If you want to build a meritocracy, diversity is the tool.

In my recent blog post, I suggested that one of the best ways to promote greater diversity is to create formal sponsorship programs for women and underrepresented minorities. This led to a conversation about the belief that creating programs that specifically support (or exclude) groups of people will undermine the natural order of meritocracy that exists within the status quo or the “no one gets special treatment” model.

Meritocracy, or the belief that those who deserve to succeed will, as an argument against diversity initiatives is founded in the belief that the current system adequately reflects a true meritocracy. Given the lack of representation of women and minorities in higher level management throughout the business world, this defense of the status quo, by its very nature, assumes that women and minorities are somehow universally less qualified and, therefore, less deserving of success than their white, male colleagues.

The interesting thing about this argument is that it doesn’t actually serve the idea of meritocracy. We already know that competition in a free market increases the overall value to the consumer, either via better quality product, faster service, or cheaper delivery. However, we also know that the labor force, like most capitalist markets, is not a true “free market” in that there are barriers to entry that are greater for some (women and underrepresented minorities) than others.  If we were to remove or reduce those barriers, a true meritocracy would cultivate the best of the best talent without regard to skin color, gender, sexual orientation and identity, age, etc.  Increased competition in the workplace actually increases the overall value to the business, the quality of output, and the more efficient delivery of innovation.  Therefore, it’s safe to posit that diversity initiatives that help reduce barriers to advancement for women and minorities are good for business and support the concept of a true meritocracy.

However, this concept of increasing fairness via “leveling the playing field” is only valid if you accept that women and underrepresented minorities are actually disadvantaged by the existing system. There are still those who refuse to believe even the most solid data and peer-reviewed research studies that clearly show a pattern of discrimination and systemic oppression affecting these groups.

So, why does this happen with otherwise reasonable and logical people?

“Statistically speaking, just being male will automatically give you a leg up. And no one wants to believe that they achieved their success, even in some small part, based on their gender or ethnicity. We all want to feel that we deserve the success and accolades that we have received based on our own merit.”

– Why Men Don’t Believe the Data on Gender Bias in Science, Alison Coil, Wired Science, 25 August 2017

In large part, this is due to a natural instinct for self-preservation. When faced with a new program that does little for you as an individual, it can be difficult to find a reason to support it. We know that a limitation of resources (let’s say, open positions within a company) means that this increased competition will lead some men who otherwise may have been offered one of those roles in a system that favored them, to now be beat out by better-qualified women and minorities. This can be particularly daunting for men just starting out in their careers, who previously would have benefited from existing systemic biases. For example, we currently operate in a system where women are required to already have a record of success and to prove themselves before they are offered opportunities, whereas men are evaluated instead for their potential to succeed. Therefore, an unproven male candidate may be assessed as equally or more qualified than a female candidate with the same or more experience.

This is particularly prevalent in the venture capital industry, where women received 2.2% of all annual VC funding in 2017.  In that same period, women received 4.4% of all VC deals. What this means is not only are women receiving an embarrassingly small cut of the total funds, but their deals aren’t as big as the ones for all-male teams. “The average deal size for a woman-led company in 2017 was just over $5 million. For a man-led company, that number is a little less than $12 million.” (Female Founders Got 2% of Venture Capital Dollars in 2017, Valentina Zarya, Forbes, 31 January 2018)

And yet, studies show that women-led companies perform better and 38% of businesses in the U.S. are owned by women.

So, why does this funding imbalance happen? In part, because of the major lack of female VC investors. (Remember that conversation we had about how people support others who are like them?) Only 8% of partners at top VC firms are female. As mentioned, female founders are more likely to be judged on their past experience and achievements, as compared to male founders who are assessed based on their potential for future success. In fact, research conducted at a 2017 funding competition indicated that women were more likely to be questioned on their potential for failure than their male counterparts, who were more often questioned about their potential for success.

“According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance.”

– Male and Female Entrepreneurs Get Asked Different Questions by VCs — and It Affects How Much Funding They Get, Dana Kanze, Laura Huang, Mark A. Conley, E. Tory Higgins, Harvard Business Review, 27 June 2017

Things aren’t looking much better for entrepreneurs of color.

“87 percent of Internet startups founded by black entrepreneurs receive no outside funding (compared to a national average of 63 percent), yet 23 percent generate operating revenues—6 percent more than national average.”

– Winning the Future: Eliminating Racial Imbalance in Innovation, Garren Givens, Huffington post, 8 October 2011

And, the argument that there just aren’t enough women or people of color in tech – which leads to lower rates of representation in tech companies – is baloney.

“Black and Hispanic computer science and computer engineering students graduate from top universities at twice the rate that top tech companies hire them. And at UC Berkeley and Stanford University — located in the heart of Silicon Valley — half of introductory computer science students are women.”

– The Unsettling Truth About the Tech Sector’s Meritocracy Myth, Tracey Ross, Washington Post, 13 April 2016

Meritocracy doesn’t exist in today’s system and to claim that it does is to be inherently ignorant of the barriers that exist for women and underrepresented minorities. Will changing the system affect the advantages given to white colleagues and male colleagues? Absolutely. I acknowledge that it can be an uncomfortable idea to reconcile for many who stand to lose those advantages. Ultimately, it’s for the greater good, not only for our female and minority colleagues but also for the overall business and tech industry to ensure that the best talents are given the opportunity to shine and that innovation continues to expand through a blend of different perspectives.

Bonus material:

For those who are math-inclined, this article gives several great, simple examples of how promotional and hiring bias can work in unsuspecting ways against building an actual meritocracy.

I really enjoyed researching this topic and appreciate the chance to discuss it. Please leave your comments and questions in the space below.