Fewer CEOs are women than are named David. There are even more Johns. When a single name outnumbers half the population, the gravity of the issue of gender disparity and diversity becomes evident.
This is an opportunity lost, as diverse companies have a serious competitive advantage. According to a McKinsey study, companies in the top quartile for ethnic and racial diversity are 35% more likely to have financial returns above their respective national industry peers. Furthermore, they found that each 10% increase in racial and ethnic diversity on the senior executive team correlated with an average 1% boost to cash flow. Diversity also creates a thriving workplace because it results in unique problem solving techniques that spur innovation (a wisdom of crowds effect or “diversity bonus”).
To realize these benefits, organizations need to actively build a more diverse and inclusive organization by addressing recruiting processes that may inadvertently penalize underrepresented minorities and women.
Here are four straightforward steps that will help your company improve diversity hiring:
Research published in the Harvard Business Review reveals that when a final candidate pool has only one minority candidate, he or she has essentially no chance of being hired. One diverse candidate in the mix stands out as an outlier and can trigger unconscious bias. Our brains are hard-wired to note differences, and often the result of this bias is the elimination of the diverse candidate. If there are at least two female candidates in the final candidate pool, the odds of hiring a female candidate are 79x greater (than if there were just one). Likewise, if there are least two minority candidates in the final candidate pool, the odds of hiring a minority candidate are 194x greater. This affords enormous leverage from boosting the diversity pool in the recruiting pipeline.
According to the National Bureau of Economic Research, job applicants with African-American names need to send out 50% more resumes than applicants with Caucasian names to get a callback for an interview. This imbalance can be simply addressed by removing a candidate’s name from their application or resume to avoid triggering certain forms of unconscious bias related to race and gender. Blind screening can also remove indicators of age and various proxies for race such as geography. Removing certain bias-laden elements of a resume or application enables the recruiter to better evaluate candidates on their merit, experience, and potential.
AI-powered sourcing tools can help hiring managers and recruiters build a pipeline of diverse, qualified candidates at a cost and time commitment that is within the reach of most organizations. By leveraging the power of machine learning, organizations can affordably cast a wide net deeper into the long tail of potential candidates, filling their pipeline with diverse qualified talent.
Additionally, AI tools can be used to unearth patterns and attributes in existing employees that correlate with long term success within the organization. When used thoughtfully, recruiters armed with these insights can be more effective in looking for these specific attributes, rather than proxies for attributes that tend to be more bias-prone (e.g., cognitive capability vs. college attended).
We often hire people who are similar to ourselves, and personality tests can help alleviate this homophily bias. These tests measure candidates’ cognitive and personality traits, skills, and motivations. For instance, Vista Equity Partners, a buyout fund that aims to double the profitability of acquired software companies, tests all existing and prospective employees as a cornerstone of their recruitment and promotions strategy. Interestingly, a byproduct of this strategy is a dramatic increase in gender equality. By testing personality attributes versus subjective interviews, companies achieve racial and gender diversity. For example, a field study of 154 companies found that those that used a personality assessment in their hiring process achieved significantly higher minority representation.
When you improve diversity hiring within your organization, it creates a butterfly effect. The number one characteristic that attracts and retains diverse talent is having representation in the first place. With a diverse and inclusive workplace, your company will ultimately outperform, have higher retention rates, and foster innovation.