Was 2016 the Breakthrough Year for Women in Tech?

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Executive Summary

To view and download the full infographic, click here.Since Google’s revelation about the lack of gender and racial diversity in their payroll, a harsh truth in the startup community has come to light. Women, and especially women of color, are disproportionately underrepresented in the technology industry. And as the sector grows to 6.7 million jobs this year, it is now more important than ever to understand why there simply aren’t enough women in tech.In 2013, The Muse, in association with Women in Tech, published a report reflecting the huge potential of female entrepreneurs and employees. For example, Fortune 500 companies with at least 3 female directors have on average 53% higher returns on equity, sales and invested capital. While this is a game-changing statistic, we haven’t educated businesses or startups on how to take advantage of this. By contrast, this special report will give tangible recommendations that companies can implement to create a positive working environment for women (and men) to thrive in.Drawing on the latest data from NCWIT, Anita Borg Institute and Deloitte, we will evaluate whether there have been any improvements for women in tech in 2016 and what this means going forward. We will also look at the context behind the numbers, examining the opportunities for women in education, employment and running startups. Note that it is important to understand the distinct challenges that each of these groups faces, whether it be access to flexible working or to investment.The takeaways will not only inform individuals but also businesses that are looking to hire or adapt their culture to value women in their organizations. Each of these learnings is backed up by research, tested amongst the most pioneering companies in the space and proven to challenge the conventional wisdom that is currently halting progress.Here are 5 high-level findings to get you started:

  1. There has been a 21% increase in undergraduate women interested in majoring in computer science, but at the current rate, the US will only be able to fill 29% of computing jobs by 2020.
  2. There is a 50% attrition rate amongst women in tech, from entry-level to executive, mainly due to poor work-life integration and environment.
  3. In Silicon Valley alone, men are 2.7x more likely to be in a leadership position than women, who are much likelier to get “stalled” in the workplace.
  4. Industries outside of technology have employed more women software engineers than the tech industry have.
  5. Amongst startups, 38% of new businesses are started by women, but only between 2-6% of those founders receive venture capital.

Foreword: Meritocracy is a myth

Before we dive into the analytics, it is important to break down some of the key assumptions that skew our approach to the tech gender gap.The first question many ask is: “Should it not just be the person with the best talent who gets the job?” Sequoia Capital’s longtime investor, Michael Moritz, made the same argument last year claiming that the problem lies with a lack of women coming through the education system. In short, tech companies would be hiring more women if they were “good enough” and there were a higher proportion of them in the industry.The idea that there aren’t enough women who are “good enough” to be investors or entrepreneurs is incredibly damaging and based on the belief that the working world is a level playing field - one where anyone can flourish regardless of their gender or race. Unfortunately, this isn’t the case - meritocracy, in any industry, is a myth.Society as a whole is not gender-invisible - women, including those of color, have experiences that shape their lives differently and face different prejudices. If we ignore these realities, by not accommodating the needs of different groups, it creates an unnatural working environment. For example, women are much more likely to handle childcare responsibilities, and therefore would benefit from a more flexible working schedule. However, this is often overlooked by companies and so many women are forced to make tough decisions that men almost never have to consider.This is just one example of how implicit bias towards men affects working women. When 1 in 3 CIOs believe that women are not underrepresented in tech, it creates a worrying loop where gender diversity is encouraged in principle, but not executed in practice.This is why we need a positive approach to gender diversity in tech circles. It isn’t enough to approach this conversation as purely hiring or promoting more women. We must create spaces in which women can progress, feel as valued as their counterparts and are able to make worthy contributions. The fluid nature of startup and small company structures could pioneer this approach - but first, let’s find out what the historic picture looks like.

