Events

Why are we seeing more attention on D&I right now? When we began our recent study with Mercer, we recognized there were many factors driving the emerging market for D&I technology solutions. Here is an excerpt from that study with some of our thoughts on why D&I tech is a market that is gaining so much momentum.

There are numerous trends driving the increased attention on the D&I conversation, not least of which is the changing racial and ethnic mix of the U.S. population. Image 1, below, shows the projected growth of ethnic diversity among younger Americans through 2065.

People between ages 15 and 24 make up close to 20% of the world’s population. Further, by 2025, millennials (those born between 1980 and 1996) are expected to comprise three-quarters of the global workforce. Younger and increasingly diverse populations often bring with them evolving expectations and a willingness to bring D&I to the forefront of societal conversations.

Figure 1: Changing Face of America,1965-2065 (% of the total population) | Source: Pew Research Center 2015 report, "Modern Immigration Wave Brings 59 Million to US, Driving Poplation Growth and Change Through 2065" | Note: Whites, black, and Asians include single-race non-hispanics. Asians include Pacific Islanders. Hispanics can be of any race.

In addition, workplaces are becoming more multicultural with global talent moving across countries and positions. Non-traditional forms of work continue to gain popularity, such as freelancing, virtual work, and short-term project-based assignments.

There is also a shortage of talent that is especially acute in knowledge industries. The financial and business services industries expect a shortage of 10.7 million candidates by 2030, which will continue to fuel this upward trend in global talent interconnectedness. These workplace changes in demographics, non-traditional workforces, and talent shortages are strong forces pushing diversity and inclusion to center stage.

The amplified attention on D&I is also due to its increasingly well-documented relationship to business outcomes. Research shows that more diverse and inclusive organizations outperform those that are not. A survey of 1,700 organizations across eight countries found that organizations with above-average total diversity had both 19% higher innovation revenues and 9% higher margins.

Therefore, organizational leaders are increasingly seeing D&I as critical to achieving financial goals. These trends, accelerated by the rise of #MeToo in October 2017, created a seismic shift in the discussion around sexual harassment that has spilled over into other diversity and inclusion topics such as gender identity racism, ableism, sexual orientation, national origin, age, veteran status, religion, and more. For example, 56% of millennials believe that “business leaders have a greater responsibility to speak out on social issues now than in years past.”

This growing and collective frustration has increased the desire for a new approach to diversity and inclusion.

We’re about two-thirds of the way through our research process for our people analytics technology (PAT) study, so thought we’d provide three initial insights on what we’ve learned to date. (Please note, this research is ongoing.)

And now, without further delay, let’s move on to what we’re learning…

1. It's all about the Benjamins. We’ve known for a while that the PAT market was receiving significant interest from the investment community – a point that was underscored by the $45 million Series D investment in Visier in 2017. However, our analysis of the market shows that interest has continued with great enthusiasm across the last few years. For example, in 2018, Humu raised $30 million and Culture Amp raised $40 million, among others. Earlier this year, Peakon raised $35 million in its series B, and Perceptyx just announced today a strategic investment from TCV, a private equity firm. New players, like Cultivate, are also off to the races with fair-sized seed rounds. There’s also been significant investment in people analytics technologies as a result of people analytics vendor acquisitions where the acquirer intends to invest significantly. Prime examples of this are Glint (acquired by LinkedIn/Microsoft, but had raised $80 million beforehand), Shape Analytics (acquired by Reflektive, which itself received a $60 million series C investment in 2018), and of course, Qualtrics (acquired by SAP in late 2018). And finally, there is Medallia, which just had its IPO last month, which provided it with plenty of cash to invest.
2. Mo’ money… All that money appears to be making an impact, if you ascribe to the idea that more investment should eventually equal more revenue. Now, we aren’t going to spoil the surprise of our research by giving overall market growth numbers here, but we will tell you that nearly all vendors are reporting accelerating revenue growth, with 2019 looking to be the best year yet. In addition to the significant investment mentioned above, additional reasons for this revenue growth appear to be a healthy economy, broader corporate investment in people analytics teams, and people analytics teams’ increased sophistication (and therefore ability to use some of these tools).
3. …Mo’ (user) problems? But there are some challenges ahead. As these vendors grow, they are looking to expand their user bases (the old “land and expand” approach) within existing customers. However, people analytics tech isn’t like a lot of other tech. First, not everyone should have access to the insights available within people analytics technologies – at least not carte blanche. Second, there are a wide variety of users within any given organization who have varying levels of data maturity, which requires different levels of sophistication and customization of dashboards, data structures, and data analysis tools and capabilities. Third, most of the vendors’ technologies were originally built to cater either to really sophisticated people analytics teams or to less data savvy HR business partners.

