Inclusion 101: Tech's Future Founders Get Schooled on Diversity

As a slew of Silicon Valley companies confront accusations of unfair treatment of women and minorities, Stanford University's Graduate School of Business is trying to help would-be entrepreneurs create more conscientious companies.

The 10-week course is the first of its kind at the nation's most selective M.B.A. program and prime breeding ground for tech startups. Students enrolled in "Building Diverse and Inclusive Organizations," slated to launch this spring, will examine research on how to prevent bias from creeping into job descriptions and managers' feedback -- and how to promote stronger feelings of belonging, which can enhance employee performance and retention of women and underrepresented minorities.

Students will also review case studies of companies' efforts to improve diversity with expanded parental leave and job promotion policies and critique recruitment and retention reports from firms like Facebook Inc., Apple Inc. and Procter & Gamble Co.

"We're at a tipping point, as people begin to realize that inclusion has to be built into the fabric of the company," says Fern Mandelbaum, a Silicon Valley venture capitalist leading the course.

Though other courses at Stanford touch on how diversity impacts a company's business performance, this is the first specifically evaluating the policies of startups and early-stage companies.

Gender and racial inclusivity has become one of Silicon Valley's most intractable challenges. This year alone, Facebook and Alphabet Inc.'s Google have been locked in public battles over allegations of discriminatory pay practices, which the companies dispute. The sector's treatment of women has attracted more scrutiny in recent weeks, as big investors in Uber Technologies Inc. demanded the resignation of Chief Executive Travis Kalanick following allegations he presided over a workplace permissive of sexism. Days later, a partner of venture firm Binary Capital resigned after he was accused of sexually harassing multiple women entrepreneurs.

Although companies have committed to stronger recruitment and retention efforts, the annual data that firms like Twitter Inc. and Apple Inc. share about the gender and racial makeup of their workforces suggest slow progress.

Sluggish improvement and the string of recent scandals have prompted executives and aspiring founders to seek out new strategies to diversify workforces. Stanford business school's associate dean for academic affairs, Sarah Soule, says students have also been asking for more guidance on the issue in recent years.

"There's been a lot of focus on the numbers by companies that say they care about diversity, without those numbers changing," Ms. Mandelbaum says.

She has been on the front lines of Silicon Valley's efforts to change. In the past few years, she has spent less time in the office of Vista Venture Partners, the Palo Alto, Calif., firm she co-founded, as her role has grown as a corporate diversity coach. She also teaches other classes at Stanford, including "Entrepreneurship from Diverse Perspectives" and conducts workshops on creating supportive work environments.

During a two-week pilot of the new course in May, speakers like Pat Wadors, LinkedIn Corp.'s chief human resources officer, and Rachel Williams, Yelp Inc.'s head of corporate recruiting, led case study discussions. Co-teacher Joelle Emerson, founder of diversity consultancy Paradigm, invited Candice Morgan, the head of diversity at Pinterest Inc. and a current client, to speak about how the company trains managers to minimize implicit biases about job candidates and employees.

The course comes as Stanford -- which enrolled 41% women and 29% minorities in the M.B.A. class last year -- and other top business schools take steps to diversify the makeup of their own programs, administrators say.

Colton Heward-Mills, an African-American student who enrolled in the pilot course, says that while he has long felt passionate about diversity, he was particularly moved when a white classmate in the early stages of launching a company devised a strategy for supporting diverse employees for a project the two worked on.

"This class made me hopeful that more people who haven't typically needed to pay attention to these issues are beginning to now," he says.

Most companies are just starting to introduce strategies for reducing workplace bias, despite a wealth of academic research demonstrating bottom-line benefits, says Ms. Emerson. Such approaches make sense in the formative stages of a company's lifespan "rather than reacting after something goes wrong," Ms. Emerson adds.

The idea seems to be gaining steam.

Venture firm Freestyle Capital invited Ms. Mandelbaum to lead a panel on inclusion for the leaders of its portfolio companies last month. Since the discussion, Freestyle has started developing a metric for early-stage startups to evaluate investment opportunities. The measure is based on factors like a startup's commitment to diverse hiring and inclusive promotion practices, which Freestyle co-founder Josh Felser says have become an important gauge of a company's health.

"We don't want our CEOs to end up like Travis (Kalanick), and it's become clear that the earlier we can get them to understand the importance of diversity and inclusion the better," says Mr. Felser.

Write to Kelsey Gee at kelsey.gee@wsj.com

(END) Dow Jones Newswires

July 05, 2017 08:14 ET (12:14 GMT)