Technology, diversity, globalization and the left-behind

The tech industry — in particular its up-and-coming digital cohorts — has championed diversity (and diginomica supports that stance). The motivation goes beyond ethics or altruism — diversity is good for business, as SAP CHRO Stefan Ries explained in a recent interview:

Studies prove that the richer and more diverse you are as an organization, it has a very positive outcome on your financial KPIs.

That's because, in an increasingly global marketplace, enterprises need a global outlook. Recruiting and nurturing a diverse workforce is the best way to engage with and service a diverse customer base. Furthermore, a diverse set of viewpoints in the workforce provides more agility to respond to disruptive change in an uncertain world.

Whose GDP?

But politics has recently been heading in the opposite direction. Political shocks like the Brexit vote and Trump's presidential triumph seem to signal a reversal in the social trend — contributing to the tensions underlying last week's meeting of tech industry leaders with the incoming US administration.

While globalization is held up as an economic driver in support of diversity, many of the economically 'left-behind' who voted for Brexit and Trump want to roll it back. They believe it's hurting them while others benefit, as one heckler at a town hall meeting in the north of England memorably summed up earlier this year, interrupting Anand Menon, professor of European Politics and Foreign Affairs at Kings College London:

A couple of colleagues and I were ... discussing the fact that the vast majority of economists agreed that Brexit would lead to an economic slowdown. A 2% drop in the United Kingdom’s GDP, I said, would dwarf any savings the country would generate from curtailing its contribution to the EU budget.

'That’s your bloody GDP,' came the shouted response, 'not ours.'

This perception that the fruits of economic activity are not being evenly shared may be visceral rather than reasoned. But that doesn't invalidate it. It's borne out, for example by Den Howlett's discussion last week of the analysis of Dr Mark Blyth:

Wage earners now have too much debt in an environment where wages cannot rise fast enough to reduce those debts ... creditors fret about their earnings, demanding repayment of debt at all costs ...

The traditional parties of the center-left and center-right ... get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets.

Global markets

Tech industry leaders are vulnerable to the same backlash. The money printed by government and central banks to ward off deflation has sent investment capital flooding into technology businesses in search of better returns. Tech industry titans and unicorns alike reap rich valuations from products and services that disrupt traditional employment through globalization and automation.

In such a climate, I worry when a tech company positions its diversity agenda as a means of overcoming local talent shortages by recruiting globally. From a business point of view, scooping up talent from emerging markets makes perfect sense, as SAP SuccessFactors president Mike Ettling explains:

If there’s a perception of a talent shortage because ‘I only want to hire managers from the G20 countries’ or ‘I only want to hire white males to be managers’ then yes, there might be a shortage of talent in that group.

But if you eliminate that and you go fishing in a bigger pond and you look globally, how can you say there’s a shortage? There’s 3 billion people coming out of emerging markets with pretty skilled education and a billion people shifting to middle class in Africa. We believe that bias, be it conscious or unconscious, is causing the perception of a talent shortage. But actually there’s not a talent shortage.

There are plenty of winners in this scenario. Emerging countries don't begrudge the export of locally educated talent because many of these emigrés repatriate earnings during their absence, and often end up returning to take up senior business roles in their country of birth. Global enterprises in mature economies gain a fresh source of talent to fill vacancies, without bidding up salaries to unsustainable levels. All of that greases the wheels of capitalism, raising economic activity, in principle, to the benefit of all.

Closer to home

But there's a danger that communities closer to home will see themselves losing out from the same scenario — especially if their own hidden pools of potential talent are simultaneously left unexploited. That doesn't have to be the case. Earlier this year, diginomica's Derek Du Preez wrote about the work of Year Up, a US non-profit that provides training and apprenticeships for 18-24 year olds from disadvantaged backgrounds:

[Founder and CEO Gerald] Chertavian’s argument is that right now there are six million young adults that are ‘disconnected’ from stable career pathways (more often than not because of their socio-economic background and the colour of their skin), and there are 12 million jobs that will require post-secondary education in America that will go unqualified in the next decade.

Year Up is helping to fill that gap.

The political message of 2016 is that those left-behind communities must not be neglected. They see a connected, technology-driven world leaving them behind, as globalization and automation destroys the industries and jobs that once provided secure employment. The trickle-down crumbs of economic benefit from continuing technology innovation and global economic expansion provide scant compensation.

Treated fairly

This makes it easy for political demagogues to exploit their resentment and stoke up prejudice. But as political science professor Kathy Cramer has learned from almost a decade of talking to voters in rural Wisconsin, what people really want is to feel they're being treated fairly:

What I heard from my conversations is that, in these three elements of resentment — 'I’m not getting my fair share of power, stuff or respect' — there’s race and economics intertwined in each of those ideas ...

It’s not just resentment toward people of color. It’s resentment toward elites, city people ... when people think about their support for policies, a lot of the time what they’re doing is thinking about whether the recipients of these policies are deserving. Those calculations are often intertwined with notions of hard work, because in the American political culture, we tend to equate hard work with deservingness ...

Of course [some of this resentment] is about race, but it’s also very much about the actual lived conditions that people are experiencing.

Including the left-behind

If the tech industry wants to continue to benefit from globalization and diversity, then it must ensure its mantra of inclusion extends to these left-behind communities too. Without backpedaling on commitments to racial, gender, sexual and disability inclusion, its concept of diversity must acknowledge the discrimination and disadvantage that stems from economic, social and educational circumstances. There need to be Year Up-like initiatives for the rural disadvantaged, and more thought given to supporting communities hit by disruptive change.

This may prove more costly than simply hiring young talent from emerging markets, and perhaps government as well as business must help direct investment to ensure it has an impact. But if these communities continue to be neglected, they'll feel they have nothing to lose by lending their vote to the next outsider who comes along promising change.

Last week, the President-elect called on the tech sector to deliver more innovation to create new jobs in the US economy. This should not be answered with technology alone. Society also needs innovative change management to help navigate the impact of technology and ensure that those new jobs benefit every community, not just a privileged few.