This combination of issues is resulting in challenges for these vendors as they try to expand their user bases. Essentially, we are seeing:

• Really sophisticated technologies trying to simplify aspects of their tech for a less data-savvy user (but the technology still being too difficult) OR
• Less sophisticated technologies struggling to make their technology adequately sophisticated for people analytics teams to justify the investment (versus those teams building it themselves)

As a result, we’re seeing instances of product/market fit when it comes to secondary users (the ones to whom these vendors must expand their offerings). Vendors are aware of this challenge (in some of our practitioner interviews, less-than-expected end-user adoption rates have come up as a real issue), but the path forward for many of them is not totally clear. We expect we will see some vendors shift their target users or potentially break up their offerings into more discrete packages to make it easier to build for and sell to different users. We see this as being one of the critical issues many PAT vendors will have to solve for in the coming 18 months.

We are analyzing our people analytics technology vendor data, and will be uncovering a lot more insights in the coming weeks. If you’re able to join us at PAFOW Philadelphia, September 5 & 6 for the sneak peek of the results, we strongly encourage you to do so! Otherwise, stay tuned here for more information on this research.

Introduction

It’s old news that gender diversity matters.¹ Yet, while the discussion around and evidence for gender diversity in organizations has grown, the number of senior women – especially women of color² – in organizations has not.

For years, organizations have tried approaches such as mentoring and sponsorship programs for women and providing women-focused employee resource groups. Given that representation numbers remain stubbornly low, we clearly need a different approach.

We think at least part of the solution lies in better understanding employees’ professional connections. Networks, and the informal information they facilitate, are one of the primary ways people learn about career advancement and development opportunities. Research³ suggests that women and men's networks – and the information within them – are different, thus networks could vastly influence opportunities for career development and advancement. Understanding these connections between people – who knows whom and why – could help organizations understand why some employees rise and why others do not.

We looked at approximately 50 academic and business articles, reports, and books to better understand network dynamics, how they differ by gender, and the potential opportunity for technology to democratize or accelerate women's effective use of their networks. This short article will summarize the literature we reviewed in terms of the following:

• What we saw
• What we didn't see
• What we learned

What we saw:

This literature review focused on research covering the fundamental differences between the networks of men and women and the resulting different outcomes. We also reviewed literature on the approaches organizations can use to help women create networks that support their advancement. The findings from this review fell into three major themes:

1. Professional networks are different between men and women
2. Differences in networks result in different outcomes
3. Specific network characteristics matter for advancement

Professional networks are different for men and women

Men and women have different networks, at least partly due to traditional social dynamics⁴. Traditionally, women have been primarily responsible for life at home and, therefore, created more ties with the community, family, and friends. Likewise, men have traditionally been responsible for the financial stability of the family and created more professionally-focused networks.

While these traditional social dynamics have helped shape professional networks, other variables at play in organizations likely have a more immediate impact on the structure and composition of professional networks.

