It’s up to startups to solve tech’s diversity issue

Just a couple of weeks ago, Ceridian CEO David Ossip took the stage at Ottawa’s Shaw Centre as the first keynote speaker of the third annual SAAS NORTH conference. Speaking to an eager crowd of nearly 1,500 tech leaders, investors and other attendees, Ossip highlighted the importance of diversity and company culture in Ceridian’s journey to become a billion dollar company, which went public earlier this year in Canada’s largest tech IPO to date.

Ossip pointed out that “building a great company culture” has been critical to Ceridian’s ability to attract and retain a highly engaged workforce that drives a positive customer experience. As part of that culture, diversity has played a strong role – especially considering its correlation with financial performance.

That first keynote speech set the tone for the rest of the conference, which would emphasize the topic of diversity throughout. Organized by Cube Business Media and co-founded with L-SPARK, this year’s iteration of SAAS NORTH featured a speaker list impressively split evenly between men and women, as well as a number of talks specifically dedicated to the discussion of diversity within today’s established and up-and-coming tech companies in Canada.

Read More: Investors poured $1.62B into Canadian SaaS companies in 2018: L-Spark report

Director of Conferences for Cube Business Media Michelle Sklar told me in an interview: “Making diversity a central theme of this year’s conference was essential to making sure that SAAS NORTH continues to galvanize Canada’s tech ecosystem by bringing people together who truly want to make their businesses successful and drive real, measurable social and economic impact.”

But diversity plays the same role in the global tech industry as well. While tech companies have collectively made a big push toward diversity and inclusion in recent years, there’s obviously still a long way to go. That’s why inspiring the next generation of tech companies to build diversity into their DNA from the beginning is critical to finally change the face of tech for good.

So what does the tech industry’s progress look like in terms of diversity? And who is leading the charge? Here we explore the current reality of diversity and inclusion for large tech companies compared to startups and share experts’ advice on how to create more diverse and inclusive cultures moving forward.

How do tech leaders fare in terms of diversity?

Global tech leaders, including Apple, Google, Facebook and others, began publishing company diversity reports only a few years back in 2014. By taking a retrospective look at these reports, it’s easy to see the true pace of the tech industry’s evolution since its diversity issue was really put under a magnifying glass.

A recent analysis by Reveal from the Center for Investigative Reporting did just that, analyzing 177 of the largest San Francisco Bay Area tech firms. In short, the analysis found that diverse representation in tech is still dismal, despite companies’ significant attempts to improve in that regard. Certain statistics from the report paint a more detailed picture.

Perhaps even more telling, though, is drilling down into the data for two of the world’s largest and most influential tech companies: Google and Apple.

According to the Google’s annual diversity report for 2018, female representation among employees has remained flat at around 30 percent since the company began publishing the figures back in 2014. It’s the same figure for Apple as well. Fortunately, both companies have made some headway by increasing the percentage of females in both tech and leadership roles, as well as the percentage of non-white employees, suggesting that change is slow but steady – despite the 10-page memos that rail against company diversity initiatives, like this one that circulated last year at Google.

Major tech companies’ slow progress points to one major challenge that these established companies are facing with regard to diversity: A diverse, representative employee base simply can’t be built overnight. This issue is compounded by the fact that major tech companies, in working to improve their numbers for representation, often ignore the more important aspects of inclusion and belonging that ensure people choose to stick around once they’re hired.

For example, Google released attrition data for the first time in its most recent diversity report. The numbers showed that even though the company was hiring more black employees, it was having a hard time retaining them. The report concludes, “Put simply, to improve workforce representation we must focus not only on hiring, but also on developing, progressing, and retaining members of underrepresented employees, and creating an inclusive culture.”

Given the above, it’s clear that large, established tech companies face a much greater challenge when it comes to building diversity into their organizations than other companies that are just starting up. But that doesn’t mean startups are doing any better…

Does diversity in startups look any better?

As it turns out, despite their opportunity to incorporate diversity into their organizations from earlier on, startups often find themselves in a similar situation as large tech companies.

A 2017 State of Startups report found that just 17 percent of founders have a formal plan at their company to improve diversity and inclusion – an improvement of only 3 percent from last year. Moreover, a Techstars report found that while 72 percent of founders believe diversity is either extremely or very important for their company, only 12 percent are “diversity leaders” who employ five or more computing professionals who are minorities or women.

Together, these statistics point to the fact that, for many startups, there is a lack of action when it comes to solving the issue of diversity and inclusion in the workplace. In other words, while many people recognize the importance of seeking out and creating opportunity for diverse perspectives in their organizations, fewer are actually taking the steps to make it a reality.

