Tech isn't as meritocratic as you think
And relying on graduates to fill vacancies isn’t working
The socio-economic and ethnic diversity of the tech workforce will form part of the discussion at the Women and Diversity in Tech Festival in November. Here, we ask if over reliance on graduates is part of the reason why people from working class backgrounds are so much less likely to pursue a tech career than their middle class peers.
Chances are you consider tech to be one of the more meritocratic professions. Compare it to something like medicine or law and it stands to reason that it should be. There's no need for years of expensive post graduate training and free coding courses and bootcamps are popping up all over the place. There are far fewer unpaid internships common to professions like media or the performing arts.
Dr. Mona Mourshed, Founder of the global non-profit Generation, explains why her organisation, which supports people into better paid work, considers technology employment to be such a useful driver of social mobility across the world.
"The wage level of tech roles tends to be at or above living wage in most countries, and the growth trajectory in terms of career can be quite strong. These are durable careers, which makes them attractive."
Above all, tech is teachable. All it takes is a certain aptitude, a great attitude and some graft. Surely that makes it one of the most meritocratic professions out there, and consequently an excellent driver of social mobility. Right?
Well, no actually.
Class matters
Tech Talent Charter's most recent report based on a survey of 30,000 tech employees across 85 employers found that 9% of tech employees were from what they classify as lower socio-economic backgrounds, compared to 29% in finance and 23% in law. The Sutton Trust found in 2021 that two thirds of UK tech workers came from professional/managerial backgrounds and 21% attended independent or fee-paying schools which is well above a UK average of around 7% at most.
The gold-standard study in social mobility is that conducted by Sam Friedman and Daniel Laurison, published in 2020 and based on data from the UK Labour Force Survey, and qualitative research in form of interviews and case studies. It researched 19 elite occupations, one of which was IT, and found that of those working in IT, 19% are from a working-class background compared to 33.3% of the nationwide population (2014 Labour Force Survey). In contrast, those with parents from a professional-managerial background made up 45% of workers in the sector compared to 31.2% of the nationwide population.
Interestingly, the Friedman and Laurison study also found that even if you get into IT from a working-class background, you'll earn less. There's a world of difference between getting in and getting on. Their study identified a class pay gap of around £5000 a year in salary between IT workers from a working class background and those with professional parents, and a small gap of approximately £2000 between those with intermediate origins and their more privileged counterparts.
The figures vary from one study to another but what is clear is that young people who have at least one parent employed in a professional and/or managerial capacity are more likely to be employed in a tech role than those from less privileged backgrounds. The reason? Those with professional or managerial parents are far more likely to have a degree
The cost of employing only graduates
Generation published global research last year that was conducted in late 2022 and early 2023 with more than 1300 companies with tech vacancies to fill and in excess of 4000 tech employees and job seekers. When recruiting for entry-level roles in areas like development, half of the employers surveyed had a degree requirement, with 17% seeking STEM degrees. In fact, 30% of employers have added degree requirements over the last three years, and 13% have removed this requirement. Similar proportions of employers had also tightened work experience requirements.
The consequences of this approach are expensive. The employers that tightened their entry level requirements spent 13% more on average to fill entry level vacancies than those who were more flexible. 53% are finding it extremely difficult, very difficult, or somewhat difficult to fill entry-level positions, and 70% recognised a need to revise the hiring process for entry-level talent.
Benefits of skills-based hiring
What is the alternative to relying on universities to furnish you with high quality candidates for entry level tech jobs? Mona Mourshed explains:
"The 24% of employers that have softened their education and/or work experience requirements would have tech assessments and interviews whereby candidates would have to demonstrate skills, as opposed to those skills being assumed because you have a computer science degree, for example."
Another way to demonstrate skills is via certification from the likes of AWS, Microsoft. Cisco etc. Interestingly, AWS announced earlier this week that it has delivered free cloud computing skills to over 31 million learners across 200 countries and territories, far eclipsing its goal of 29 million people by 2025.
This is an excellent example of enlightened self-interest. Is it in Amazon's interest to pay to train an army of young people embedding them into organisations across the world, shoring up their customer base and also making sure they don't struggle to recruit the skills they need? Yes. Does it widen and democratise access to potentially lucrative careers, extending opportunity to people and communities who would otherwise not get a financial slice of the action? Also yes.
These candidates often perform better on the job than those recruited via the more traditional outlets, as Mourshed explains.
"The great news is that 89% of these companies got the same [31%] or more [58%] applications for open tech roles. But much more importantly, 84% of those companies said that the hires made through the through the assessment process, are performing as well, if not better, on the job than those that they hired the traditional way."
Other benefits of skill-based hiring reported by those who practice it is that it's quicker to fill vacancies, which reduces recruiting costs.
A longer-term financial benefit is the reduction in attrition rates.
A study by McKinsey suggests that employees without college degrees tend to stay in their roles for 34% longer than their degree educated counterparts. This is intuitively easy to understand. If you think your employer extended an opportunity to you that its competitors didn't, you're far more likely to stick around.
Skills-based hiring also delivers a more ethnically and socio-economically diverse tech workforce by opening doors for groups which are increasingly excluded from higher education.
"If you have the right certifications for a role, it is an important equalizer when it comes to ethnicity," Mona Mourshed says. However she goes on to acknowledge that, "when it comes to gender the picture is more complicated."
When certifications are part of the evaluation process, men and women have broadly similar conversation rates from application to interview (the research showed 75% for women and 80% for men.) However, far more men than women convert interviews into offers, which goes to show how much work still has to be done to unpick gender biases in tech recruitment.
Why isn't everyone hiring based on skills?
An obvious question is, if skills-based hiring is so great, why aren't more employers doing it? Generation has been researching this, and Mourshed is happy to drop a few hints in advance of publication later this year.
"We have a spectrum of responses on this. For some companies in the midst of the financially conservative environment that we are in and the waves of layoffs and the budget cuts, this just isn't a good time. HR teams have also had layoffs as well so resource is just very limited for some."
AI is also making employers wary around entry-level tech recruitment.
"They think with AI they may need fewer entry level people than they did before. There's a sort of a wait and see approach and they're not going to rejig the hiring process in the meantime.
"For others there was a management capacity issue. There's a perception that if you hire people who don't have the traditional profile, that managers are going to have to spend more time coaching and supporting them, so that is also a barrier."
These are all factors that companies will admit to. But there are other reasons that a majority of tech employers are continuing hiring practices that are counter to their interests. IT employment decision makers are highly likely to be graduates themselves. Seeking value beyond a traditional graduate talent pool involves questioning the intrinsic value of a degree on suitability for employment. That's not an easy process if it's the route you took.
Nobody is arguing that tech employers shouldn't employ graduates, just that they don't employ only graduates.
Tech is more meritocratic than some competing professions. But the question of how to make it more meritocratic – and diverse as a consequence - can be answered by examining how employers measure merit. We all want the best person for the job. But re evaluating how you hire could help you find that person a lot faster – and keep hold of them for longer.
Socio-economic diversity will be one of the topics of discussion at The Women and Diversity in Tech Festival which takes place on 5th November in London. Click here for an agenda and here for early bird tickets.