For example, men tend to hold a larger percentage of leadership positions and to be promoted more often than women. As a result, when men move up the ranks in organizations, they are more likely to be surrounded by other men (rather than women) in similar leadership or influential roles. As information and job opportunities tend to be shared within networks, men continue to have better opportunities due to their participation in these networks, perpetuating the gender imbalance at higher organizational levels.

Women, on the other hand, are, generally speaking, less likely to be promoted into senior roles. Those that are promoted tend to find themselves as part of a male-dominated professional network (only one in five C-suite executives is a woman⁵).  Women who do not move into leadership roles often sit in less influential, lower-status positions in organizations.⁶ These positions do not afford women the same connections into higher-status networks, curtailing access to information and sponsorship for better development and career opportunities.

Differences in networks result in different outcomes

While on the surface network differences may not seem like that big of a deal, those differences affect how individuals move around and up through an organization.  There is a tendency for professional networks to be closed, meaning individuals in one group are all connected to each other and the individuals within those networks have access to and share the same information. Therefore, new and unique information often does not flow into the network.

Closed networks tend to impact women differently than they impact men.⁷ For men, as they are more likely to be in networks with others in higher-status roles, information that is shared is likely to be important or strategic, which benefits them. Whereas for women, who are less likely to be in high-power networks, closed networks result in less important, less strategic information sharing.

Specific network characteristics matter for advancement

The literature indicates there are several things individuals should consider when developing networks to facilitate career growth. While these practices are not unique to women’s networks, being aware of these characteristics will enable women to better leverage their professional networks for advancement.

First, women need a small “inner group” of connections who can provide immediate support. Individuals benefit from being a central figure in a close-knit group. The literature indicates that these inner groups are crucial because they create a sense of communality and can tap into a woman’s shared experience.

Second, women need to become “brokers” – people connected to fundamentally different networks that can provide them with new and diverse sources of information.⁸ An individual who can position themselves as a broker between two high-powered groups, or who is directly connected to a broker, has a higher likelihood of accessing unique information and opportunities. The literature also hints that while this is an acceptable and even coveted position for men, women acting as brokers may experience some backlash (which could impact performance⁹).

This brings us to the third characteristic. To counteract backlash, women may also need to become “energizers” in their network. An energizer is someone that engages with others in a way that builds trust, instills a sense of purpose, and fosters an environment of psychological safety where people are not worried that they will be judged or dismissed. Because of this, energizers are presented with new opportunities and information more often than non-energizers. Research¹⁰ suggests that being seen as an energizer is a critical factor in advancement.

What we didn't see:

There were also a couple of thing we expected to see that just didn't show up:

What causes differences

The literature offered little insight into the actual mechanisms that cause differences in networks of men and women. So little has been written on the topic that we found ourselves accessing research in tangential fields to understand how and why these gaps may occur. This gap likely impedes organizational efforts to develop innovative and effective interventions.

Likewise, most of the research geared toward practitioners largely focuses on “fixing” women’s networks through mentoring, sponsorship, and Employee Resource Groups (ERGs). On the surface, these solutions seem like great ideas; however, because they are often not intentionally managed or designed, they may serve as a forum for the shared experience of women rather than a resource for helping women build networks and advance careers.

How technology can help

There was also little research that discussed using technology as a part of the solution to directly address the advancement of women. In fact, we feel that the gaps in current research have impacted the current technology solutions available. While there are technologies with network analysis capabilities, many – if not all – offer only descriptive reports on the structure and makeup of various networks. Descriptive statistics are a good start, but don’t point organizations toward potential drivers of these differences or suggest solutions.

What caught our attention:

In the process of putting this literature review together, we came across several articles that simplified complex ideas, offered unique solutions, or expanded our understanding of the topic.

The first three articles provide insight into social networks, how they impact aspects of our lives including work, and how different groups of women may face very different realities in the workplace. The final two articles are more academic and provide insight into characteristics of professional networks and their consequences for women. We’ve also included a bonus article that highlight network practices that are critical to the success of women in organizations. Finally, a list of additional readings is provided to offer further insight on the topics covered in this literature review.

