Why diversity matters

Why diversity matters
Are you unconsciously biased? Why diversity matters
We live in a diverse world •  In terms of gender, race, religion, sexual orientation…
Yet, our power structures are still fairly homogeneous •  Mostly male, middle-aged, white, heterosexual, and in many cases from Catholic upbringing
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Exhibit 4 Gender diversity of executive management team1 Percent of companies by percent race/ethnicity diversity 1 9 22 38 1613 21– 30%11– 20%1–10%0% 41– 50%31– 40% 01 7 16 31 16 30 > 50%41–50%31–40%21–30%11–20%1–10%0% 00 10 19 7 63 21– 30%11– 20%1–10%0% 41– 50%31– 40% Population diversity Percent, 2012 Women 50.9% Men49.1% Women 50.8% Men49.2% Women 50.8% 49.2% Men Average percent women in executive team 12% 16% 6% 1 Number of companies = 107 for UK, 186 for US, 67 for Brazil Women are still underrepresented at the top of corporations globally SOURCE: US Census Bureau, McKinsey Diversity Database SOURCE: US Census Bureau, McKinsey Diversity Database Exhibit 5 Compared with other countries, the UK is doing a better job in racial diversity, though it still faces challenges
You can’t be what you can’t see •  Difficult to be inspired when you don’t belong, when you don’t fit the norm.
We need deeper understanding and deeper cohesion
Being more aware of our unconscious bias •  Yale study: –  All of the professors received the same one-page summary. –  In half of the descriptions, the mythical applicant was named John and in half the applicant was named Jennifer. –  On a scale of 1 to 7, with 7 being highest, professors gave John an average score of 4 for competence and Jennifer 3.3. –  John was also seen more favorably as someone they might hire for their laboratories or would be willing to mentor. –  Female professors were just as biased against women students as their male colleagues.
Source: Unconscious Bias @ Work | Google Ventures
Unconsciously, we tend to like people who look like us, think like us and come from backgrounds similar to ours.   •  Beliefs and values gained from family, culture and a lifetime of experiences heavily influence how we view and evaluate both others and ourselves. •  These thought patterns, assumptions and interpretations – or biases – we have built up over time help us to process information quickly and efficiently. •  Deep-in-the-brain automatic preferences
Implicit association test
Implicit association test Male Female
Implicit association test Liberal Arts Science
Implicit association test Female/ Liberal Arts Male/ Science
Implicit association test Male/ Liberal Arts Female/ Science
Implicit association test •  About 75% of people who have taken the IAT online complete the test faster when white faces are sorted alongside pleasant words, when male words are sorted alongside career terms and when women are sorted with liberal arts studies, not science and tech.
Lessons from behavioural economics and social psychology Recent developments in the fields of behavioural economics and social psychology help to explain why diversity is lacking in organizations, and what methods can be used to increase it. 1. Underlying reasons for bias A body of research in cognitive psychology and behavioral economics over the past 40 years has established that human behaviour is heavily influenced by subconscious, instinctive, and emotional “System 1” responses, rather than being under the exclusive control of rational, deliberate “System 2” thinking.* As a result, behaviour and attitudes in the workplace are influenced by an array of cognitive biases that affect decision making. The most relevant for diversity are: ƒ Implicit stereotypes (sometimes referred to as “subconscious bias”): the association of groups of people with certain traits or activities, such as men with science and mathematics and women with arts and languages.† Without our being aware of it, these associations can powerfully influence decisions such as which candidate to hire. ƒ Ingroup favouritism: a preference for people who are like us, so that an individual might choose to work with someone of the same nationality, gender, and race.‡ ƒ Outgroup homogenity bias: the tendency for an individual to think that the group of people they belong to (their “ingroup”) is more diverse, while their “outgroup” is more homogeneous, with members who appear alike or even interchangeable.‡ 22 Allen R. McConnell and Jill M. Leibold, “Relations among the implicit association test, discriminatory behavior, and explicit measures of racial attitudes”, Journal of Experimental Social Psychology, 2001, volume 37, pp. 435–442. 23 Boris Groysberg and Katherine Connolly, “Great leaders who make the mix work”, Harvard Business Review, September 2013, pp. 68–76. Source: Diversity ma<ers, Mac Kinsey 2015
Gender inequity makes us lose money and opportunities Source: Diversity ma<ers, Mac Kinsey 2015
Source: Diversity ma<ers, Mac Kinsey 2015
Diversity and inclusion help the bottomline •  Venture-backed companies led by a woman actually produce 12% higher revenues and launch on a third less capital than their male counterparts, as show studies by the Kauffman Foundation and leading universities. They have a record of greater capital efficiency and a lower failure rate than companies only run by men. •  According to DELL study, companies with more women board directors outperform those with the least by 66% ROI capital, 53% return on equity and 42% return on sales.
