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Ensuring Women Thrive: An Imperative for the Technology Industry

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The world looks to the technology sector as a lens through which to view the future. Touching almost every corner of the globe, the tech industry has changed the way the world works and interacts. Its ability to create customer demand and stay ahead of the competition—while managing globalization and increased regulatory demands—has drawn top talent to the industry.

From office perks to workspace amenities, tech’s approach to attracting and retaining talent has been admired and emulated by other industries.

Yet, while technology companies have focused much attention on developing comprehensive diversity and inclusion programs—and as we celebrate International Women’s Day today—there is still much progress to be made in building a gender-diverse workforce.

Indeed, the predominance of men in senior positions in tech is symptomatic of broader issues within the industry. Overly narrow criteria for advancement, outdated leadership models, limited flexible-working practices, and biases in talent management all contribute to a lack of diversity.

According to Mercer’s newly released When Women Thrive—Technology Industry Perspectivewhich focused on 53 IT or high-tech organizations among 583 companies surveyed across 42 countries, including data on 3.2 million employees—women represent only 18 percent of the average tech firm’s executives, and comprise only 34 percent of the industry workforce. That’s more than 10 percent less than female representation in the overall global workforce.

And while the average tech firm is projected to grow the representation of women in executive roles from 18 percent to 40 percent over the next decade, given a positive trend in promotion and retention rates, female representation at the professional level and above is projected to decline from 34 percent to 31 percent, given lower hire and promotion rates further down the talent pipeline.

For any industry, moving backward in terms of gender diversity should not be an option, especially not for an industry fueling much of the innovation and advancements of what’s known as the Fourth Industrial Revolution. The advent of robotics, artificial intelligence and other technological breakthroughs are expected to transform labor markets and significantly displace jobs. The World Economic Forum’s The Future of Jobs report estimates that between 2015 and 2020, 35 percent of core job skills will change, while some jobs will disappear altogether and new jobs will be created. Unfortunately this disruption, rather than helping women, is likely to further interrupt progress toward gender equality.

A diverse workforce delivers product innovation aligned to the needs of varied customers; positive brand image; and unique insights, knowledge, and experiences. Higher female representation in the workplace is also linked with better financial performance; higher return on sales, equity and invested capital; higher operating results; and better stock growth. A recent study by Intel concluded that closing the global technology industry’s female leadership gap could add between 0.5-0.6 percent to the global GDP. That’s equal to a $430- to $530-billion-dollar boost in global productivity.

Tech organizations need to align on why gender diversity is critical for their business—or face public scrutiny.

Not only is the technology industry lagging in gender diversity, it also faces tremendous public scrutiny and demand for improvement in achieving gender-diversity goals. Many leaders, board members, and investors within the tech sector have spoken passionately about the gender challenge. Generally, these leaders point to the value of diversity in driving product innovation, proactively engaging women to join the sector, and the importance of compensating women equally.

Such a level of engagement from CEOs, combined with a reputation for innovation and agility, uniquely positions the tech industry to lead the way in developing and fully leveraging a diverse workforce. Given that the growth of tech firms is predicated on serving increasingly diverse markets and customers, the sector can ill afford to ignore that women account for 85 percent of all consumer purchases, buying fully two-thirds of personal computers, while more than 90 percent of young adult women are involved with home electronics purchases. Yet 76 percent of women question whether most tech companies understand their needs.

Where, then, should tech organizations focus in order to make sustainable improvements? Here are our recommendations, based on Mercer’s When Women Thrive research:

Engage Leaders, Managers and Men

To make more rapid progress on gender diversity, change needs to be driven from the top of the organization. This means leadership, ownership and accountability from the board, CEO and senior executives. In addition, our 2016 study shows that the active involvement of management and men in diversity and inclusion initiatives is a critical success factor when it comes to ensuring that women thrive in the organization.

Actively Manage Flexible Work Programs

Starting and/or maintaining a family can impact the retention and career development of employees. In response, many employers now offer the flexible work and leave programs that employees want and need. Although companies like Netflix and Facebook have been leading the way in introducing broad family leave programs, the reality is that the majority of tech companies still lack these programs. And yet, simply having the programs is not enough—managers must be trained in how to properly support their colleagues who use these programs.

Focus on Talent Pipeline and Career Trajectories

Many organizations in the tech industry have focused their recent diversity efforts on building a strong executive team. Although attention at the top is necessary, the failure to focus further down the pipeline means representation of women at the professional level and above will actually fall between now and 2025 if organizations don’t make improvements.

Tech firms need to focus on systemic, supportive practices that are rigid enough to withstand scrutiny, yet flexible enough for individual situations. This will build the female talent pipeline and sustain gender equality in the long term. In part, this means increasing the prevalence of women in profit and loss roles, which has long been important for career advancement in tech firms. Only 35 percent of tech organizations participating in our When Women Thrive research agree there is equal representation of men and women in roles with profit and loss responsibility.

Review Processes for Potential Bias

Although direct and overt hostility toward women is no longer the barrier it once was to career progression, barriers can still exist based on deep-seated, possibly unconscious biases about what it takes to perform at the top of tech firms—biases that disproportionally disadvantage women. Organizations must therefore review their talent management and pay processes to reduce and eliminate these barriers.

For example, our research found that organizations with a robust pay equity process and a dedicated pay equity team have greater female representation. Yet among tech organizations, we found that only 26 percent review performance ratings by gender and less than half (41 percent) make pay equity adjustments as part of their annual compensation review process.

Develop a Holistic Strategy to Address Women’s Unique Needs

To make progress, tech firms need to consider the holistic needs of their female workforce—their careers, of course, but also their health and financial wellness. Although our research points to the benefits of implementing programs to help women manage their critical health and wealth needs, few organizations have done so.

Our research found that female representation increases when organizations understand and support women’s health needs. Women have a unique relationship with health care (as patients, caretakers and decision-makers) and 56 percent of tech firms agree that supporting this unique relationship is important in attracting and retaining female talent. But only 23 percent of tech organizations actually conduct analyses to identify gender-specific health needs in their workforce.

Gender-specific financial wellness practices also drive better future representation of women. Women face a perfect storm financially because they tend to work in lower-paid employment than men, have more significant gaps in service and live longer than men, and therefore need retirement savings to last longer. Yet, less than 10 percent of tech organizations offer retirement programs customized for the behaviors and needs of different genders or monitor savings and investment choices by gender.

To break through the inertia and advance women, technology organizations need to align on why gender diversity is critical for their business, diagnose what is helping and what is impeding their efforts, engage their stakeholders to champion progress, and take action to ensure the right practices and processes are in place to support their female employees. The issue is urgent, and the time to take action is now.

Patricia A. Milligan

Senior Partner and Global Leader, Multi-National Client Group for Mercer

Pat Milligan is senior partner and global leader, Multi-National Client Group for Mercer.  She also currently serves on the World Economic Forum Global Agenda Council.

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