Social Network Theory: Explaining Society

Tobias Stone

"…understanding the underlying mechanisms of social networks allows you to use them more effectively. Also, this descriptive analysis can explain some of the weirder things happening in our lives."

Highlights:

• Provides a high-level overview of social networks
• Breaks down basic aspects of social network theory and related concepts
• Explains how social networks impact almost every aspect of our lives

This three-part series (provided via text and/or audio) gives an interesting look at social networks and dives into how they impact our world – from happiness to politics. It also asks the question as to whether technologies that tap into our networks are friend or foe.

Mentorship, Sponsorship, and Networks: The Power and Value of Professional Connections

Center for Women and Business at Bentley University

"…when it comes to professional networks, women and men find themselves in very different positions."

Highlights:

• Provides a brief overview of important concepts and the benefits of mentorship and sponsorship to individuals and organizations
• Outlines a framework for understanding networking
• Offers insight on how to establish a mentorship culture for organizations and how to navigate networks for individuals

Not only is this a great review of the current research on sponsorship and mentoring, but it also brings in a network-based perspective. In addition, the list of resources and articles provided is a robust set of materials to help you further understand this topic.

Connections that Count: The Informal Networks of Women of Color in the United States

Catalyst / Katherine Giscombe

"Depending on the work environment, it may be difficult to form relationships at all with dissimilar colleagues, which would then lead women of color to turn to similar colleagues or people from outside the work organization for advice."

Highlights:

• Dives into the increased complexities of professional networks for women of color
• Discusses different network strategies women of color may use when dealing with barriers to organizational advancement
• Provides recommendations for organizations to think past a "one-size fits all" mentality when addressing the professional networks of women

This article highlights the complex network challenges that women of color face. It forces the reader to see that solutions designed for women do not always apply to all women and solutions should not advance one group of women over others.

Do Women Suffer from Network Closure?

Mark Lutter

"Females … have a higher risk of career failure than do their male colleagues when affiliated in cohesive networks, but women have better survival chances when embedded in open, diverse structures."

Highlights:

• Discusses the importance and impact of social capital, along with the two main ways that social capital is built (or borrowed) – cohesive and weak ties
• Illustrates differences in female and male networks and the practical impact that has on women's careers

This is an examination of how women's networks impact career advancement and is an example of what other research is starting to uncover.

To Land Top Jobs, Women Need Different Types of Networks than Men

Kellogg Insight

"While it's true that highly connected women tend to land better jobs, the most successful women also have something they cannot get through ‘beers with the boys’…"

Highlights:

• Summarizes the findings of a recent empirical investigation¹¹ on the impact of differences between men and women’s networks among MBA students
• Illustrates that women need a fundamentally different network to find career success
• Discusses the difference in business networking between men and women

If you can get your hands on the original empirical article that this summary is based on, we highly recommend it. However, if you cannot, this overview hits all the major points and interviews one of the researchers to add context.

Bonus: Invisible Network Drivers of Women’s Success: How Successful People Manage Collaborative Overload

Inga Carboni, Rob Cross, Aaron Page and Andrew Parker

“If the ultimate goal of gender diversity efforts is to build organizations in which employees work together and evolve as professionals without regard to gender, then let’s focus on the relationships themselves.”

• Suggests that understanding gender diversity requires organizations to think beyond implicit bias
• Presents the BEST model to help organizations understand the critical networking practices that distinguish high-performing women, including boundary-spanning, efficiency, stickiness, and trust
• Provides a number of tips for organizations to put their findings into practice

Additional Reading:

• • “What’s in the ‘old boys’ network? Accessing social capital in gendered and racialized networks,” S. McDonald, 2011.