THE ADVANTAGE IN TALENT RECRUITMENT In the decade before the financial crisis, it became apparent that demographic pressures and economic Exhibit 9 Diversity has a positive impact on many key aspects of organisational performance Rationale Diversity management helps to… …enhance the company's image ▪ Social responsibility is becoming increasingly important ▪ Many countries have legal requirements for diversity (e.g., UK Equality Act 2010) …improve decision making ▪ Diversity fosters innovation and creativity through a greater variety of problem-solving approaches, perspectives, and ideas. Academic research has shown that diverse groups often outperform experts. …increase employee satisfaction ▪ Diversity increases employee satisfaction and reduces conflicts between groups, improving collaboration and loyalty …strengthen customer orientation ▪ Women and minority groups are key consumer decision makers: for example, women make 80% of consumer purchases in the UK ▪ Gay men and women have average household incomes that are almost 80% higher than average …win the war for talent ▪ A strong focus on women and ethnic minorities increases the sourcing talent pool, a particular issue in Europe. In a 2012 survey, 40% of companies said skill shortages were the top reason for vacancies in entry-level jobs SOURCE: Women Matter, McKinsey & Company, 2007, 2008, 2010, 2012, 2013; Thomas Barta, Markus Kleiner, and Tilo Neumann, “Is there a payoff from top-team diversity?”, McKinsey Quarterly, April 2012; Martin Dewhurst, Matthew Pettigrew, and Ramesh Srinivasan, “How multinationals can attract the talent they need”, McKinsey Quarterly, June 2012; Diversity wins!, McKinsey & Company, November 2011; McKinsey qualitative survey; The War for Diverse Talent, Green Park , September 2010; Scott E. Page, The Difference: How the power of diversity creates better groups, firms, schools, and societies, Princeton University Press, 2007; McKinsey analysis SOURCE: Women Matter, McKinsey & Company, 2007, 2008, 2010, 2012, 2013; Thomas Barta, Markus Kleiner, and Tilo Neumann, “Is there a payoff from top-team diversity?”, McKinsey Quarterly, April 2012; Martin Dewhurst, Matthew Pettigrew, and Ramesh Srinivasan, “How multinationals can attract the talent they need”, McKinsey Quarterly, June 2012; Diversity wins!, McKinsey & Company, November 2011; McKinsey qualitative survey; The War for Diverse Talent, Green Park, September 2010; Scott E. Page, The Difference: How the power of diversity creates better groups, firms, schools, and societies, Princeton University Press, 2007; McKinsey analysis
Diversity and inclusion help the bottomline •  “Having a more diverse set of employees means you have a more diverse set of skills,” says Sara Ellison, an MIT economist, which “could result in an office that functions better.” •  Among other results, the economists found that shifting from an all- male or all-female office to one split evenly along gender lines could increase revenue by roughly 41 percent. h<p://news.mit.edu/2014/workplace-‐diversity-‐can-‐help-‐bo<om-‐line-‐1007
Diversity and inclusion help the bottomline •  Companies With More Women Board Directors Experience Higher Financial Performance. •  Investments run by female hedge fund managers do 3 times as well as those run by male managers over the past 5 years. •  Venture capital firms that invest in women-led companies outperform those that don’t, according to research from the Small Business Administration’s Office of Advocacy. •  And venture-backed companies that include more women on their executive management teams are more likely to succeed than companies with men-only executive suites, according to Women at the Wheel: Do Female Executives Drive Start-up Success, research conducted by Dow Jones.
Diversity and inclusion help the bottomline •  Understand customer better: When teams had one or more members who represented a target end-user, the entire team was as much as 158% more likely to understand that target end-user and innovate accordingly. (Apple) •  If women’s paid employment rates were the same as men’s, the USA’s GDP would increase by nine per cent, the Eurozone’s by 13 per cent and Japan’s by 16 per cent.”
Diversity makes us smarter •  Being around people who are different from us makes us more creative, more diligent and harder-working.
“What would have happened if Lehman Brothers had been Lehman Sisters?” 
Even movies about women make more money…
Ninety-‐seven of the 133 movies represented in this selecQon are about men. Only 36 are about women — the people who are, as it is now proven, the bigger box office draw. That's not just poor representa<on, it's also bad business.
What can we do about it?
