The business case for diversity in tech scale-ups: why it's more than just a buzzword

Even in the most innovative scale-ups, deeply ingrained traditional business practices and assumptions can still lead the way. In this blog, we will discuss the realities of diversity in scale-ups and actionable strategies founders can undertake to make meaningful change.

We spoke with Gretchen Scott, a director at Women Who Code Melbourne, who prides herself on supporting and encouraging diverse people in the technology industry. She is also a founder of Kaleida, the only platform with technology-focused career growth frameworks.


Setting the scene 

 In Australia's tech industry, there is an evident scarcity of skilled workers, and bolstering the participation of women, who are already underrepresented, would increase the talent pool, and curb the mounting skills gap.

However, the industry is in danger of exacerbating its skills shortage because women leave high-tech jobs at twice the rate of men. Workplace inflexibility, unequal pay - women still earn 18% less than men across all STEM industries - and lack of accessible and affordable childcare are some of the reasons why women leave the tech industry. Additionally, unconscious bias within most tech organisations prevents women from progressing up the ladder and feeling valued in their workplaces.


 So, why should scale-up founders care?

There are two big reasons that tech founders should take diversity seriously, both financially and ethically. Firstly, it can be a competitive advantage (and who doesn't want that?). A 2015 McKinsey study found ethnically diverse companies were more than 35 per cent more likely to outperform their industry counterparts. Even more significantly, each 10 per cent increase in racial and ethnic diversity on the senior executive team yielded, on average, a rise of 0.8 per cent in earnings before interest and taxes (EBIT).

Similarly, for gender, a Credit Suisse study found that companies with higher female representation at the board level or in top management exhibit higher returns on equity, higher valuations, and higher payout ratios.

And in terms of ethics? Well, tech can be unsafe if it isn't taken seriously. As it's the infrastructure of our social existence, it would be naïve not to consider how tech can harm people, especially those who aren't well represented. 

Having a diverse team means that your technology will be built with a broader audience and usage in mind. I saw this first-hand when investigating a recipe website outperforming all its counterparts for seemingly no reason.

At a glance, the website offered the same kind of content as its competitors and didn't warrant the traffic and sign-ups it received. However, when we looked at the code, we could see that it had been built with excellent semantic HTML – which takes a little more time to write but makes websites more accessible to assistive technologies such as screen readers. Ultimately, this meant the website not only held market share when it came to visually impaired people but also a whole heap of parents and chefs who were cooking using Siri and other technology and needed to be hands-free when in their kitchens.


Be intentional, there's no instant solution

The above is just the tip of the iceberg regarding why diversity is so crucial in our sector, but there's no way of instantly fixing a broken system. We're all impatient and want a quick fix in half an hour, but the reality is that it will take a few years to get there, even for the most enthusiastic scale-ups.

A big part of the journey to more diverse workplaces is admitting things need to change and starting to explore the different paths you can take. I've spent so many years discussing diversity in tech, attending countless programmes and learning about every kind of badging or accreditation out there. While these are useful and can start this process, they don't retain change or help with long-term adjustments to workplace culture.

One of the most successful ways I've seen scale-ups implement change is by having managers stop using guesswork and pattern-matching when identifying high performance and instead have metrics and structure in place to help everyone work towards promotions and new opportunities fairly.

Importance of frameworks

At Kaleida, we've built a platform that hosts frameworks for technology roles. They are hyper-specific frameworks, and help technical teams to all understand what skills are required in different roles. For instance, what does a junior software engineer need? What are the technical skills and soft skills they require? These frameworks already exist in a way, but scale-ups need to agree to one idea of what they need, and this needs to be communicated across the business.

Career frameworks help all employees at companies. It eliminates bias and allows space for all employees to succeed, not just the ones who usually get promoted. This enables you to get the best employee for the role, not just the candidate who looks like the last person who did the same role. 

These frameworks also support management in having conversations with team members and empower people to take ownership of their growth – helping to create a real sense of loyalty and pride in the workplace. Similarly, they allow you to build morale and discuss what career growth and success look like at the company. 


 There's no such thing as perfect

When it comes to implementing changes and working toward diversity, many founders or senior team members want to make a difference but don't know where to start; they ask, "what if we do it wrong?", and the truth is, you might, but that's no reason to put off having these difficult conversations and trying to change a broken system.

Cupcakes and lip service aren't enough. By actually changing how your workplace functions, you'll reap the benefits of true inclusion, where those who are often outnumbered feel supported and celebrated for their differences rather than belittled. Sure, you may put a foot wrong, but you'll miss out on market share and talent by keeping schtum and not tackling these issues head-on.