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Leadership

The Important Statistics That Are Missing From Most Diversity Reports

Many companies are leaving out some of the most important statistics when disclosing their diversity numbers.

The Important Statistics That Are Missing From Most Diversity Reports
[Photo: Flickr user Jenna]

Earlier this month, Microsoft wrote a blog post about its gender pay gap. It shared that its pay gap between men and women is much smaller than the national average, and that overall its non-white employees earn slightly more: Microsoft's U.S. female employees make on average 99.8 cents to every dollar their male counterparts make. For non-white employees the breakdown goes: "African American/black employees are at $1.003; Hispanic/Latino(a) employees are at 99.9 cents; and Asian employees are at $1.006 for every $1 earned by Caucasian employees at the same job title and level, respectively." The company pledged to continue monitoring this data and publicly disclosing it.

Over the past few years, leading technology organizations—like Microsoft—have begun releasing internal numbers, which divulge the demographics of the companies as a whole, as well as the diversity breakdown of talent and information about the outreach programs the companies participate in. It’s become a trend, almost—companies admitting that they need to focus on diversity and then releasing statistics to highlight their commitment to the issue. Other companies, including Slack and Pinterest, have hired positions with titles like "Head of Diversity" to more directly combat this issue. And while strides are undoubtedly being made, perhaps a full story isn’t always told.

What's Missing

Leigh Honeywell, an engineer at Slack, addressed this in a personal blog post. In it, she responded to Microsoft's post and noted that a few data points were absent from the report: Namely relative promotion velocity and retention data. That is, the company didn't disclose the rate at which minorities receive promotions and how long non-white and female employees last.

Without these numbers, writes Honeywell, "it’s only half the story."

With companies beginning to post their diversity numbers, it logically leads to the question: What narrative are they trying to tell and are they doing it accurately? In Honeywell’s view, the companies owe their current and future employees a more complete snapshot of the organization. She views these reports as important signals.

In an email conversation with Fast Company, Honeywell talked about what these reports really do. First, they "put pressure on the companies to do better." Second, they "enable individuals to make decisions about the environments they want to go work in."

It’s a way of indicating to the world—as well as those already on the inside—that the organization is cognizant of its internal makeup and what it should be focusing on. So when companies ignore important equity and diversity stats, it sends another signal. "Big companies do have this data," Honeywell wrote. "I can only assume that it's really, really, really ugly, as otherwise they'd be shouting it from the rooftops."

Beyond these statistical flaws, there’s another nuance to this equation. While there are glaring data points like retention and promotion rates that should be disclosed when talking about diversity, others say the issue should also be reframed. McKinsey and Company, for example, tasked a team over the last three years to analyze what sort of external effects occur when executive teams have diverse backgrounds. The findings were clear: Hiring people from different walks of life led to better performance.

Position, Not Just Quantity, Matters

According to the authors of the McKinsey report, this prompted a few interesting discoveries. First, the companies that excelled most were the ones who embraced different perspectives from a external perspective. The top performers, explains Vivian Hunt—a managing partner of McKinsey's United Kingdom and Ireland office, "drive it into their business agendas." Her colleague and co-author Dennis Layton adds to this, saying their findings showed that top teams with more women and people of color had a distinct competitive advantage.

What this ultimately culminates in, says Layton, is a new taxonomy of disclosing diversity; It’s not just reporting who works at the company and why, but also understanding why these differences should be embraced and who they represent.

Beyond having a list of demographics people fit into, companies need also understand the "drivers that create these outcomes," says Sara Prince, also of McKinsey. And putting all of this information together, she adds, leads to an "evolved scorecard." If companies disclose their numbers for disclosure's sake—or, worse, for PR's sake—they're ultimately missing the point.

The most glaring examples Hunt, Layton, and Prince provided are businesses whose top brass demographics aren't representative of the actual user base. For example, "The international growth market for whiskey is not Scotland," says Layton. It’s India. And yet many top alcohol companies’ teams don't have people representing that core demographic.

Similarly Twitter has a huge user base of people of color, and yet its board still has scant representatives from that demographic. The company has now pledged to fix this perspective gap, but has yet to release a plan. And some wonder whether or not the fixes put in place will be much more than lip service.

The main issue the McKinsey analysts found was that companies had to not only seek out diversity but understand why. As Layton put it, they must ask "am I really capturing those growth markets?"

Thus moves like Microsoft's disclosure of internal numbers isn’t about just checking names on a box, it’s about making sure people are adequately represented in business decisions. If a company makes a product that is used by women and non-white people, they ought to understand how best to serve them. More importantly, the employees should be utilized for their perspective, which is also why retention is so important. Having a concert of demographics isn't enough—it's necessary to understand their strengths and what they bring to the table. All of this leads to the need for new ways to frame the complex question of company diversity.

While this conversation has been happening for a while, it’s still in its infancy. And public disclosures like Microsoft's and Twitter's (along with many others) does help to contextualize the issue. People like Honeywell show why not only these companies should continue writing them, but include the whole picture. "These numbers are table stakes, and it's worth knowing who has the basics already handled," she wrote in the email.

But from there, new internal lists can form that will hopefully lead to better equity and equality in the workplace. Until then, people must continue to push for more transparent numbers and explanations of why diversity matters. Some companies are beginning to understand this—like Slack—but there’s still a ways to go.

As McKinsey's Hunt put it, if understanding and implementing company diversity was easy, "everybody would be doing it."

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