VMware, a leader in cloud computing and visualization technology, did something very different than most company efforts to foster diversity, equity, and inclusion (DEI). Over its 10-year journey with DEI and partnership with Exponential Talent, the company learned that significantly increasing the number of women and underrepresented minorities throughout the organization and changing the culture toward greater diversity, equity, and inclusion required harnessing the power of incentives—including compensation, career advancement, and other rewards. Leaders in HR and the C-suite can learn important lessons from the company’s experience. Key to these efforts was establishing and tacking measurable changes in representation over time.
To craft effective incentives that advanced VMware’s aggressive DEI goals, the company worked both from the top down and the bottom up, specifically tying DEI goals to its bonus structure, starting with top executives in 2018, extending financial incentives throughout the vice president and senior director levels by 2020, and eventually expanding bonuses for reaching DEI goals throughout all levels of the organization by 2022.
Industry-Leading Results
For example, the company tracked representation as one important indicator of the change it wanted to see, steadily increasing the percentage of women and Black, Latinx, and Indigenous employees in the company. As representation changed, both globally and in the US, increases were steadily matched at the more senior levels as well—an important indicator of sustainable and multilevel commitment to DEI goals (See Exhibits 1 and 2).
To craft effective incentives that advanced VMware’s aggressive DEI goals, the company worked both from the top down and the bottom up, specifically tying DEI goals to its bonus structure, starting with top executives in 2018, extending financial incentives throughout the vice president and senior director levels by 2020, and eventually expanding bonuses for reaching DEI goals throughout all levels of the organization by 2022.
Industry-Leading Results
For example, the company tracked representation as one important indicator of the change it wanted to see, steadily increasing the percentage of women and Black, Latinx, and Indigenous employees in the company. As representation changed, both globally and in the US, increases were steadily matched at the more senior levels as well—an important indicator of sustainable and multilevel commitment to DEI goals (See Exhibits 1 and 2).
Exhibit 1
Exhibit 2
These annual growth rates are within the top decile of the tech industry. Over the eight years studied, Exponential Talent calculated that the number of women globally increased at a compound annual growth rate (CAGR) of 3.5%, and at 6.9% for Black, Latinx, and Indigenous employees. (See Exhibits 3 and 4.) These increases were consistent with the growth in women in leadership roles companywide, which grew over the same period at a CAGR of 3.1%, and among Black, Latinx, and Indigenous employees in leadership in the US at a CAGR of 10.5%, among the highest levels of growth at comparable tech companies.
VMware has a quarter of the employees and revenues of top global tech companies such as Microsoft, Google, Amazon, Meta, and Apple. These companies have significantly larger budgets to devote to DEI efforts, as well. Even without these advantages, growth in women’s representation at VMware was two to five times the rate at Google and Microsoft, and growth in Black, Latinx, and Indigenous employees at VMware in the US exceeded the rate at Microsoft, Adobe, Cisco, and Intel. VMware was also able to sustain rapid rates of change in both groups over time.
VMware has a quarter of the employees and revenues of top global tech companies such as Microsoft, Google, Amazon, Meta, and Apple. These companies have significantly larger budgets to devote to DEI efforts, as well. Even without these advantages, growth in women’s representation at VMware was two to five times the rate at Google and Microsoft, and growth in Black, Latinx, and Indigenous employees at VMware in the US exceeded the rate at Microsoft, Adobe, Cisco, and Intel. VMware was also able to sustain rapid rates of change in both groups over time.
Exhibit 3
Exhibit 4
In terms of engagement, employee inclusion sentiment increased substantially from 2020 to 2023. The number of Black employees in the US who felt that senior leaders demonstrated a commitment to DEI through their actions increased 20 percentage points from 2020 to 2023, reaching 80% and significantly closing the engagement gap between Black employees and employees of all backgrounds across the company. Women answered the same question in the affirmative 9 percentage points more often over the same period, reaching 84% agreement. A lack of substantial culture change is frequently the key reason that DEI progress either stalls or backslides, and VMware’s dedication to working on both workforce diversity and inclusive culture was key to sustained change.
