Americans are rightly dismayed that Google, one of our most iconic technology companies, has possibly the worst "diversity" employment record of any Fortune 500 company. According to Google's workforce statistics, globally 70 percent of its employees are male, and in the U.S., 91 percent are white and Asian, 3 percent Latino and 2 percent black. Google's executive management is even less diverse.
Google grants that its lack of workforce diversity is a problem, which it attributes to "unconscious biases" within the company that cause hiring managers to act on unrecognized racial and gender preferences to the exclusion of candidates who do not fit their archetype. The company further states that there is an insufficient supply of Latino and black computer technologists to substantially increase their numbers. However, Google misstates the problem, which is not "unconscious bias" or inadequate supply but rather a culture of institutional discrimination and exclusion so pervasive in Silicon Valley that it trumps sound business practice.
Silicon Valley, the hub for technology innovation, has long lagged behind on diversity. The most recent diversity statistical analysis of Silicon Valley firms -- including Hewlett-Packard, Intel, Cisco Systems, eBay and AMD -- shows that while the collective workforce of the 10 companies reviewed grew by 16 percent between 1999 and 2005, the already low number of Latino and black employees at those firms declined by 16 percent during the same period, a double-dip net loss. Furthermore, nationally Latinos and blacks made up 12.4 percent of computer workers, but only 6 percent in Silicon Valley. Even more startling is a report by the AFL-CIO indicating that the Great Recession and other factors resulted in 20,000 fewer blacks employed as computer programmers and systems analysts in 2011 than there were in 2008, when black employment in the tech sector peaked.
These numbers come into focus as reflecting poor business strategy when considered in light of the shifts in U.S. demographics. Today, Latinos and blacks make up 29 percent of the U.S population and represent a $2.8 trillion annual economy. By 2040, Latinos and blacks will increase to 42 percent of the population and minorities will become the majority, not just in terms of raw numbers but also in terms of intellectual capital, innovation, workforce supply, and the sustainability of our national economy. Given these realities, Google and other Silicon Valley companies reject diversity at their peril.
Many new technology companies look upon "diversity management" as antithetical to the cultures of merit they have created and adding little to their bottom lines or productivity. They see diversity as the "management of human differences," and the simplistic inclusion of women and minorities. They do not want to be saddled with the negative vestiges of "affirmative action" or to have their cultures altered. And why should they change who they are to accommodate a race- and gender-based idea of diversity? They have the right to want people to fit in, to assimilate. They have the right hold high their standards and require all who would join their ranks to meet those standards. And they have the right not to see diversity as an obligation in business, but as a driver of productivity and innovation.
So what should these companies do? Develop a slew of ineffective, affirmative action-based programs to increase their women and minority headcounts? No. They should adopt a business model of diversity management called "strategic diversity," which is not just about increasing the numbers of women and minorities; it is about generating business value and facilitating business strategy from diversity management. Strategic diversity is about improving innovation, resource management, and technology optimization to drive performance. It is less concerned with political correctness than with adding business value. Companies that practice strategic diversity understand that diversity makes companies work better. They see diversity in everything they do -- from their products and services, to process design and business development -- and they seek to leverage diversity along all those vectors.
In a recent study of the diversity strategy of over a dozen Fortune 500 companies and national sports organizations, our team found that only 25 percent of the companies surveyed had a business-based diversity strategy. The best example of strategic diversity among these organizations is Major League Baseball, which has integrated diversity as a strategic element across all areas of operations. Unlike most companies, Major League Baseball has taken diversity out of the realm of human resources and put it into all aspects of business operations. The difference is that Major League Baseball does not see diversity as just about race and gender but about its ability to compete, attract a new and growing fan base, and deliver maximum return on investment. It has galvanized all thirty teams around an idea of strategic diversity that is driving productivity, resource allocation, and long-term strategy.
IBM is another company practicing strategic diversity. IBM has partnered with the New York City Public Schools to create P-TECH High School to give students in a poor section of Brooklyn an opportunity to earn their high school diploma and associate degree in computer technology with an option to join IBM upon graduation. IBM is building its technology workforce of the future by investing in strategic diversity now. The P-TECH model is being replicated nationally, garnering praise from President Obama as the future of workforce readiness. With a fraction of Google's seventy-four percent reach to U.S. consumers, IBM is setting the pace for diversity management in computer technology that Google and other Silicon Valley companies should seek to surpass.
The Google diversity problem is not one of unconscious bias but of poor business strategy that decouples diversity management from the long-term health of the company. But in breaking its silence, Google is demonstrating its readiness to forge a new way forward.