As the COVID-19 vaccine rolls out and companies plan various return-to-work scenarios, the aftermath of the pandemic’s disproportionate impact on women and people of color presents tech leaders with unprecedented challenges and unique opportunities.
The tech industry cannot afford to take steps backward in Diversity, Equity, and Inclusion (DEI), but recent research strongly suggests that is exactly what is on the horizon. In the newly released “Women in the Workplace” report, McKinsey & Company and LeanIn.org found that one in four women are considering downshifting their careers or leaving the workforce due to the impact of COVID-19. About one in five working mothers are considering dropping out of the workforce because of COVID-19 compared with 11% of fathers. The struggle is especially acute among women with young children: Nearly a quarter say they may take a leave of absence or quit altogether. Senior-level women are 1.5 times more likely than senior-level men to think about downshifting or leaving.
Research has demonstrated that “senior-level” women (referring to senior and executive-level women on the chart) are important role models for women at mid-level and entry-level stages of their careers. Fewer women at the senior level significantly impact a company’s ability to recruit and retain top female talent into their pipeline, which affects a company’s employee value proposition. The McKinsey and LeanIn.org report suggests a COVID-19 domino effect potentially erasing five years of DEI progress in gender diversity.
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.
Thomson Reuters Invests in Future Female Leaders
Winner of the 2020 Minnesota Technology Association Tekne award for Tech Talent – Corporate Initiatives.
By: Rick King
Almost a decade ago, leaders at Thomson Reuters identified a problem: there were too few women in their technology practice, and even fewer held leadership positions. As Executive Vice President of Operations at Thomson Reuters at the time, I was eager to engage in fixing the problem. I reached out to Susan Davis-Ali, Ph.D., founder and President of Leadhership1 and an expert on the retention and advancement of women technologists.
When Susan and I talked about pilot testing the Leadhership1 program at Thomson Reuters, our goal was to stop mid-career departures of our valued women technologists. We studied various factors leading to resignation, and Susan designed a program to change the outcomes. Eleven years and nearly 1,000 female executives later, we continue to achieve our goals.
Fast forward to 2020, and the world is in the middle of a global pandemic. While many companies hit pause on their training and development programs, we at Thomson Reuters launched our tenth cohort of women in the virtual Leadhership1 program without a hitch. From its inception, Susan designed the Leadership1 program to be virtual. Our latest cohort included 150 women from all around the world who experienced the program the same way the previous nine had – entirely online and virtual.
With a decade of data supporting the online virtual leadership development model, we can disregard the naysayers who said cohort-based leadership development could never be as effective as the more expensive, traditional face-to-face models. Even before the pandemic, we saw the need for more affordable and accessible training to help companies cast a wider net and invest in cultivating diverse talent earlier in the pipeline. Susan was confident that the answer was a virtual, online model and pointed to online dating success. “If people can fall in love online,” she would remind me, “they certainly could acquire leadership development skills online.”
Contributing Factors to Retention & Advancement
Three key factors contribute to the retention and advancement of women technologists, and these factors are the building blocks of the Leadhership1 program. They include:
- Goal clarity
- Confidence to achieve career goals
- A strong network of women in an organization
Leadhership1 graduates report significant increases on each of the three key factors comparing metrics before and after the program.
Increasing Retention and Advancement
Goal Clarity – Increasing goal clarity for a woman technologist helps her enision her career path at work which leads to increased retention and readiness for advancement.
Confidence – Increasing a woman techologist’s confidence in achieving her career goals plays a significant role in her interest and readiness for advancement opportunities.
Network – Increasing the size and strength of a woman’s network of other women at work increases her sense of belonging by decreasing her feeling of isolation.
Key Program Results
The Leadhership1 program helped generate interest in career advancement during a stressful global pandemic. Nearly 90% of graduates agreed with the following statement: “I am more interested in advancing my career and moving into a more senior position when an opportunity presents itself after participating in the Leadhership1 program.”
Nearly all the women (98.8%) reported that the six-month program was fun and enjoyable, 98% said that the online coaching content was relevant, and 99.7% shared that the online curriculum was well-organized and easy to follow.
Long-term Outcomes and Return on Investment (ROI).
In a six-year longitudinal study, Thomson Reuters promoted graduates of the Leadhership1 program two times more often than a control group of non-graduates. The study also found that Leadhership1 graduates had a 4% greater retention than a control group of women who did not participate in the program. The program more than pays for itself based on the retention data alone. Using $100,000 as an average salary, assuming 100 women per year in the program, and using the market rate of 1-2x annual salary as the cost of turnover, the savings of retaining four additional employees is estimated between $400,000 and $800,000 on a $200,000 investment. And this is just the financial ROI.
Perhaps more importantly, a different kind of return on investment is illustrated by the hundreds of thank you notes Rick received from Leadhership1 graduates over the past ten years. Research studies conclude that job satisfaction is enhanced when organizations demonstrate structural commitments to employee development and career advancement. Our experience proves this to be accurate, as reflected in employee satisfaction, loyalty, and gratitude. Now more than ever, it is wise to demonstrate your company’s commitment to retaining and advancing diverse talent.
Six Immediate Actions Tech Leaders Should Take to Retain and Advance Female Talent:
Fix the Broken Rung. Focus on providing leadership development programs to the women in your pipeline, especially at the critical “broken rung” into management.
Cast a Wide Net. Secure funding to cast as wide a net as possible. Many high-potentials can become high-performers with a little bit of investment.
Make Connections. Connect women technologists with other women technologists. Being an “only” takes a toll on diverse talent. Continue to prioritize employee resource groups (ERGs) and informal networks within your organization to help women technologists feel less isolated in a male-dominated industry.
Create Role Models. Women are more likely to stay at an organization where they can envision their career trajectory. Spotlight women technologists at senior and executive levels, so women earlier in the pipeline have role models
Develop Mentors. Recruit male and female leaders to mentor and sponsor women. Positioning gender diversity as a business issue rather than a woman’s issue invites more men into supporting gender diversity initiatives.
Start Now. As a tech leader, now is the right time for your organization to invest in rising stars and retain and advance your future female tech talent pipeline.
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Ready to take the next step for your organization?
• Managing talent in the post-pandemic world
• Addressing the “broken rung” for your women technologists
• Launching the Leadhership1 program for your organization
Visit leadhership1.com for more information.