Transparency is the first step to changing this situation
Google’s first set of diversity statistics, released in May 2014
Source: Apple diversity website
Diversity programmes are in essence a form of change programme: they seek to alter the composition of leadership teams or staff and to disrupt old habits and routines. However, research into change management has found that change programmes have a high failure rate of about 70 percent.21 Most efforts stall because those involved—management and employees—do not believe in them or make them a priority. Successful diversity programmes have clear objectives and are led from the top (not just the CEO, but the entire top team). They foster active involvement from the wider organization and require the infrastructure to actively manage against targets (not quotas) to hold individuals accountable for outcomes. Exhibit 10 sets out questions for leaders to ask when planning a change programme and suggestions to help organizations reach their diversity goals. Exhibit 10 Aspire Where do we want to go? Assess How ready are we to go there? Architect What do we need to do to get there? Act How do we manage the journey? Advance How do we keep moving forward? 1 2 3 4 5 Key steps for successful diversity programmes SOURCE: Scott Keller and Colin Price, Beyond Performance: How great organizations build ultimate competitive advantage, Wiley, 2011 Diversity ▪ Create a clear value proposition for having a diverse and inclusive culture ▪ Set a few clear targets (not quotas) that balance complexity with cohesiveness Define a clear value proposition Establish a fact base ▪ Understand the current situation in terms of statistics and mindsets and learn from external best practices. Understand root causes and underlying mindsets Create targeted initiatives ▪ Differentiate initiatives by diversity group, for example, gender initiatives do not always resonate with other minorities. Lead from the top Define the governance model ▪ Define the rollout strategy for all initiatives. Launch 1-2 highly visible flagship projects at the beginning of the effort. Monitor rigorously Build inclusion ▪ Continuously address potential mindset barriers through systematic change management. Link diversity to other change management efforts SOURCE: Scott Keller and Colin Price, Beyond Performance: How great organizations build ultimate competitive advantage, Wiley, 2011 Which are the best practices in terms of diversity and inclusion?
2. Techniques for overcoming bias Behavioural insights can be harnessed to increase diversity in three main ways: by training and educating people to reduce personal biases, by changing organisational processes to take bias out of decision making; and by incorporating behavioural principles in the design of programmes and communications to spur action. Educating and training people to reduce personal biases Key success factors for raising awareness and building capability include: ƒ Tailoring delivery to the audience. For example, one engineering company used a computer simulation to show how a systematic 1 percent bias against women in performance evaluation scores caused women to be underrepresented in top positions. ƒ Getting people to experience bias personally. At Google, for instance, staff are encouraged to take a test that measures biases. ƒ Reminding people about biases at key moments, such as before reviews. ƒ Helping people to focus on differences to reduce homogeneity bias and stereotyping. In one experiment, French students discriminated against potential employers who were Arabs, but stopped doing so if asked to describe differences between their photos.‡ ƒ Fostering empathy training and taking the side of the target group—a practice proven to reduce prejudice and discrimination. Simply asking “How would I feel in this situation?” can be enough to have a positive effect.‡ Changing processes and structures to reduce bias in decision making Another way to increase diversity is to introduce techniques to minimise the influence of individual biases on key decisions. These techniques can take several forms: ƒ Analytical. One approach to reduce bias in recruitment is to define scoring criteria for each candidate and use an algorithm rather than human judgement to make decisions based on the criteria. Daniel Kahneman Source: Diversity ma<ers, Mac Kinsey 2015
ƒ Fostering empathy training and taking the side of the target group—a practice proven to reduce prejudice and discrimination. Simply asking “How would I feel in this situation?” can be enough to have a positive effect.‡ Changing processes and structures to reduce bias in decision making Another way to increase diversity is to introduce techniques to minimise the influence of individual biases on key decisions. These techniques can take several forms: ƒ Analytical. One approach to reduce bias in recruitment is to define scoring criteria for each candidate and use an algorithm rather than human judgement to make decisions based on the criteria. Daniel Kahneman has applied this technique to improve the assessment of candidates for the Israeli army.* Modified versions of the technique have been used by a variety of companies, including McKinsey. ƒ Debate. One effective way to identify bias in decision making is to institute a “pre-mortem” by asking people to imagine what could go wrong if a particular decision is taken.§ Another technique is to nominate an individual to act as devil’s advocate and challenge assumptions behind decisions, such as implicit stereotypes. A number of studies have shown that this approach leads to better decisions. ƒ Organisational. Companies can, for example, create a decision challenge team. Applying behavioural economics principles to diversity efforts McKinsey has identified seven ways to apply behavioural principles: use information about peers, use people’s natural reflexes, make sure information comes from a credible origin, provide strategic context, trigger an emotional response, make information salient, and appeal to an individual’s self-image. Many of these techniques can be used to enhance the effectiveness of diversity programmes; for instance: Source: Diversity ma<ers, Mac Kinsey 2015
