Silicon Valley’s diversity issue is almost certainly worse — and more addressable — than we’ve been led to believe.
Out of 177 major tech companies studied by The Center for Investigative Reporting’s Reveal division, just two had more female executives than men. Three of them didn’t have a single black employee. More than 5 percent of the sample, or 10 firms, had no black women on their teams.
Although you might assume that big-name firms fare better than their peers, Reveal found just the opposite to be true. More than nine in 10 of those scrutinized had more black, Hispanic, and multiracial team members than Facebook. “We learned through trial and error that if we’re going to hire more people from a broader range of backgrounds,” wrote Maxine Williams, Facebook’s chief diversity officer, “it’s not enough to simply show up at colleges and universities.”
The Problem of ‘Divertia’
Targeted recruiting, as Facebook has found, can’t address the root of homogeneous hiring. What’s the root of the issue? What STELLARES calls “divertia,” which it defines as “the inertia to generally hire the same faces that [a company] started out with.” In studying more than 13,000 U.S.-based tech firms ranging from seed stage to post-IPO, the talent acquisition platform debunked a common assumption about diversity: that it gets better as companies grow.
Consider how seed-stage companies compare to their post-IPO peers. At firms of both sizes, 34 percent of the general team is female, and 28 percent of it’s composed of people of color. Seed-stage companies’ leadership teams average one-third female, while 28 percent of leaders at post-IPO companies are women. Across tech companies at the A, B, C, D, and pre-IPO stages, none of those metrics vary by more than 10 percentage points.
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Although those figures prove divertia is real, they also highlight the importance of proactivity. “Once it’s set, the demographic composition of companies tends not to change,” explains Roi Chobadi, STELLARES co-founder and CEO. “The problem is, it’s a lot tougher to do something about homogeneity at a 5,000-person company than at a five-person one.”
While diversity may be easiest to address when companies are young, STELLARES’ research revealed an even more important truth: that every company can take steps to fix it.
What the Data Says to Do
The path to promoting diversity in tech starts with another principle from the STELLARES report: What you see is what you get.
“When we started studying this, we quickly noticed that HR is magnetic,” Chobadi says, “At every company we looked at, like attracts like.” That principle, Chobadi points out, applies to multiple dimensions of diversity. To counter the divertia of homogeneity, however, HR teams must overrepresent those disadvantaged groups in order to attain appropriate representation on the leadership and HR teams.
Take women: STELLARES’ study found that an entirely male HR team is associated with a leadership team that’s 0 percent female and a general team that’s just a quarter female. An entirely female HR team, however, correlates with a leadership team that is 25 percent female and a wider team that’s 41 percent women.
The picture is similar for people of color: With no minorities on the HR team, only one in five members of tech firms’ leadership teams tend to be people of color. Even with an HR team that’s entirely composed of people of color, though, just 32 percent of company leaders are people of color.
Although HR diversification can help, it’s clearly not the be-all, end-all answer. How do we solve the rest? Unfortunately, it’s the reason no major tech firm has solved the diversity issue: “Divertia” starts with the founding team.
Founders’ Faces Matter
Across age, race, gender, and more, the demographics of a company’s founding team set its trajectory going forward. “For better or worse, diversity has to be part of the co-founder conversation,” Chobadi argues.
Just how much do the company founders’ characteristics matter? When all of a tech firm’s founders are male, less than a fifth of the leadership team is female, statistically speaking. To achieve true gender parity, STELLARES found, all of a company’s founders must be female.
What about age? Somewhat surprisingly, STELLARES noticed that Baby Boomer entrepreneurs tend to build more gender-diverse engineering teams. The effect, however, didn’t seem to hold for members of the leadership team. “We wondered whether Baby Boomers might be more willing to give women a chance because they’re more likely to have an adult-age daughter,” Chobadi speculates, but he admits he’s not sure of the reason.
The most complex relationship between the founders’ characteristics and those of the broader company, however, is with race. Surveyed founders who attended a “top” university — defined as a higher education institution that ranks among U.S. News and World’s top 25 — placed 37 percent more people of color on their leadership teams. The impact disappeared, however, when checked along lines of gender, age, or technical role.
“Frankly, that finding raised as many questions for us as it answered,” Chobadi concedes. “It may be that founders from top schools are more concerned with optics. Or it might be that founders from top schools see business value in diverse management perspectives but not in engineering.”
More Data Is Key
STELLARES’ report revealed one final truth about diversity: Tech firms have plenty of data about the problem but precious little in the way of potential solutions. Although founders can certainly start making tweaks to their HR team, they simply can’t know what other areas to adjust until more studies are done.
How much does the engineering team’s makeup matter, for instance, when it comes to hiring diverse individuals for technical roles? Does the age, gender, or race of recruiters matter more than those attributes across the broader HR team? Do tech startups in certain geographic areas fare better than others? Does a proportion of parents affect a company’s tendency to hire people who look like them?
The bottom line is this: The more data-driven answers that are available, the more willing tech leaders will be to make diversity-linked changes. It’s up to all of us, fittingly, to provide them.