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Diversity Hiring: Winning with Data

diversity hiring

In the UK, company profits rise by 3.5% for every 10% increase in the diversity of the executive teams.

And yet, the news are teeming with stories of gender and racial discrimination in hiring like this one or this one. And it’s not just anecdotal evidence.

In the US, a 2004 study showed that black applicants were found to be 15% less likely to receive callbacks for jobs than equally qualified white applicants. A very similar experiment conducted in 2018 showed - drumroll - pretty much the same result: a 16% difference in chances of a callback. Virtually no progress was made in the past 15 years, in the US or the UK.

There is a lot of interest in solving the Diversity and Inclusion challenge in business right now, and it’s a great time for Talent Acquisition teams to invest resources in hauling up their hiring process. Here’s why:

How diversity wins in the bottom line

[tweetery]“Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. “ - Delivering Through Diversity, McKinsey[tweetery-end]

A lot of research on the impact of diversity on the bottom line has been done recently. MIT and McKinsey have both published reports that show a correlation between diversity and profits that is hard to ignore. The Harvard Business Review recently published the results of research that specifically looks at the causal relationship between diversity and financial performance.

Paul Gompers and Silpa Kovvali looked at the financial performance of thousands of VC firms, as well as their teams’ compositions. The results? VCs who had 10% more women on their team also made 9.7% more profitable exits. Same profitable exits were 26% to 32% lower in VCs where only people of the same ethnicity were hired.

A VC’s job is not only to give money to a startup, it’s also to help them grow and shape their long-term strategy. Having only one kind of viewpoint in those conversations limits what those startups can do.

The same can be seen in larger, more complex companies. There are many sources of growth and value for the company: productivity, process efficiency, customer retention, risk management, time to market… and diversity has an impact on each of them.

Having people from different genders or socioeconomic backgrounds could mean a different appetite for risk, for example; Diverse employees might be better able to relate and retain a wide range of diverse customers; Teams with different educational tracks might come up with more innovative solutions to business problems… The list goes on.

Backing diversity hiring with the right metrics

With so much evidence that a more diverse workforce is better for the business, TA teams can justify putting serious resources into optimizing their diversity hiring strategy. Before making any changes, however, you have to make sure you are set up to measure the right metrics.

Our State of Diversity report in 2017 showed that 52% of respondents don’t measure their progress towards diversity targets. But even when they do measure it, they don’t look at granular data.

diversity hiring metrics

An overall 50-50 split of men and women hires doesn’t mean that women get offered the same salaries, for example. Hiring a representative number of black or hispanic employees doesn’t mean that all ethnicities are presented with the same professional opportunities. You have to make sure you’re looking at the right metrics.

Lack of diverse leads

Look at your existing candidate base, and compare its demographics to those of your target population. If you only have 1% of Hispanic candidates from a city where 30% of the population is Hispanic, for example, you might have a problem at the very beginning of your process.

Unfortunately, some professional areas have been hostile to women or minorities for a long time, and it’s harder to find diverse candidates the higher you climb in the ladder. 56% of respondents to our diversity survey say that finding relevant candidates is their biggest challenge in diversity hiring.

Your best short-term bet for this particular challenge is to partner with outside organizations and affinity groups, like the National Black MBA Association, Prospanica, or Reaching Out MBA can help.

Conversion rates through the funnel

Is your candidate base representative at the start, but less and less diverse as it progresses through the funnel? Your sourcing teams might be blind to names that sound a little different, or to gender, or to country of origin, but this might not be the case to recruiters, interviewers or hiring manager who look into candidates case by case.

Go through past offers. Do women or people with culturally diverse names get fewer offers on average than their male, non-diverse counterparts for the same qualifications? Are people with the same qualifications but different backgrounds hired at the same level?

Many companies are using blind screening processes to help decrease this built-in bias. Try masking names and countries of origin for recruiters and hiring managers on your CRM, for example, and encourage sourcers to make candidate profiles as rich as possible with job experience, languages, interests, portfolios, etc.

Automated screening processes can both help with this and make it worse. They can help if you set up automated screening workflows that only look at qualifications and achievement, and mask irrelevant data like age, gender, or nationality.

They can also make it worse if you rely on an AI screening bot that learns from the biased screening decisions of humans, for example.

Localised lack of diversity

Is there more of a challenge for specific roles? For example, candidates might be more subject to discrimination if they are being hired for customer-facing roles.

Look out for more female or minority candidates in back-end, “staff” or supporting roles -regardless of seniority level- as opposed to revenue-generating roles. That could be an indication that you’re not hiring diverse candidates in strategic positions.

Once you have enough data on these different metrics, you’ll have a much clearer idea of where and how progress can be made.

The other side of the Diversity recruiting coin is discrimination, and that’s a hard subject to address honestly in any organization, no matter how transparent and well-intentioned. The reward, however, is substantial.

Beyond the obvious reasons like fairness, equality, and the desire to give a chance to people who deserve it, there is another strong incentive for TA organizations to solve the diversity recruiting challenge: Organizational influence.

Being able to show granular and detailed progress in diversity hiring is a huge opportunity for the TA organization. Diversity and inclusion issues are on the mind of every CEO and board member today, and the TA team can help demonstrate that the company is differentiating itself from the competition with real progress.

It means tomorrow, leadership will involve TA in other strategic initiative because they’ve seen how it can solve strategic issues at the root. It’s yet another step in making TA a permanent participant in every executive conversation in the organization.

State of Talent Engagement 2019 report

The results of the State of Talent Engagement 2019 survey are in! You can download the full report here for statistics and data on how companies plan to engage with talent in 2019.

[image-caption][download report]( ) [image-caption-end]

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