This report sheds light on diversity and inclusion in UK tech companies
We found that the state of diversity among directors of UK tech companies is unbalanced, and for the first time this research backs up with data-based findings, anecdotal reports of unrepresentative directorship.
The characteristics of tech directors are correlated with the performance of their companies. We found a significant relationship between the gender of directors and company turnover, and nationality and investment raised. We attempt to unpick why this might be the case.
Despite a burgeoning number of interventions that aim to shed light on, and address gender disparity in the boardroom, the proportion of men and women being appointed directors of tech companies in the UK has remained almost exactly the same since 2000.
But things could be so much better…
The state of diversity in UK tech
Diversity and inclusion in the tech sector has received much attention over recent years. From encouraging young women to consider STEM careers to addressing gender gaps in tech boardrooms – a number of interventions have aimed to address a perceived imbalance in representation of some groups.
The Tech Nation Report challenged our perceptions about the people that work in the tech sector. We broke the stereotype that all people working in tech are millennials, in fact, this is only the case in East London – not the UK as a whole. However, we also found that the tech sector is still in the throes of a diversity dilemma when it comes to gender, and this has not really changed over recent years.
But what is the cause of this seemingly intractable imbalance in tech? Is this something that is being driven from the top of companies? If so, what can directorship data tell us about diversity and inclusion, and does it offer a potential solution for addressing some of the broader issues around representation and inclusion in the sector as a whole?
We explore the state of diversity among tech directors in the UK. We look at gender, age and tech sub-sector to unpick trends about the characteristics of directors. And we look at how this has changed over time, to see if the problem is being chipped away, or if it’s getting worse.
The first, and perhaps most important question we need to ask as a sector must be – are tech companies better, or worse than other companies for director diversity?
When it comes to gender, 77% of tech director roles are fulfilled by men, and 23% women. In the the wider economy, 71% of directors are men, and 29% are women.
While tech directorship is lagging behind the rest of the economy, the tech workforce more broadly is made up of 81% men, and 19% women – meaning that tech leadership has better gender balance than those working in tech.
There may be a number of reasons for this, one of which might be that diversity is promoted on boards in the interest of public relations – company boards are far more visible than their workers.
This finding has a number of implications, some of which challenge how we currently think about promoting diversity. It is often cited that to promote better representation of underrepresented groups in the workforce, boards should lead by example – predicated on the idea that diversity will trickle down. Given that the data shows that boards are more diverse than the workforce, this could either indicate that the workforce has yet to feel the effects of the trickle down phenomenon, or that the hypothesis that ‘diverse board = diverse workforce’ does not hold water in reality.
Baby on board
Going beyond gender, we found that tech company directors are younger than non-tech, by an average of 4 years – but more interestingly, the mean age of directors in both tech and non-tech is north of 45 years. This suggests that age is linked to experience in the appointment of directors. We also found that tech companies are, other things being equal, younger than non-tech firms, and directors at tech firms have been in post for a shorter period of time.
We found that tech leadership is highly international. Tech directorships are composed 18% of people with a non-British nationality, compared to 13% in the wider economy. This is higher than the proportion of non-UK nationals working in the tech sector – which is 15% compared to 10% across the whole of the UK economy.
We found 8 distinct clusters of tech directors based on a number of shared characteristics. To cluster these directors we looked at variables like their age, the industry their company is based in, the length of time they have been appointed as a director, and the incorporation date of their firm. We did this to see if any patterns emerge in the types of director that are most prevalent in tech, and to understand if there are any industries that stick out in terms of the characteristics of directors that work in them.
Based on the characteristics of directors in a given cluster, we assigned a descriptive name. The 8 clusters are shown below.
|Cluster number||Cluster name||Which directors make up this cluster?|
|1||IT men||This cluster is comprised entirely of men leading companies in IT consultancy activities – the mean age of these directors is 46 years, and the age of the firms they head up is, on average, the youngest of all clusters at just under 7 years old.|
|2||Younger IT women||This cluster is the ying to the yang of cluster 1 – made up entirely of female directors in IT consultancy activities. The cluster is smaller than cluster 1 with 649 directors, compared to the 1652 IT men.|
|3||Computer games men||Computer games as a tech sub-sector is one of the worst performing for gender parity of directorship positions, with 87% men, and only 13% women. This cluster is comprised almost entirely of men – who make up 99% of directors in the cluster.|
|4||Younger tech businessmen||This cluster is, again, entirely comprised of men. The average age of these men is just under 45, making it the youngest cluster of directors.|
|5||Other tech service men||This catch-all category is 100% male, and represents directors of tech service firms not elsewhere classified. These directors fall in the middle of the pack for age, averaging just under 48 years old.|
|6||Tech businesswomen||This cluster mirrors cluster 4, and is comprised entirely of women. The average age of female directors in this cluster is 46, and directors in this group tend to have been in position for a shorter period of time – on average for 5 years.|
|7||Telco men||At 98% male, this cluster is dominated by men working for telecommunications companies. On average, they have the shortest tenure of all clusters at just under 4 years, and average age is over 48 years, making it the second oldest group of directors.|
|8||Older IT women||Finally, this cluster of female IT consultancy activity based women have the oldest average age of all groups at 49 years, and work for older tech companies, on average over 11 years since incorporation.|
Stand out success
We also conducted cluster analysis on a subset of approximately 2,700 high growth tech firms (using data from Beauhurst on scaling companies), to understand whether the directorship composition for these ambitious, fast-growing firms looks different to the broader tech company population.
The 10 clusters that emerged mirrored some of the trends we saw in the broader business director population, but interestingly, the additional clusters include men working in data-dominated companies, and female directors in other tech activities.
We found that there is marginally more fragmentation of groups of directors of high growth firms. We can see that the clusters are smaller in the visualisation below, and their distribution is more sporadic.