The historic picture

We can expand this topic into three chunks. The first is the pipeline for women in tech which is the education system and specifically girls studying STEM subjects. The second is the industry as a whole, focusing on the number of employed women in technical positions. Finally, we will look more closely at startups and venture capital to see whether they buck the trend.According to Girls Who Code, 74% of girls in middle school express an interest in STEM (science, technology, engineering and mathematics) subjects, but only 0.4% go on to major in computer science in college. Moritz may have a point - the pipeline for women in tech seems to be dangerously thin at a college level. In context, this is even more worrying, as the U.S. Department of Labor projects, at the current rate we will only be able to fill 29% of computer specialist jobs by 2020. Although there has been some improvement, the lack of women specializing in tech is a symptom of many not seeing a future in the industry. Fewer tangible role models often deter many middle-schoolers from even considering this as an option.Unsurprisingly, in industry, this does not improve. A survey of the biggest tech companies from the last two decades shows a shocking bias towards men. While there is more of a balance in non-technical roles (HR, marketing, finance), on average, only 21% of women hold technical positions. The figures are even worse for Black and Hispanic women, with only 1-8% of them being represented. Considering that these days 53% of the workforce is technical, everyone is essentially a ‘tech’ company, so we need to start paying more attention. In leadership positions, for example, the number of Fortune 500 female CIOs has fallen from 24% to 17%, which demonstrates a worrying trend if not reversed soon.Amongst startups, 38% of new businesses are started by women, but only between 2-6% of these founders receive venture capital. Therefore, it shouldn’t surprise you that 86% of venture-funded businesses have no women in management positions. There are many theories as to why this is the case, but Pitchbook notes that only 9.7% of partners at VC firms are women. As Ethan Mollick, management professor at Wharton, says: “There is a problem here, and ‘leaning in’ is not enough to solve it.” The only way to tackle this is to change the culture of how we perceive and invest in women-led startups. And we need to do it now.

How can we stop women leaving the industry?

When discussing this question, it can be like asking how long is a piece of string. There is no all-encompassing reason why women choose to leave the technology industry, however in our discussion, we’ll look holistically at the working environment and how we can improve on various areas within. We have condensed it down into three core parts: recruitment, retention and promotion. Let’s take a closer look at the nucleus of each stage and investigate how we can reverse the trend.RecruitmentA study of LinkedIn examining millions of profiles across a dozen industry groups found that industries outside of technology employed more women software engineers than the tech industry. Moreover, 64% of employees recommend candidates of the same gender and 72% the same race or ethnicity. Deloitte has shown various studies from multiple countries showing that both men and women are twice as likely to hire a man for an IT job as an equally qualified women.As we have already discussed, this is driven in part by hegemonic gender biases. The only way to deal with this is to implement gender diversity practices into the everyday working environment. This is backed up by an investigation of 500 US businesses which found that companies with more race and gender diverse teams had higher sales revenue, more customers, greater market share, and greater profits than did less diverse companies. By including formal and informal training, it includes both men and women of all races in the conversation and this has a big effect on the bottom line.RetentionAccording to NCWIT, across the board, there is a 50% attrition rate amongst women in tech, from entry-level to executive. The two main reasons for this are due to working conditions (30%) and work-life integration (27%), although most women were not leaving based on family issues. Research suggests that women were less likely to report opportunities for training and development, support from a manager, and support for balancing work and other competing responsibilities. They were also more likely to report undermining behavior from managers (Fouad, Singh, Fitzpatrick and Liu, 2012).Successful companies found that including flexible work and remote working opportunities has made a difference, with 49.4% of workers embracing this practice. Paypal is a great example of this, offering “returnship” programs that give women, who have taken long absences in the industry, a route back into the fold with multi-level support. Interestingly, mid-level employees have reported that managers can make such opportunities difficult to access even though they are a part of formal company practices (Simard et al., 2008). In this vein, it is essential to make it clear to all employees that these opportunities are available and ensure your managers are discussing them in an inclusive fashion.PromotionThe Centre for Talent Innovation reported that 76% of STEM women consider themselves to be very ambitious - 62% are seeking a C-suite or senior management position in the future. However, only 25% actually make it to this level and many are reported to feel intrinsically less capable than men in their companies. In Silicon Valley alone, men are 2.7x more likely to be in a leadership position than women (Simcard et al, 2008). The biggest proportion of women who feel stuck in the workplace are ages 25-34 and this is particularly true of African American women - 48% of which feel “stalled” in the workplace.The biggest reason reported by mid-level women is that they feel “invisible” to higher levels of management. Although they have the ambition to progress, their efforts are often glossed over or unseen by their supervisors, in favor of men. One prominent explanation is women experience a “family penalty” where they are less likely to to be offered more important or higher responsibility tasks, because managers assume that they will take more time off for family responsibilities or maternity leave.In order to counteract this, the Anita Borg Institute, a nonprofit which specializes in research to advance women in technology, recommends enabling these women to have mentors or sponsors that will increase their visibility and confidence. On average, women with sponsors are 10% more likely to ask for visibility and report satisfactory pace in their progression.However, it is vital that both executive men and women take on this responsibility, as noted by an anonymous Fortune 500 executive, “85% of our leaders are men in this company, and if they are not advocates, then the culture won’t change - we won’t have the right environment.”