Nevertheless, startups must take action if they want to avoid having the same problems as larger tech companies further down the road. SurveyMonkey CMO Leela Srinivasan put this elegantly in an interview with Fast Company in 2016, saying, “Companies building a culture of diversity and inclusion when they’re small have far less ‘fixing’ or catch-up to do when they’re much larger organizations, when the needle is harder to move.”

This suggests that it’s ultimately up to startups to drive the future of diversity within the tech industry – a point which Lever CEO Sarah Nahm discussed in detail in a post for USA Today. “If Silicon Valley is going to make real progress on diversity, we all need to start looking to emerging players as leaders,” she writes.

In making her argument, Nahm uses the examples of Change.org, npm and Buffer as startups that have prioritized diversity from day one with various types of inclusive company policies and recruiting strategies. A poignant example is npm’s “guys jar,” where employees voluntarily add a dollar to the jar each time they slip up by using the word “guys” to mean “people.”

Of course, this is just one small example of how startups can start to build a more diverse and inclusive environment within their organizations. For more ideas, I spoke with a number of experts at the SAAS NORTH conference in Ottawa. Their advice is shared below.

How can startups drive diversity moving forward?

From the various conversations I had with experts at the conference, as well as the many talks devoted to the topic of diversity, it became clear that startups have a clear advantage when it comes to diversity. Here are a couple interesting reasons why startups – not big tech companies – will be the ones to solve tech’s diversity issues.

Startups can create a culture of belonging from day one.

Sitting on stage for a panel about how diversity and inclusivity are paramount in scaling a product team, moderator Lianne Vineberg, Technical Talent Lead at Wealthsimple, told the audience: “Don’t let this be a problem you have to fix. Let this be a strategy going forward,” referring to the fact that diversity is not easy to incorporate into an organization retroactively.

Satish Kanwar, VP & GM of Channels at Shopify, reiterated the same point succinctly: “If you’re starting new, start aware.”

As such, it’s obvious to see why startups and other young companies have the advantage compared to the tech giants in solving the diversity problem. The important thing to note, however, is that there is a difference between diversity, inclusion and belonging. Diversity boils down to having a diverse set of perspectives; inclusion is whether those perspectives and people are heard; and belonging relates to people feeling comfortable as themselves at work.

Without belonging, any attempts to build diversity will be short-lived. This is exactly what Jeremy Bailey, Creative Director of Freshbooks, was getting at when he said, “Culture fit, if we’re intentional about creating diverse, inclusive cultures, means that the culture requires those people to be present.”

As such, startups have the opportunity to put in the work to make belonging a priority from the get-go. That way, as they grow, their cultures demand a diverse set of perspectives to be present and heard.

Startups can more easily rely on distributed teams and remote employees.

There’s no doubt that securing enough qualified talent is a challenge for startups these days. Large companies like Google, Apple, Facebook and others often attract the best talent by offering salaries that startups simply can’t match.

Fortunately, this creates an incredible opportunity for startups to seek out diversity when looking to expand their teams. Many startups have solved this talent problem by creating opportunities for remote workers and distributed teams, which inherently opens the door to a more diverse set of perspectives and an untapped talent pool.

Liam Martin, co-founder of Time Doctor and Staff.com, explained in a SAAS NORTH panel about building diverse teams at scale that his team was recently able to recruit an extremely talented developer from Indonesia who recently got fourth place in a Facebook hackathon. Martin noted that despite having offers with higher salaries, the developer valued the opportunity to stay in his home of Indonesia and ultimately chose to work with Time Doctor instead.

In another interview, Katie Womersley, VP of Engineering at Buffer – which has a fully distributed team – told me that the company currently has 86 employees in 18 different countries.

She explained that this facet of the company has helped her team reduce unconscious bias and identify numerous challenges that people may not have been able to recognize otherwise.

When it comes to remote employees or distributed teams, startups such as Time Doctor and Buffer have the advantage. Larger tech companies have already invested in physical offices and infrastructure, whereas startups remain relatively unbridled in that regard.

What does this all mean?

Simply put, it’s up to the next generation of tech companies to drive a different outcome for diversity in tech in the future.

Startups are known for moving quick, being agile and disrupting – and that is exactly what they need to do to take the lead in making tech more diverse. Leaders like Google and Apple, while having made some progress, won’t be able to move to spur rapid, significant change when it comes to diversity.

Fortunately, not all hope is lost. Startups have a set of unique advantages that allow them to incorporate diversity into their DNA as they scale. All they need to do is be aware of that, and take action to make it happen. And considering the advantages of diversity in the workplace, startups may even give the tech giants a run for their money when they do.

Disclosure: This article includes a client of an Espacio portfolio company