Dive Brief:​

• There's a business case for racial diversity congruence — having matching levels of representation in upper management and lower management —  according to a study published June 9 in the Academy of Management (AOM) Journal. The study found that firms with high levels of diversity in both upper management and lower management achieved the greatest levels of productivity.
• Academic researchers Orlando Richard, María del Carmen Triana and Mingxiang Li analyzed 201 high tech firms' EEO-1 data. Firms with unequal levels of racial diversity in upper and lower management were less capable of making good business decisions, absorbing information and obtaining a competitive advantage, according to the study. Researchers found that a 1% increase in racial diversity congruence in management increased a tech firm's productivity by $729 per employee. For Fortune 500 firms, analyzed in a supplemental sample, productivity increased by $1,590 per employee. 
• Tech firms with more racial diversity in upper management than lower management out-produced firms with more diversity in lower management, according to the study. Researchers also pointed to the "critical role" that lower management plays in organizations. They stressed that even if management levels are "demographically different," information exchange should be prioritized as lower-level managers may have valuable ideas to enhance a company's strategy.

Dive Insight:

Although many tech companies have made gains in overall workforce racial diversity, there has been less improvement at the managerial level, according to public reports. 

Pinterest exceeded set goals for underrepresented engineers and the hiring rate for underrepresented employees across the country. But its D&I report from January showed that company leaders are 75% male and 64% white; the percentages of black and Latinx leaders are 1% and 2%, respectively. Pinterest has committed to a "laser focus" on specific efforts to diversify leadership and ensure business leader ownership of inclusion and diversity outcomes, Jo Dennis, chief human resources officer, said in a blog post. 

Twitter's D&I report released in December 2019 showed a significant increase in the number of black and Latinx individuals it employs, but it continues seeking improvement in diverse leadership, according to a blog post by Dalana Brand, vice president of people experience and head of inclusion and diversity. 

As of May, black and Latinx representation in senior leadership at Twitter increased to 4.9% and 4.1%, respectively. By 2025, Twitter said it aims for women to represent half of its workforce and for "underrepresented minorities" to comprise a quarter of its U.S. workforce.

"As we see from the current demographics of the major technology companies of Silicon Valley and the Fortune 500, many firms are far from being diverse and especially at the highest levels," the authors of the AOM study, The Effects of Racial Diversity Congruence between Upper Management and Lower Management on Firm Productivity, wrote.

They suggested companies "approach diversity as a means of learning from different perspectives" and use what they learn to improve the organization. Such effors may also improve recruitment as research shows that most job candidates seek companies who value diversity, equity and inclusion. Representation in leadership can be a strong way to demonstrate a company commitment to D&I.