• “The role of organizational network analysis in people analytics,” David Green, 2018.
• “Women and the labyrinth of leadership,” A. Eagly and L. Carli, 2007.
• “Why women build less effective networks than men: The role of structural exclusion and personal hesitation,” E. Greguletz, M. Diehl, and K. Kreutzer, Human Relations, 2018.
• “Taking gender into account: Theory and design for women’s leadership development programs,” R. Ely, H. Ibarra, and D. Kolb, INSEAD, 2011.
• “Gender, brokerage and performance: A construal approach,” R. Brands, Academy of Management, 2019.caut

In this Research:

Diversity and inclusion is not a new idea for today's corporations, but over the last 18 months, the slow D&I burn has turned into a flashpoint, in part due to the #MeToo moment. Leaders across organizations are asking: "How can we systematically challenge the status quo, and build a more diverse and inclusive workforce?"

It is upon this foundational question that technology companies have begun to construct dozens of new and innovative ideas to support equity, diversity and inclusion in the workplace—recognizing that new technological capabilities, paired with this increased urgency, represents an opportunity to address D&I challenges in novel ways.

Back in March 2018, I posted to LinkedIn what I thought would be a rather quickly forgotten question: What technology had others seen that focused on improving diversity and inclusion (D&I) in companies? The response was huge, with lots of people I'd never met sharing how their company was using technology to tackle diversity and inclusion in ways that I'd not even dreamed of. Clearly, something big was happening – so the question turned into a quest to understand this new market.

We've ended the first 2 phases of that quest with the publication of our research on D&I tech, Diversity and Inclusion Technology: The Rise of a Transformative Market, which we, RedThread Research, have completed in partnership with Mercer.

Let me take a step back and tell you why I was even asking the question. Years ago, I'd asked folks what vendors they used to help with D&I. Most people just scratched their heads, and said, “Huh? I don’t understand what you mean.” So, I went about my merry way working on a study that ultimately focused on D&I practices, with no technology component.

Post #MeToo. Post many public D&I missteps that cost executives their jobs and companies their stock prices. I thought, surely, now, there must be technology focused on this space. But I just hadn’t read that much about it.

I started talking to a lot of people about this topic and found that it resonated with many of them. One of those people was Carole Jackson, a former colleague and current Principal at Mercer, focused on their When Women Thrive research. We found a shared passion for this topic and we agreed to partner on this research to bring a heightened understanding of the D&I technology market to both vendors and customers.

So, what began as my simple question ended up turning into a quest to find as many technology vendors focused on D&I as possible – and document who they are and what they do. Why? Three reasons:

1. This market is exploding with new vendors – Our study has nearly 100 in it (and that's in just this 1st phase of the research) and many of them have only started within the last 3 years. Given this, organizational leaders need to better understand the innovative technology solutions available, and technology vendors need to see where opportunity for new products and solutions exists.
2. D&I technology has the potential to be a disruptor – Structural biases hide in our processes and behaviors and, applied correctly, D&I technology can enable scalable, consistent treatment of people decisions while also alerting users to previously hidden patterns of bias. That said, our glasses are not so rosy as to blind us to the potential limitations and even detrimental impacts of D&I tech.
3. Too little information is available on the market – The folks over at Gartner have written a report on this topic, but not everyone can access that. Further, focusing on the question of “If There’s Too Much Diversity Tech?” doesn’t give folks insight into the range and capabilities of D&I tech. We wanted to do an in-depth study that would help vendors and buyers truly understand the market.

To that end, our study answers 5 questions:

1. What is D&I technology?
2. Why are D&I technologies coming to market right now?
3. What are the benefits and potential risks?
4. What types of D&I technologies exist?
5. Who are some of the players in the different D&I technology categories?

This report is a both qualitative and quantitative study that summarizes the D&I tech market landscape, based on a vendor and customer survey, customer interviews, and the feedback we received. It also includes an interactive market map tool that allows readers to quickly understand which vendors are in the market.

THANK YOU! To everyone – practitioners and vendors alike – for participating in this research! We hope you'll continue to be part of the D&I tech conversation going forward!