In almost any endeavor – whether it’s entertainment, sports, business, and even technology – fortune favors the bold. Rigidity and a slavish adherence to the methods and practices of the past simply does not result in innovation.

When it comes to diversity and the ability to recruit, retain, and get the best out of employees with more diverse ethnic, social, economic, or educational backgrounds, an industry as seemingly progressive as tech is simply not leveraging itself to the best of its ability. Many companies are feeling the impacts across the board. And this counts for both lack of talent and financial implications.

In a recent article for the Harvard Business Review, Bhaskar Chakravorti writes: “It is no secret that tech has had a long-standing diversity and inclusion problem…it’s arguably a root cause of many larger issues that plague tech. It has implications for justice and fairness; it also results in devastating flaws in the industry’s own products.”

This begs the question: What can the tech industry do to leverage increased diversity amongst its talent pool, and what benefits might tech companies experience in doing so?

Let’s examine both questions to better understand how the tech industry can bolster growth through embracing diversity.

Location, Location, Location

There’s an old saying when it comes to fishing: You have to go where the fish are if you want that big catch.

The same is true for the tech industry. We know the Bay Area and New York City have long been hubs for the tech industry. But the problem with continually drawing from two main talent pools again and again is not only do you quickly dry out that reservoir, but you also hit a wall in terms of new voices, ideas, and perspectives, which fuel innovation and creativity.

This is where tech companies need to be agile and forward-thinking in terms of where and how they search for talent, but also in terms of how they conceive of work in general. We’ve seen during the COVID-19 pandemic a massive shift to a work-from-home model that means companies are no longer limited to the talent that resides in their metaphorical backyard. Many in the tech industry believe this new working model will persist long after the COVID-19 pandemic subsides, and that means tech companies will need to expand their talent search radius and move beyond the Bay Area and NYC-area staples in order to adapt and grow.

A recent study conducted in part by the Harvard Business Review identified 6 states that are prime candidates for recruiting tech industry professionals. The findings are based on the number of underrepresented STEM-trained individuals within the state combined with each state’s digital readiness in terms of work-from-home capability.

Georgia, Texas, Maryland, Delaware, Virginia, and Connecticut emerged as frontrunners, and when you take into account the major urban centers within these respective states such as Atlanta, Austin, Richmond, and Hartford, it’s a no-brainer why tech companies should consider zeroing in on these states for both talent recruitment and operations activities.

Diversity = Increased Profitability?

A recent study by the worldwide management firm McKinsey revealed that companies across any number of industry verticals – yes, including tech – with greater levels of diversity saw increased performance in a variety of metrics. According to the study, the brand of diversity was a non-factor in these enhanced levels of performance: companies with higher levels of gender diversity experienced a 15 percent jump in performance while companies with increased ethnic diversity saw a 35 percent increase.

In addition, the study also revealed that companies with a more diverse talent pool experience significantly increased profitability and financial stability. Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.

The moral of the story is clear: the more diverse cast of voices a company deploys, the more productive and profitable a company becomes. And what’s perhaps even more motivating for tech companies to embrace and actively promote diversity within their organization is that these gains also happened at the management and leadership level.

According to the results, the most ethnically diverse executive and leadership teams saw a 20 percent increase in productivity over their less diverse counterparts, and companies in the top quartile of diversity within their leadership team experience a 20 percent increase in profitability compared to companies with those in the bottom quartile.

What makes these figures most staggering is how competitive the tech industry is in 2021, especially given the COVID-19 pandemic and the exacerbated need for tech companies to help those in other industries continue to operate as more and more work moves remote. In such a competitive landscape where the margins of profitability compared to competitors can be razor thin, tech companies can ill afford to ignore the financial benefits of actively promoting and facilitating as diverse an employee-base as possible.

Bridging the Skills Gap

Given how much the world relies on technology to facilitate our everyday lives, it may sound absurd to suggest there’s a skills gap in the tech sector. Yet, given how fast tech companies develop and evolve and how the challenges of today present new problems to solve quickly and effectively, there is indeed a skills gap amongst developers and programmers that a more robust focus on diversity could help curb.

The study referenced above by wealth management firm McKinsey suggested “40% of companies are facing skills shortages. These are the top reasons for vacancies in entry-level jobs. Simply put, you need to look outside of your traditional sources to get the best developers…”

For tech companies, this means taking a good, long look at how organizations for the advancement of minorities and/or women in the tech sector can be leveraged for a fresh influx of talent. In addition, tech companies would be wise to partner with colleges or universities that historically have a large minority student body to help create a pipeline of young tech professionals primed to become instant disruptors for these companies.

But diversity also means thinking outside the box in terms of a skills and educational background. Some of the greatest technological and scientific advancements in our lifetimes have come from companies looking over the proverbial fence to see how the work of individuals in one industry could benefit their own. Today’s tech companies would be wise to incorporate the same approach. Companies and industries well outside the technology sphere may in fact – and likely do- employ talented individuals with skills and experience adjacent enough to tech to make a large impact for a company with a bit of vision and foresight.

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