Alphabet can’t give up on China, home to the biggest Internet market in the world. Source: Shutterstock

Why businesses should pay attention to Google’s diversity problem

GOOGLE has a “woman” problem – the company’s current scandal is revealing valuable lessons about why businesses can’t simply shrug off issues of diversity, and why businesses need to rethink how they approach these problems before they begin impacting their bottom lines.

Google has been at the center of a media firestorm that has featured the collision of opposing political viewpoints in the tech industry. The technology world has always had a problem when it comes to issues of gender parity, and it all came to a head with the revelation of an anti-discrimination memo, penned by a now-former Google engineer, that made the rounds first internally, before being leaked to the general public.

Within the memo, the engineer, who has been identified as James Damore, argued the central reason why women are not prominently represented in the tech industry because biological differences impact work productivity. His argument included a panning of Google’s diversity policies he said are creating a “politically correct monoculture” within the search giant.

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As of Monday, Damore had been fired and Google is currently in the process of managing the fall-out. Google CEO Sundar Pichai cut short a planned holiday and is due to address the entire company today. Furthermore, brand new Diversity Officer Danielle Brown, formerly of Intel, was quick to respond to the issue with a memo of her own – released by Motherboard – decrying Damore’s comments as perpetuating “advanced incorrect assumptions about gender”.

“My initial thoughts of the memo were that this person has been hurt in some way, I’m not sure how but for him to write what he did wasn’t to inform people of ‘facts’,” Casie Millhouse, director of the Singapore branch of SheWorx, said to Tech Wire Asia. SheWorx is a global coalition of female entrepreneurs which is working towards redefining leadership.

“What he said was not OK. I’m all for freedom of expression, but in a company context, and criticism towards initiatives Google is spearheading to promote inclusion, perhaps this could have been brought up in the correct channels in the organisation.”

The entire affair hits squarely at the tech world’s diversity problem and throws into high relief the various sexual harassment battles that are currently taking place all over Silicon Valley. But it also serves to highlight the long journey everyone in the tech industry still has to reckon with when it comes to the welfare and treatment of their workers, particularly those from minority groups.

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Google is currently battling the United States Department of Labor on accusations of perpetuating systemic pay inequality within the company. In its recently released diversity report, Google has performed abysmally, with the number of black and Hispanic workers coming in at three percent each, despite a workforce expansion rate of 43 percent.

There’s an impulse to think these are context-specific issues, ones isolated to Google’s own environment. But let’s be clear: Damore’s comments did not emerge in isolation, but is rather a product of an endemic problem embedded within the tech and business industries.

Leadership positions and engineering roles in technology companies are overwhelmingly represented by white and Asian men, and this is the reality that is pervasive throughout the tech industry. According to Recode, Twitter features the highest number of women in leadership positions and that still only makes up to 30 percent of the entire pie – the numbers get more dismal when taking into account women in tech-centric roles, which Amazon tops at 26.7 percent.

Those numbers represent the overall totals in multinational tech companies, but Asia’s business scene doesn’t get off easy either – women are still largely missing from the upper echelons of leadership, though the numbers fluctuate depending on the country you’re looking at. According to a report by The Economist and Willis Towers Watson30 percent of companies all across Asia Pacific have zero female board members, while only nine percent have female CEOs.

SEE ALSO: Indian IT firms improve gender diversity but need more women in the boardroom

So, as you can imagine, the business world has a bit of thinking to do when it comes to the issue of women in business, tech and various other industries. It’s true women are much more likely to drop out of the labor force than men, despite nearly 50 percent of women saying they are either the main breadwinner or co-breadwinner.

Why you should care

This is a political issue, but it’s also a serious issue for businesses to really think about. Failing to foster a positive work culture could cost businesses a lot in terms of time, resources and effort. Profits are important, but even successful businesses can’t go on without a strong workforce (even if the robots are coming for us).

If you’re running a business, you could very well brush this entire issue under the rug and tell yourself re-configuring the demographics of your business is less important than figuring out how to squeeze as much out of your current one. Except for one glaring problem: diversity of all forms is good for business.

SEE ALSO: EverYoung ‘rebels’ against S. Korea’s corporate culture, hires senior employees

Last year, the Peterson Institute for International Economics and professional services firm EY released a study that found companies with leadership that was 30 percent female saw profit margins rise by six percent compared to those with no C-suite female leaders. And contrary to Damore’s claims, the study could find no difference in performance between male and female CEOs.

Companies have a vested interest in hiring more diverse workers because it drives higher profit margins. Source: Shutterstock

Research from consultants McKinsey and Co. revealed workforces that are more diverse tends to perform in the top percentile in terms of financial returns; racially diverse workplaces earn 35 percent higher revenues while gender diversity pushes them up by 15 percent.

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The reason why diversity drives higher returns is simple: people from different background, from a variety of lifestyles and experiences, will foster an environment of innovation, of creativity, and constructive competition. Diverse workplaces are good for business because diversity is all about a variety of talents, ideas and methodologies.

“More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision-making, and all that leads to a virtuous cycle of increasing returns,” the McKinsey report said.

That’s why you should care.