ƒ Peers: highlight the positive achievements of peers. This has been shown to be one of the most effective ways to influence people. For example, informing taxpayers that others pay their tax significantly increased tax contributions, whereas reminders of prosecution or how tax is used did not.¶ A company could use internal statistics from other departments or business units that are more advanced in achieving diversity, as well as external data on highly regarded competitors. Telling employees about their peers’ contributions to diversity is another effective technique. ƒ Reflexes: prime people with images and words that discourage biases. A striking example of the effects of priming—or introducing subliminal clues—was provided by research that showed that when Asian women were reminded about their gender, they performed significantly worse in a maths test than when they were reminded about their ethnicity.** Companies can use priming techniques strategically to reduce bias, for example by displaying pictures of well-known powerful women. ƒ Origin: make sure that diversity messages come from trusted opinion leaders within the organization, whether they are line workers or managers, rather than from a diversity group that may be seen as an outsider.†† * Daniel Kahneman, Thinking, Fast and Slow, Allen Lane, 2011. † Brian A. Nosek, Mahzarin R. Banaji, and Antony G. Greenwald, “Math = male, me = female, therefore math ≠ me”, Journal of Personality and Social Psychology, 2002, volume 83, number 1, pp. 44-59. ‡ Scott Plous, editor, Understanding prejudice and discrimination, McGraw-Hill, 2003. § Gary Klein, “Performing a project pre-mortem”, Harvard Business Review, September 2007. Ryan T. Hartwig, “Facilitating problem solving: A case study using the devil’s advocacy technique”, Group Facilitation, number 10, 2010. ¶ Richard H. Thaler and Cass R. Sunstein, Nudge: Improving decisions about health, wealth, and happiness, Yale University Press, 2008. ** Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih, “Innovation killers: How financial tools destroy Source: Diversity ma<ers, Mac Kinsey 2015
The good news is: we can rewire our brains! So what can YOU do to shift your biases?
ANNEX Examples of best practices
DELOITTE •  Average annual turnover rate among female managers was huge : 33%. •  Why ? Male-dominated culture. Not a confortable place to work in. •  Change : accountability of women recruited and retained, networking events and career-planning programs especially for women. Change in the requirements for travel. Flexible work arrangements, which wouldn’t hinder one’s professional advancement within the organization. Dramatic increase of the use of these program by men and women. •  •  Deloitte number of female partners tripled, from 5 to 14% and saved USD 250 million in hiring and training costs. •  So investing in women, rather than costing money is actually saving millions of dollars and stopped hemorrhaging talented people.
Sthree •  Identity initially focused on empowering women within the company and creating a supportive environment in which they can succeed. The programme has provided tools and information, developed a support network, highlighted successful role models and held forums to share ideas. We have also been engaging with our clients and candidates on gender diversity and supporting women in the community, for example, working with female students to raise career aspirations. •  Our maternity buddy scheme has played an integral role in 83% of employees returning to work after maternity leave. For employees expecting a baby our buddy scheme provides support for the duration of the pregnancy, maternity leave and return to work. h<ps://www.sthreecareers.com/en/diversity-‐ inclusion
American Express •  “You can have as many diverse employees as possible, but if we don’t have a culture where employees feel that they can speak up and their voices are heard, you’re not going to really take advantage of that.” •  The groups provide mentoring, “speed networking,” and other opportunities to connect with like-minded colleagues. •  Helps with recruitment and retention of talent
Best practices •  Diversity needs to be made a clear priority at companies. That happens when diversity moves out of workshops and becomes factored into the hiring managers' bottom lines. •  Managers at Chevron, for example, are rated in their performance evaluations on their ability to reach diversity goals. •  At Procter & Gamble, managers’ stock options are tied to diversity goal
Workshops to create awareness Teaching about all forms of discriminaQon and implemenQng lessons into workplace decisions can mediate prejudice, both blatant and subtle. Judith Williams, the Global Diversity and Talent Programs manager at Google, leads the unconscious bias workshops designed to inform employees about the science of subconscious decision-‐making.