Was 2016 the breakthrough year?

In short, no. But there was an improvement in the numbers and the sentiment has been improving rapidly. There is plenty to be optimistic about and we predict that as more companies make progressive changes to their culture, the long-term picture looks a lot more hopeful across the board. Here are some of the highlights:

  1. There has been a 21% increase in first-year undergraduate women who were interested in majoring in computer science between 2000-2015 (NCWIT)
  2. Across participating companies, women held 21.7% of technical roles in 2016 - a 0.9% increase over the 2015 average (Anita Borg)
  3. Representation have grown at all levels - entry, mid, senior, and executive - since 2015 (Anita Borg)
  4. Of 2,813 people (47.5% women) who responded to a survey in technical companies, 84.8% of women and 77.2% of men strongly believed that mixed gender teams are more productive, innovative and creative (NCWIT)
  5. Women are starting approximately 1,288 companies each day, up from 602 in 2011-2012 - a 68% increase (and 2x the growth rate of men) (Women in Tech)
  6. The representation of women is now 33.5% among startups and tech unicorns - a 6 percent increase since 2011 (IB Times)
  7. Startups with women executives are 3x more likely to receive VC funding compared to 15 years ago (Women in Tech)

However, while there have been successes, there are some areas that are cause for concern:

  1. Women make up only 4% or 20 of all CEOs in S&P 500 co. Of these 20 women, 5 are in tech-related industries (HP, IBM, Yahoo, Oracle, Xerox) (2014 Harvey Nash CIO Survey)
  2. Younger SET women “simply don’t see a future in the field...leaving companies without a crucial tranche of talent to train and without young role models to attract the next class of female graduates” (NCWIT)
  3. There are fewer data points on women in color and it doesn’t appear at all in the IB Times study, conducted by 500 Miles. It is important for future research that we understand this demographic better because intersectionality is often overlooked.

Conclusion: The potential exists, let’s exploit it now

For some, these numbers are pretty depressing. However, they do create an opportunity for pioneering companies and investors to really exploit the potential of women in tech. According to RAD, if women business owners in the US formed a country, its GDP would rank 5th globally. In the US alone, there are nearly 10 million+ women founders - that is more than anywhere else in the world. Women-led businesses are also likely to bring in 20% more revenue with 50% less money invested.Some of the biggest names in tech like CISCO (Sandra Lerner), Care.com (Sheila Lirio Mercelo) Bebo (Xochi Birch) and Slideshare (Rashmi Sinha) have been founded and sustained by women. It is impossible to include them all but there are plenty of names here; as well as a list of female angels and early investors in women; and some promising figures on women-led ventures.As we have mentioned - by seeing the benefit of and encouraging gender diversity practices; promoting flexible working whilst using inclusive language; and taking the onus ourselves to invest, sponsor and make women in tech more visible - we have every opportunity to add more names to this list.The choice is ours - the more women there are in tech, the more the industry will flourish - now is the time to stop thinking about it in principle, and start delivering it in practice.

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