Google Refuses to Link Executive Pay to Diversity
- Only 2% of Google’s workers are black
- African Americans make up 7% of the U.S. high-tech workforce
Alphabet (GOOGL +0.72%) Google’s parent company has turned down a request from its employees to increase diversity. The request would have tied executive compensation directly to diversity benchmarks. When will tech companies start to truly understand the importance of diversity as a direct correlation of their overall success?
Why This Matters: Google has long been embroiled in clashes that have to do with race, gender and diversity. An employee and investor initiative to promote greater diversity at Google was voted down at the latest shareholder meeting. The request would have tied executive compensation directly to diversity benchmarks. Shareholders and employees said a lack of diversity could make it difficult for the company to hire and retain workers, posing a long-term risk to its ability to innovate.
McKinsey & Company research shows companies in the top quartiles for gender and racial/ethnic diversity were more likely to have above average financial returns. Only two percent of Google’s workers are black, a figure that has remained static for the past three years. Google’s head of HR operations noted the company remains committed to an internal goal to reach “market supply” representation of women and minorities by 2020.
The problem is much bigger than just Google. For eight of the largest U.S. tech companies, the portion of black workers in technical jobs increased to 3.1% in 2017 from 2.5% in 2014, according to data compiled by Bloomberg News. The latest data from the U.S. government released in 2016, reinforces the point that blacks made up seven percent of the U.S. high-tech workforce, and just three percent of the total Silicon Valley workforce.
What’s Next: Google still has questions to answer about inclusion and workplace equality. Will they have a change of heart much like Amazon (AMZN +0.30%) did regarding recruiting more diverse board members? Look out to see how this topic is addressed at the next investor meeting.
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