November 07, 2023 Building Diverse Teams in Tech: The Business Case and How-To
By Baxter Juds
In the ever-evolving landscape of technology, diversity is not just a buzzword; it’s a robust business strategy. As a tech recruitment firm, AES Global understands the intrinsic value of a diverse team in driving innovation, mirroring a global customer base, and fostering a culture of creativity and inclusion. But why exactly does diversity make such a significant difference in the tech industry, and how can companies effectively build diverse teams?
The Business Case for Diversity in Tech
A diverse team brings together individuals with different backgrounds, experiences, and perspectives. Here’s why that’s a game-changer for tech companies:
Enhanced Innovation and Creativity
Tech thrives on innovation, and diverse teams have shown to be more creative and better at problem-solving. People from different walks of life bring unique viewpoints that can lead to breakthrough ideas and solutions that a homogenous team might miss.
A report from Boston Consulting Group, as mentioned on Forbes, revealed that companies with more diverse management teams have a 19% higher revenue due to innovation. This report underscores diversity not merely as a matter of fairness but as a strategic advantage for businesses, highlighting the innovation and better performance delivered by diverse teams.
A Zartis article discusses the direct correlation between gender, ethnic, and cultural diversity, and profitability in an organization, stating that diversity leads to innovation – a key ingredient for successful and sustainable technology businesses.
Improved Product Development
Tech companies serve a global market. A team that reflects the diversity of this market is better equipped to understand and cater to a wider array of user needs and preferences, resulting in products that appeal to a broader audience.
A study mentioned that a significant percentage of white-collar workers from 90 countries at least occasionally work in global virtual teams (GVTs), illustrating the global nature of modern tech projects.
Diversity leads to varied perspectives which come in handy during the planning and execution phase of business strategies, ensuring that multiple viewpoints are considered which could lead to more inclusive products.
Diversity is critical for tech innovation, especially as technology evolves rapidly with advancements like 5G, autonomous vehicles, and the Internet of Things (IoT). A diverse team can bring a variety of ideas and approaches to these technologies, ensuring they cater to a wide user base.
Greater Financial Returns
Research consistently shows that companies with diverse leadership teams report higher revenue from innovation and better financial performance. Gender-diverse companies are 21% more likely to outperform on profitability, and ethnically diverse companies are 33% more likely to lead in profitability.
A 2019 analysis by McKinsey found that companies in the top quartile for gender diversity on their executive teams were 25% more likely to have above-average profitability compared to those in the fourth quartile. This was an increase from 21% in 2017 and 15% in 2014, indicating a growing correlation between gender diversity and profitability.
SCORE, a non-profit association dedicated to helping small businesses, provides an infographic that states that gender-diverse companies are 21% more likely to outperform, while ethnically diverse companies are 33% more likely to outperform their counterparts. Moreover, non-diverse companies are 29% more likely to underperform, emphasizing the financial advantages of diversity.
According to another McKinsey research cited by Morgan Philips, companies in the top quartile for gender diversity on their executive teams are 21% more likely to experience above-average profitability. Similarly, ethnically diverse executive teams are 33% more likely to outperform on EBIT (earnings before interest and taxes) margin, underlining the financial benefits of both gender and ethnic diversity.
A study by Accenture also supports these findings, stating that companies with gender-diverse management teams were 21% more likely to outperform their peers in profitability. It also suggests that prioritizing diversity and inclusion can provide companies with a competitive advantage in terms of financial performance, innovation, and employee engagement and retention.
Attracting and Retaining Talent
Top talent is drawn to workplaces that value diversity and inclusion. Building a diverse team can be a key differentiator in competitive tech talent markets, helping not just to attract but also retain the best candidates who value inclusive work environments.
How to Build Diverse Teams in Tech
As a recruitment firm specializing in the tech industry, AES Global has distilled a series of steps that can guide companies in building diverse teams:
Start with Leadership Commitment
The push for diversity must start at the top. Company leaders must not only endorse but actively participate in diversity initiatives. This includes setting clear diversity goals and holding the organization accountable for reaching them.
Expand Your Recruitment Pipeline
To recruit a diverse team, expand your search beyond the usual networks. Partner with organizations, universities, and community groups that work with underrepresented populations. Encourage employee referrals while emphasizing the need for diversity.
Standardize the Hiring Process
To minimize biases, standardize interview questions and use structured interviews. This ensures that all candidates are evaluated on an equal footing based on their skills and potential.
Implement Bias Training
Unconscious bias training can help hiring managers and team members understand their preconceived notions and prejudices. Awareness is the first step towards minimizing the impact of these biases on the hiring process and team dynamics.
Foster an Inclusive Culture
Diversity goes beyond hiring. For a truly diverse team to thrive, there must be an inclusive culture where everyone feels valued and can contribute. Regularly solicit feedback, and offer mentorship and career development opportunities that are accessible to all.
Measure and Refine Your Strategies
What gets measured gets done. Track diversity metrics and analyze them to understand where you are making progress and where you need to improve. Use this data to refine your diversity strategies continually.
Leverage Technology for Equity
As a tech recruitment firm, AES Global also recommends leveraging technology to aid in building diverse teams. AI-powered recruitment tools can help to reduce bias in candidate screening by focusing on skills and experiences rather than demographic characteristics.
Building a diverse team in the tech industry is not just about ticking a box for corporate social responsibility. It's a strategic move that brings tangible benefits, from enhanced innovation to better financial performance. As we navigate an increasingly complex and interconnected world, the companies that prioritize diversity will be the ones that lead the way in tech. AES Global is committed to partnering with these forward-thinking organizations to craft the diverse teams that will shape the future of technology.