While the tech world has made significant strides to improving gender diversity over the past decade, women remain significantly underrepresented in the corporate world. Despite extensive research demonstrating a direct correlation between diversity and profitability, the gender gap continues to persist.
In celebration of International Women’s Day, we wanted to highlight several reasons why tech companies benefit from hiring more women and some strategies for improving gender diversity.
Gender diverse organizations generate more revenue
Companies with high gender diversity have been shown to outperform their less diverse counterparts over the last five years, as well as deliver slightly better revenue returns. The effects are compounded for companies who manage to retain their female employees over an extended period.[i]
The Technical University of Munich and the Boston Consulting Group conducted a study to get to understand the effect of diversity in management. They found that increasing leadership diversity results in increases in innovation and improved financial performance.[i] Perhaps most strikingly, companies with at least 40% of their management teams made up of women generated 34% of revenue from innovative services and products.
The effect is magnified for Fortune 500 companies – those that have three or more women in top gained a 66% ROI increase over companies with less diverse leadership teams.[i]
A report from McKinsey found that the most gender-diverse organizations (those in the top 25%) were 15% more likely to experience higher financial returns than the national median for their industry.
One experiment published in Management Science found that teams with an equal gender split outperformed male-dominated teams in terms of sales and profits[i]. Finally, the American Sociological Review concluded that gender equality led to better customer acquisition, increased revenue, and greater relative profits.[ii]
Gender diversity leads to diversity of thought
By its very nature, interactions between diverse staff members compel team members to consider viewpoints they may not have otherwise. The differences between how men and women perceive the world enable better problem solving and boost overall performance.
The scientific term for this is “general collective intelligence,”[i] which refers to a group’s ability to perform well across a wide range of tasks. Studies published in Science found that collective intelligence increase is correlated with the number of women in a team.[ii] The explanation put forth by the researchers is that having more women in a group increases collective social sensitivity, which is correlated with collective intelligence.
The bottom line is that gender diversity demonstrably boosts productivity, your team’s intelligence, and overall business outcomes.
Young women need more role models in the tech industry
One of the top reasons to celebrate female tech leaders is to encourage more young women to pursue a tech career, thereby growing the female hiring pool.
It can be hard enough as a woman in IT, and it’s even more difficult as the only woman in the board room. But the more women who are brought into senior positions, the less pressure there is on any single woman. This has the added benefit of creating more role models for young women, increasing the likelihood that they will pursue a career in tech, and a snowball effect is created.
How to Implement Gender Diversity
By now, the benefits of attracting women for technology positions should be clear. To achieve this and enhance gender diversity, there are several steps companies can take:
- Implement unconscious biases training: management and hiring practices can involve unfair processes and biases that occur unconsciously. If not dealt with, employees can become resentful of the status quo. Companies should look at job postings, eliminate gendered wording that might send the wrong message, and consider professional unconscious biases training for team members.
- Bring women into the hiring process: this reduces the problems that unconscious biases can introduce. Additionally, strong female representation can make your organization more attractive to female interviewees.
- Revise and expand work-life policies: many organizations have inflexible work arrangements that disproportionately impact women – childcare being the most prominent example. With tech becoming more comfortable with non-traditional work arrangements in general, there are many ways to attract women who want to work in tech but may require more flexibility.
For a company to realize its full potential, gender diversity must be made a priority. Leaders need to identify business units that are less diverse to develop comprehensive hiring strategies that combat this without reducing the role of merit in hiring.
At Hanu, we recognize that the world needs more strong, capable women in leadership positions, and employers who are willing to embrace them will outperform those that do not.