leadership Of IT Companies
By Dave Sobel, The Business Of Tech Podcast
Each quarter, the Business of Tech podcast researches the leadership of companies involved in the delivery of IT services and classifies the racial diversity of those teams. Monitoring 301 companies, this quarter’s report tracks three thousand, two hundred forty-four humans. Identified on each organization’s website, they are then classified as white, and then nonwhite, as well as specifically Black. Additionally, they are classified as male or female.
For Q1 2022, 87.73% of those tracked are white, up from 86.18% last quarter. 79.75% male, down from 80.32% last quarter. Publicly traded companies are more diverse and more female than the total measured group. Fortune 1000 companies are as well.
Technology providers are roughly on par with the totals measured, as are views of vendors. The smaller group of self-reporting is significantly more diverse than the overall cohort. For the first time, we’re also publishing trends data. These are graphs of the data over time. It’s available as a download at https://www.businessof.tech/.
These paint a different picture. Overall, the leadership teams are getting more whites, not less. In the first data set in September 2020, leadership teams were 82.31% White. Now that number has increased to 87.73%. That’s been pulled from the overall “non-white” number, as Black has generally hovered just below 2%. When viewing gender, the leadership teams remain roughly 80% male and 20% female, showing only slight fluctuations.
The methodology is simple. Leadership teams are counted and then visually inspected to classify based on pronouns or pictures using each company's website. Each company is also grouped into U.S. or Rest of World and Technology Services Providers, Vendor, and Distributor.
On the podcast each day, I ask, “Why do we care?”
The obvious first reason is that it’s the right thing to do. Leadership teams should reflect the people working at the company, and they should look and sound like those people.
There’s a commercial set of reasons too. Research shows that diversity increases profit for businesses of all sizes. To understand your customers, you want to look more and more like them to understand them… and if we’re “white” and “male,” there are vast swaths of potential customers we’re not in touch with.
The industry can’t do what has been done before and expect better results. For over a decade, there have been conversations about “Women of the Channel.” From the basic research here, we’ve only outperformed race by about 3%.... and notably, women are more than 50% of the population.
Korn Ferry analyzed chief information and technology officers in 2019 and found that about 18% were women, and it raises about 1% a year.
Companies that do not invest in diversity are designed to underperform—quoting Harvard Business Review.
2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean.
In a global analysis of 2,400 companies conducted by Credit Suisse, organizations with at least one female board member yielded higher return on equity and higher net income growth than those that did not have any women on the board.
In recent years a body of research has revealed another, more nuanced benefit of workplace diversity: nonhomogeneous teams are smarter. Working with people who are different from you may challenge your brain to overcome its stale ways of thinking and sharpen its performance.
Thus, it’s pretty logical to observe that these teams are underperforming. If non-homogenous teams are smarter… those homogenous teams… not as smart.
Let’s ask yourself… why are we building leadership teams that do not create the smartest groups? Don’t get me wrong – on an individual basis; we have intelligent people. But we need to develop smarter MIXES of people to drive that benefit.
The NASDAQ is pushing this direction – looking to require companies on the exchange to disclose the breakdowns of their boards by race, gender, and sexual orientation. The proposal also requests listed companies to have at least two diverse directors or explain why they cannot meet the mandate. Why? NASDAQ cites a report from the Carlyle Group that found that those companies they invested in with diverse board members have nearly 12% more earnings growth per year than the average of companies that lack diversity.
Wired’s also reported on Diversity Theatre. Many of the self-reporting can be summed up in these two paragraphs.
Consider the annual ritual of the diversity reports themselves. When companies issue statements after missing diversity goals, the apology usually comes from a chief diversity officer—often one of the few nonwhite executives at the company in the first place.
“We aren’t where we’d like to be,” Facebook’s chief diversity officer, Maxine Williams, wrote in 2017. “We continue to have challenges,” she wrote the next year. In 2018, she was one of only nine Black females among Facebook’s top 1,053 executives. “We must continue our work,” wrote Melonie Parker, Google’s head of diversity, in 2019. Google listed only five Black females among its top 357 officers in 2018, the most recent numbers available.
So let’s look at the practical things that can be done.
First, reminder, you can expand leadership. Boards and executive teams can just be expanded. Don’t wait for someone to leave; make more leaders. This is very true for small companies – you can easily make changes.
Second, from a hiring perspective, a simple recommendation. When hiring for any position, do not stop looking at candidates until you have talked to at least one that meets the criteria. This is likely going to be hard to start. You will find that your current system may not be presenting enough diverse candidates. Rather than complain, you will change the system. Over time, you will find a plan that DOES bring you more candidates.
Finally, let’s talk about the cultures. Ensono’s Speak up 2020 report says 59% of women of color and 43% of white women said they experienced discrimination at tech conferences. That’s just conferences. At a very minimum, leaders need to be examining their internal culture. Are you building an inclusive environment to retain any talent you do hire? This may seem simple, but the indicators are that we aren’t retaining enough talent either.
We have to acknowledge that these companies have not changed and are not heading in the right direction. We will have to do something a lot bolder to make real change
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About The Author
Dave Sobel is the host of The Business Of Tech and a leading expert in the delivery of technology services with broad experience in both technology and business. He owned and operated an IT Solution Provider and MSP for over a decade, both acquiring other organizations and eventually being acquired.