Sthree •  “I think three things need to happen,” she says. “Firstly, there needs to be an HR policy in place - it has to be supported at a corporate level. Secondly, it needs to be top-down with senior level sponsors promoting the initiatives. And thirdly, tactically, you need a bottom up approach too, you need local champions.” h<ps://www.sthreecareers.com/en/sthree-‐blog/why-‐workplace-‐diversity-‐is-‐good-‐for-‐ the-‐bo<om-‐line
Increasing attention of tech companies on diversity challenges •  Industry giants Apple and Twitter have published diversity audits and pledged to do more to increase diversity in their workforce. •  Janet Van Huysse, Twitter’s Vice President, Diversity and Inclusion put it simply: “As we look ahead, we see opportunity rather than a challenge.” •  Companies currently looking to appoint Heads of Diversity include Airbnb, Asana and Dropbox. Those recognised by Diversity Inc. as making the most effort to increase diversity this year include Novartis, PricewaterhouseCoopers and Procter & Gamble. •  This has become a mainstream issue, a competitive business imperative.
APPLE •  we continue hiring talented people from groups that are currently underrepresented in our industry. •  We’re supporting education with programs like the Thurgood Marshall College Fund to help students at historically black colleges and universities find opportunities in technology. •  ConnectED is bringing our technology to some of the most economically disadvantaged schools and communities in the United States, so more people have the opportunity to pursue their dreams. •  We’re also hosting hundreds of students at our annual developer conference, and we’re setting up new programs to help students learn to code. Source: Apple diversity website
APPLE •  Building a vibrant community to support women in tech. •  We launched our Supplier Diversity Program in 1988 •  We’re also working with a variety of STEM (science, technology, engineering, and math) organizations that offer scholarships to developers from different backgrounds. •  We partner with groups like the Human Rights Campaign (HRC), which is the largest LGBT civil rights organization in the United States. Source: Apple diversity website
APPLE •  To encourage women to be part of the tech industry, we’ve developed a strong partnership with the National Center for Women & Information Technology (NCWIT). We’ve been working together for over a decade. We’re proud to be their first-ever Lifetime Partner, and we’re dedicated to supporting all aspects of their organization. •  As part of our partnership, we’re helping NCWIT expand the only national talent development initiative for women in tech — Aspirations in Computing. Through this program, NCWIT and its partners give support, scholarships, and career opportunities to young women. Source: Apple diversity website
And yet, it is still a boy’s club
And the numbers are dropping! •  Women make up a tiny fraction, roughly 15%, of people working in technical roles in the tech industry. And amazingly, that percentage is dropping, not rising. •  Multiple studies have found that the proportion of women in the tech workforce peaked in about 1989 and has been steadily dropping ever since. Source: American AssociaQon of University Women
Source: American AssociaQon of University Women Source: Apple Diversity
Why? •  Most have very few female role models and colleagues. •  Surveys find 23% to 66% report experiencing sexual harassment or seeing it happen to others. •  Half the respondents to my survey said they've been treated in a way they find hostile, demeaning or condescending, and a third said their bosses are friendlier and more supportive with their male colleagues. •  Women report being encouraged to move out of pure tech into support functions, which offer less pay, are less prestigious and have limited upward mobility. •  A 2014 Glassdoor analysis concluded that women in tech are paid less than their male colleagues, with another 2014 study putting the salary gap at 12%.
The Athena Factor •  After 10 years of work experience, “The Athena Factor” found, 41% of women in tech leave the industry, compared with 17% of men.
Forty-‐one percent of highly qualified scienQsts, engineers, and technologists on the lower rungs of corporate career ladders are female. But more than half (52%) drop out. Why? To be<er understand the scope and shape of female talent, the Athena Factor research project studied the career trajectories of women with SET credenQals in the private sector. It found 5 powerful "an<gens" in corporate cultures. •  Women in SET are marginalized by hosQle macho cultures. Being the sole woman on a team or at a site can create isolaQon. •  Many women report mysterious career paths: fully 40% feel stalled. •  Systems of risk and reward in SET cultures can disadvantage women, who tend to be risk averse. •  Finally, SET jobs include extreme work pressures: they are unusually Qme intensive. •  Moreover, female a<riQon rates spike 10 years into a career. Women experience a perfect storm in their mid-‐ to late thirQes: They hit serious career hurdles precisely when family pressures intensify. Companies that step in with targeted support before this "fight or flight moment" may be able to lower the female a<riQon rate significantly. •  This study features 13 company iniQaQves that address this female brain drain. Some, for example, are designed to break down female isolaQon; others create on-‐ramps for women who want to return to work. These iniQaQves are likely to be "game changers": They will allow many more women to stay on track in SET careers.

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