Dave Sobel is host of the podcast The Business of Tech and co-host of the podcast Killing IT. In addition, he wrote Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business.
This week, Sobel follows up on a topic he covered a couple months ago: diversity in the IT channel. He originally looked at the IT industry overall to see where it stood when it comes to diversity among a company's leadership team. He's added more data and is now offering companies a chance to self-report.
Transcript follows below.
Back in September, I released data around the diversity of leadership teams in the IT industry, with a specific bent of those serving the IT Channel and SMB customers.
I identified 100 companies that are known channel companies and looked at who they present to the world as their leaders on their webpages, and I began counting.
Since then, I've expanded the database to 300 companies. Additionally, I monitor the webpages and am alerted to changes so that the data can be updated. That allows for time to now become a measurement, as I can understand what the data looked like for a particular week.
Additionally, as I expanded the data, I set out to ensure it was across several new spectrums, including making sure I was monitoring enough technology services providers. Many of these providers include pages simply of their entire teams, with no identification of leadership versus non.
This led to a small update to the methodology. For companies that show no distinction between leaders and non-leaders -- I count everyone. I'm being very forward with the methodology because I intend this to be useful, consistent data. You can't manage what you don't measure, after all.
The larger data set also came with some new dimensions to examine. Previously, I had the entire sample set, and then looked at Fortune 1000 companies, and also at publicly traded companies.
This time, I've added two more dimensions to the analysis, able to break out vendors and technology services providers and distributors. Thus, we can now see if other dimensions make a difference, and we can also look at geography.
What did the data show?
As a reminder, back in September, across 100 channel companies, there were 876 individuals, and 82% were white, 19% women and just shy of 2% Black.
Expanding the database did not improve that. In fact -- it made some of it worse. Across 300 companies counting 2,966 individuals: 84.5% are white, 18.58% women and just slightly over 2% Black.
Revisiting the factor of size, publicly traded companies -- 58 of them, 81% white, 2.65% Black and almost 22% female -- nearly identical to September's data.
Let's try other dimensions to see if that helps. Do vendors or solution providers break the norm?
How do vendors and solution providers fare?
Vendors appear just slightly less white -- 83% or so versus nearly 87% for services providers, although services providers seem to employ slightly more Blacks, at 2.5% versus 1.7% for vendors. On gender, nearly the same. Here, we're looking across nearly the same number of companies.
Is this a U.S. problem? Adjusting for location doesn't seem to make a noticeable difference, and the gender divide is nearly identical.
Preparing for a Q1 2021 data set
From a data perspective, my intention is to hit 500 monitored companies for the Q1 2021 data set and then monitor and update quarterly. That should allow an ongoing baseline.
Additionally, while I do not intend to release company names, as this is not a shame exercise, I will be talking and profiling companies that are making changes to their numbers in substantial ways. As part of that, and to help make the data set more accurate, I now am offering companies the ability to submit their own data to the project.
All that said, the data hasn't significantly changed. And, no matter how you slice it -- size of company based on being traded or Fortune 1000, providers versus vendors, or US. versus the rest of the world, the numbers are the same. Roughly 82% of these leadership teams are men, and they are 84% white. It is one thing to say, 'This is a very male and white industry,' but facing the data is another thing.
Let's observe then … this configuration is designed to underperform. Why do I say that? Well, let's look to the Harvard Business Review:
A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean.
In a global analysis of 2,400 companies conducted by Credit Suisse, organizations with at least one female board member yielded higher return on equity and higher net income growth than those that did not have any women on the board.
In recent years a body of research has revealed another, more nuanced benefit of workplace diversity: nonhomogeneous teams are simply smarter. Working with people who are different from you may challenge your brain to overcome its stale ways of thinking and sharpen its performance.
Thus, it's quite logical to observe that these teams are underperforming. If nonhomogeneous teams are smarter, then those homogeneous teams are not as smart.
Why aren't companies creating the smartest C-suite?
Let's ask yourself: Why are we building leadership teams that do not create the smartest teams? Don't get me wrong -- on an individual basis, we have smart people. But we need to create smarter mixes of people in order to drive up that benefit.
Companies are starting to wise up. Tesla just released their first ever diversity report, citing a leadership team that is 83% male and 59% white. The company reports Black employees as underrepresented, at 10% of the workforce, and an IT services besting 4% of leadership.
The NASDAQ is pushing this direction too, looking to require companies on the exchange to disclose the breakdowns of their boards by race, gender and sexual orientation. The proposal also has requested listed companies to have at least two diverse directors, or explain why they cannot meet the mandate. Why? NASDAQ cites a report from the Carlyle Group that found that those companies they invested in that have diverse board members have nearly 12% more earnings growth per year than the average of companies that lack diversity.
To that end, I'm launching a self-reporting mechanism. If you would like to report your company into the database to help make sure the data is more accurate and to push for visibility, you can now do so. You can visit businessof.tech, and there is an option to reach out. The intention is to highlight success stories, as well as highlight the difference between the average, and those who are monitoring their data.
You can take a leadership role here and move in the same way that larger companies are, or you can underperform. It's actually that simple -- the data says by not doing this, you are underperforming. I'm not in the business of advising companies to leave 12% on the table.
About the author
Dave Sobel is the host of the podcast The Business of Tech, co-host of the podcast Killing IT and authored the book Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business. He owned and operated an IT solution provider and MSP for more than a decade, and has worked for vendors such as Level Platforms, GFI, LOGICnow and SolarWinds, leading community, event, marketing and product strategies, as well as M&A activities. Sobel has received multiple industry recognitions, including CRN Channel Chief, CRN UK A-List, Channel Futures Circle of Excellence winner, Channel Pro's 20/20 Visionaries and MSPmentor 250.