What the Google Controversy Misses: The Business Case for Diversity

The Google memo assumes Silicon Valley is already a meritocracy, but true meritocracies would innately reflect diversity.
What the Google Controversy Misses: The Business Case for Diversity

What the Google Controversy Misses: The Business Case for DiversityThis article by Christopher Mims is from The Wall Street Journal.

The memo written by a Google employee that went viral earlier this month hit a raw nerve. The tech industry is already beset by accusations of widespread sexism and discrimination, and suddenly here was someone arguing that genetic differences rather than bias alone might explain why there are more men than women in tech jobs.

That assertion led Google CEO Sundar Pichai to fire its author, James Damore. The reason, as Mr. Pichai put it in a companywide memo: “To suggest a group of our colleagues have traits that make them less biologically suited to that work is offensive and not OK.” But Mr. Pichai’s memo also said it’s not OK for Google employees to feel they can’t safely express their views at work, and that “much of what was in that memo is fair to debate.”

Google has yet to clarify what it thought was debate-worthy, but it’s a good bet that it had something to do with two of Mr. Damore’s admonitions: that Google should be more inclusive of conservatives and their viewpoints, and that it should consider the potential cost of Google’s diversity programs. But this controversy, as often happens with debate over diversity, has obscured the core business issues involved.

Diversity = Dollars

Research has established the business case for diversity. This isn’t an argument about redressing historical inequities or even present-day fairness. More diverse companies have better financial returns, are more innovative and are just plain smarter than their more homogenous competitors.

One reason diversity is good is that it’s hard, says research done by Katherine W. Phillips and others while at Northwestern University’s Kellogg School of Management. Diverse teams tend to have more disagreement but better outcomes, while homogenous ones are more confident in their abilities but perform worse. In a 2009 Kellogg study involving members of fraternities and sororities, a team was more likely to correctly solve a murder mystery if it mixed in (same gender) people from other houses. Tellingly, those same teams were less sure they were right and often felt their interactions were less effective.

Overall, women represent only 11% of engineers in the U.S., according to the Society of Women Engineers. At Google, women are 31% of the overall workforce but 20% of technical staff.

Company cultures that are unfriendly or even hostile to women and minorities not only lead to less diverse workforces, but they also harm the performance of the women and minority employees they do have, says Aubrey Blanche, head of diversity and inclusion at enterprise software company Atlassian . This happens for a number of reasons, notably the “stereotype threat,” where humans live up—or down—to others’ expectations of them.

The No. 1 reason women leave tech isn’t a life transition like starting a family, but the fact that they didn’t feel welcome or included at their companies, in their teams or within the industry as a whole. This is according to many studies, from researchers at MIT and the University of Wisconsin-Milwaukee, as well as professional societies and private foundations.

The Meritocracy Paradox

When faced with the business case for diversity, many managers—particularly in Silicon Valley—have countered with the meritocracy argument: A business where reward is proportional to effort and ability alone should be immune from the need to promote diversity or reduce bias in hiring, promotion and bonuses.

The trouble with this idea is that true meritocracies don’t exist. Indeed, a study of individuals with managerial experience found that they were more likely to favor men in a simulated compensation scenario when the instructions emphasized meritocratic values, according to an oft-cited 2010 study from researchers at MIT Sloan School of Management and Indiana University Bloomington.

In a more recent project, Emilio Castilla, one of the 2010 study’s co-authors, examined promotions and bonuses within a company after controlling for every other significant variable, including job title, education, experience, skills and performance. He found that demographics influenced rewards in this company (which he can’t name because of a confidentiality agreement). Subsequently, the company created a system of transparency and accountability to address the disparities, and his follow-up research found it eliminated pay and promotion gaps that were the result of bias based on someone’s gender, race or national origin.

One thing that both defenders and detractors of diversity initiatives seem to overlook is that these arguments apply beyond gender and ethnicity. Dr. Castilla has also demonstrated that managers tend to more favorably review employees who are like them.

This means those wishing for “ideological diversity,” at Google or elsewhere, could potentially benefit from the same diversity and inclusion best practices aimed at eliminating other biases.

How to Move Forward

To become a place where merit is truly rewarded, a tech company must commit to an ongoing and systematic evaluation of its corporate culture, says Atlassian’s Ms. Blanche. It’s easier for companies not to undertake the hard work of transparency, accountability and organizational change required. But in the long run, failing to do so can make them less competitive.

“Diversity is not the goal in itself,” says Ms. Blanche. “Strengthening your process begets diversity and leads to better collaboration and teamwork.”

There are a wide and growing array of tools for accomplishing this, including structured behavioral interviews, where all candidates are asked the same set of questions, agreed upon in advance. This eliminates the part of interviews—”What do you like to do on the weekend?”—where homophily creeps in.

Being systematic, transparent and accountable for how important workplace decisions are made removes opportunities for conscious and unconscious bias.

Google is apparently working on it: It spent a total of $264 million on diversity and inclusion in 2014 and 2015. But the company is also being sued by the Labor Department, which is investigating gender-pay gaps at the company.

Google hasn’t responded to a request for comment. For an issue that affects so many people, at least the vociferous public discussion that is following Mr. Damore’s memo might be viewed as a form of progress.

When I spoke to Jonna Gerken, president of the Society of Women Engineers and a manufacturing engineering manager at Pratt & Whitney, she said, “If it promotes more discussion about organizational climate, I think that’s a good thing.”

Appeared in the August 14, 2017, print edition as ‘Making a Business Case for Diversity.’