Results like these pay strong financial dividends. Companies with above-average diversity throughout the company, especially in management positions, make better decisions and have up to 36 percentage points better financial performance, research from McKinsey shows. They also report 19 percentage points higher innovation revenue, according to Boston Consulting Group.
Competition and Transparency Motivates People and Builds Trust
At VMware, DEI actions started with a focus on representation metrics, similar to most companies that move directly to changing the demographic makeup of employees at all levels. However, the focus came from the top of the organization, not primarily from talent acquisition or hiring processes. Leaders were given organizational dashboard data to understand the current state of the entire company in addition to their specific domains and departments. They focused on the opportunities necessary for improvement, with attention to their specific role in addressing those improvements.
Leaders were also motivated to act with data comparing the company to peers, competitors, and addressable talent markets. They also began sharing metrics more transparently both internally and publicly. Again, the key reason this DEI effort became worth the investment is that the focus for changing demographics was not solely, or even primarily, driven by HR—the focus was on the leaders across the organization who needed to feel compelled to see a difference.
We often hear about the importance of leadership involvement and accountability. VMware’s approaches are straightforward, and intentional ways to create such leadership buy-in. As a result of this focus, not only did the metrics drive action, but greater transparency created a condition for increased organizational trust and engagement, as staff at all levels could see how leaders performed. Employees began to believe in leaders’ commitment to DEI work, which embedded DEI into VMware’s DNA as a leadership expectation.
Lessons for Leaders
As VMware learned during its journey, measurable results are more than an outcome—they are a driver of change. Measuring and tracking changes in representation in hiring, promotion, and retention helps to identify key gaps in areas such as retention of women managers in specific roles. That furthers commitment to action. Open discussion of these changes, including regular updates to teams, spurs more action to change.
It is more important than ever for DEI investments to generate as much impact as possible. VMware’s lessons about measuring metrics that matter can help other organizations better prioritize limited resources and attention along their own journeys.
Results like these pay strong financial dividends. Companies with above-average diversity throughout the company, especially in management positions, make better decisions and have up to 36 percentage points better financial performance, research from McKinsey shows. They also report 19 percentage points higher innovation revenue, according to Boston Consulting Group.
Competition and Transparency Motivates People and Builds Trust
At VMware, DEI actions started with a focus on representation metrics, similar to most companies that move directly to changing the demographic makeup of employees at all levels. However, the focus came from the top of the organization, not primarily from talent acquisition or hiring processes. Leaders were given organizational dashboard data to understand the current state of the entire company in addition to their specific domains and departments. They focused on the opportunities necessary for improvement, with attention to their specific role in addressing those improvements.
Leaders were also motivated to act with data comparing the company to peers, competitors, and addressable talent markets. They also began sharing metrics more transparently both internally and publicly. Again, the key reason this DEI effort became worth the investment is that the focus for changing demographics was not solely, or even primarily, driven by HR—the focus was on the leaders across the organization who needed to feel compelled to see a difference.
We often hear about the importance of leadership involvement and accountability. VMware’s approaches are straightforward, and intentional ways to create such leadership buy-in. As a result of this focus, not only did the metrics drive action, but greater transparency created a condition for increased organizational trust and engagement, as staff at all levels could see how leaders performed. Employees began to believe in leaders’ commitment to DEI work, which embedded DEI into VMware’s DNA as a leadership expectation.
Lessons for Leaders
As VMware learned during its journey, measurable results are more than an outcome—they are a driver of change. Measuring and tracking changes in representation in hiring, promotion, and retention helps to identify key gaps in areas such as retention of women managers in specific roles. That furthers commitment to action. Open discussion of these changes, including regular updates to teams, spurs more action to change.
It is more important than ever for DEI investments to generate as much impact as possible. VMware’s lessons about measuring metrics that matter can help other organizations better prioritize limited resources and attention along their own journeys.