Source: AnitaB.org Top Companies Data
These setbacks are not inevitable. There are initiatives tech leaders can implement now to lessen projected setbacks, with the most urgent initiatives involving retention of current diverse talent already in your company’s pipeline. THE BUSINESS CASE FOR GENDER DIVERSITY The business benefits gained by a gender-diverse workforce were valuable before COVID-19 but are arguably even more relevant with potential COVID-19-related setbacks for DEI on the horizon. Data reported in the Wall Street Journal in October 2020 based on 640 large, publicly traded companies demonstrates that organizations with a higher combined percentage of women in senior management and C-suite positions out-perform companies with a lower rate of women in the following six areas: 1) Customer satisfaction, 2) Employee engagement, 3) Innovation, 4) Social responsibility, 5) Financial strength and 6) Overall effectiveness. Why companies with more women at the top fare so well in every area of the rankings is not yet clearly known, but the findings are consistent with a growing body of scholarship highlighting the benefits of gender diversity in business. The researchers conclude simply and emphatically: “The results couldn’t be clearer.” FOCUSING ON RETENTION IS GOOD BUSINESS SENSE Trying to develop a talent pipeline without focusing on retention is like trying to fill a bathtub without first plugging the drain. You’d have to run the water endlessly (hire continuously) to keep the tub full. Very few companies are achieving 50/50 gender diversity at entry-level (see data above), but entry-level still represents the highest percentage of women in the tech pipeline. The percentage of women decreases at each subsequent level. The best way for companies to prepare for their leadership needs of the future is to focus on retaining and developing the talent they already have. Every tech leader knows that turnover is time-consuming and expensive. Research estimates the average financial cost of turnover to be 1x to 2x salary. Studies suggest that an outside hire may take up to three years to reach the productivity of an existing person on that team. Turnover can also have a widespread negative impact on company culture. Whenever high-performing employees leave, others wonder why and consider leaving too.
Talent is an “appreciating asset.” The longer people stay with an organization, the more productive they become by learning the systems, products, and how to work cross-functionally for maximum productivity. THE MAKINGS OF A PERFECT STORM Tech leaders face three converging challenges in 2021 that threaten their ability to achieve their DEI goals:
• The potential COVID-19-related gender diversity setbacks
• The high cost of employee turnover
• The fact that the tech talent shortage landed as the industry’s top emerging risk in Gartner’s 2019 Emerging Risk Survey (Cited in the Fall/Winter Edition article Identifying Future-Fit Leaders). Many business consultants advise companies that developing and retaining in-house talent is the smartest investment an organization can make. Yet, many companies approach talent development with well-intentioned but misguided strategies. Companies wait for top talent to emerge at senior levels, only to invest in this small subset of employees they recognize as high performing. Cultivating talent before it has emerged, rather than recognizing existing talent, is key to a successful strategy for building a diverse talent pipeline at the top.
“The biggest obstacle to closing the gender gap in senior management might not be a glass ceiling,
but rather a broken rung.” (McKinsey & Company, September 2020)
The most successful talent cultivation companies cast a wider net much earlier in the talent pipeline to avoid a “broken rung,” which is the first step into management. Strategic tech leaders who invest in talent development before the broken rung enjoy increased retention and advancement of their most highly sought- after diverse tech talent. The following case study illustrates how Rick King, a highly strategic tech leader, made a decade-long commitment to increasing gender diversity at Thomson Reuters, sustained that commitment during the pandemic, and secured a strong return on investment.
Retaining a Diverse Workforce | 29
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