Last week I wrote about starting a new diversity and inclusion initiative from scratch. I briefly mentioned the buzziest new term in diversity and inclusion: diversity tech. Diversity tech is what happens when some of the smartest start-up minds in our country work on one of the most intractable problems of this century – increasing diversity and inclusion in the workplace.
Diversity tech includes companies that focus on recruitment like Textio, Blendoor, Teamable, and GapJumpers. The range expands from there. One startup, Glassbreakers, sells enterprise software to companies to improve their inclusion and retention. Another, Allie, allows users to anonymously report incidents of microaggressions instantly to HR. Includeed lets employees and employers share a company’s diversity and inclusion efforts and shares those reports on a publicly searchable database. And ColorStock offers stock photos featuring people of color, something any user of stock photos knows is desperately needed.
But how effective are these talent development diversity tech solutions? Yes, we can implement blind hiring technology, but what’s the short and long-term effect of that change, both to a company’s composition and its performance? That’s the need another start-up sought to fill.
Aleria uses what they call a “people-centric” analytics approach, combined with a software platform that utilizes computer simulations, to help organizations plan, execute and measure the impact of diversity & inclusion programs.
I recently interviewed the founders of Aleria, about the whys of their business and the future of this new diversity tech world. Ellen Hunt is a financial services veteran. Her business partner, Paolo Gaudiano, has long worked in analytics and AI. Together, the two of them are going to transform how companies perceive diversity, using quantitative analyses, technology, and performance as the guide. Here’s a lightly-edited transcript of our conversation.
Why the quantitative approach to diversity?
If I came to you and said, “I want to manage your finances. There’s a company called Google. I’m going to put 100% of your retirement funds into Google stocks.” You probably wouldn’t hire me. And likewise with advertising. If I said, “Oh, we’ve had TVs for 60 years or more, why are you wasting time on Internet ads, just use your money in TV,” you would say, “You’re crazy!” But if I come to you and say, “White men have been doing really well in this business for the last century so I want 95% of my board and executive team to be white men,” you would have no answer for why I shouldn’t do that. People don’t know how to counter that kind of argument. And the reason for that is because whereas in portfolio management, advertising management, baseball team management, people have found a quantitative link between diversity of portfolio and performance, that quantitative link does not exist in talent development.
What is the relationship between diversity and performance?
The success of any company depends on its ability to (1) attract talent; (2) retain talent; (3) operate efficiently; (4) appeal to its marketplace – the four pillars of performance … Diversity impacts each of these pillars, and it does so in complex, sometimes unintuitive ways. For instance, a more diverse hiring team can reach a more diverse pipeline, giving the impression of improving talent attraction; but if management does not know how to deal with a multicultural team, the new recruits may not feel included, which can reduce operational efficiency, and reduce retention as they leave the company after a short time. This in turn can have a negative impact on talent attraction, as the company may receive negative reviews and gain a reputation as not being inclusive. These kinds of ripple effects can appear in many ways, and are almost impossible to predict without a formal way of capturing all the causal links that exist within each organization.
What should companies seeking to improve diversity and inclusion focus on when reviewing their structures and policies?
While we love some of the “point solutions” that address specific aspects of recruiting and retention, we believe that the biggest problem arises from the kinds of complex interactions and ripple effects that we mentioned earlier. People have a tendency to look for “silver bullets”: a few years ago everyone talked about pipeline and quotas; then the conversation shifted to inclusion, and to unconscious biases. But ultimately, each organization is a unique, complex ecosystem that includes not only its employees, but also its clients, competitors, suppliers, regulators and so on. And any complex ecosystem can give rise to “emergent behaviors,” that is, unexpected results that depend on all the interconnections in ways that cannot be predicted when looking at any single initiative in isolation.
One of the common effects of a big diversity and inclusion push, is often a push back from majority employees. How can an analytics approach help with that?
People undertake diversity initiatives without really understanding the outcomes. If things go wrong, it leads to negative sentiments within the company, and it allows skeptics to say “see, we tried but it did not work.” As a result, careless attempts to be more diverse, no matter how well-intentioned, run the risk of backfiring and causing negative sentiment. This is why it is so important for leaders to learn the quantitative link between the actions and behaviors of their people, to the performance of the firm as a whole, and why it is important for leadership to be directly involved.
Speaking of diversity and tech, what response do you have to people who argue that diversity doesn’t matter, and cite all of the Silicon Valley companies making billions without having much diversity?
We saw this study on AI where a huge percent of the developers are men so it reflects one group of people and it does not take into account how women behave. You’re developing all of your focus based on what you know and you experience which does not necessarily apply to a wider audience … By having more voices at the table, having a diverse thought process, you’re widening your lens. And it’s not just product innovations and opening up new markets. It’s also a major support to risk management. When you have multiple people looking at the same problem from different angles, you’re more likely to be able to see some of the unintended consequences and begin to solve for it, before it’s too late. And the second element of all of this: our population is changing and we are part of a global society. Without this diversity of thought and voices, how do you remain relevant as a company? What risks does this pose to you if you don’t recognize it and leverage it?
Thank you to Ellen and Paolo for talking with us about the need for a quantitative approach to diversity and inclusion. You can learn more about their organization, Aleria on their website or follow them on their Forbes Magazine blog posts.