Blog > diversity in hrm

6 Ways Diversity And Inclusion Impact The Cost And Effectiveness Of Recruiting

6 Ways Diversity And Inclusion Impact The Cost And Effectiveness Of Recruiting

Most of the expenses and attention directed towards diversity are centered on ways to boost the number of newly recruited employees from varied backgrounds. Companies should evaluate how their diversity and inclusion levels impact all key aspects of their business including recruiting, retention, operations and sales among others. Ignoring inclusion when concentrating only on hiring for diversity can lead to unintended consequences.

Nevertheless, there is a clear economic advantage in hiring from a more diverse talent pool whether a company wants to diversify its workforce because it believes that diversity and inclusiveness are important values, or simply because it wants to be seen as compliant or diverse. Increasing the supply of candidates lowers hiring costs, especially where there is intense competition for talent. Furthermore, unless one believes that white males are inherently superior tapping into a bigger pool of talent means you have more qualified candidates to choose from. Thus, large firms with high recruitment volumes will have better average talent quality compared to smaller entities.

The so-called “pipeline problem”, which companies often use as an excuse for slow progress in promoting diversity is also cited as another reason why more people do not come into top management from diverse backgrounds especially in certain highly skilled positions. For instance, in a recent study conducted by U.S House Committee on Financial Services which requested the country’s biggest banks to point out challenges encountered while implementing their goals and initiatives for enhancing diversity had most banks indicating they were competing over few STEM educated applicants.

There is too much fuss about pipeline problems that mainly results from misguided approaches used by organisations when selecting new employees plus low knowledge regarding how present levels of diversity hamper recruitment efforts at any firm.

In relation to supply and demand, the chart above starts with reference to how each stage decreases available talents except those who passed through each level. Specifically speaking if you imagine the largest grey box shown here representing every candidate who would be able to make successful employees upon being hired then at every stage this size shrinks since only some individuals crossing each particular stage.

Let’s now see what impact a company’s present diversity and inclusion levels might have at each of these stages; or in other words, how a company may lose potential employees that could otherwise become successful due to their non-inclusive recruitment practices. This blog post will discuss the problems associated with each stage.

Stage 1: Awareness

The first one has to do with where you find people. For instance, if you only hire from ivy league schools whose population is overwhelmingly biased towards white males, then you are excluding a large part of the population who would not know about your hiring process. However, even though you recognise that recruiting from top schools is a bad idea, if most of your recruiters are straight able-bodied white individuals, they will not be aware of any places where talent comes from different backgrounds. Similarly, sometimes the means through which job adverts are made can be highly disproportionate in terms of those population segments they reach for again this is something that someone coming from an advantaged majority background would not be aware of. Consider this stereotypical ‘paradigm’ — a richer get richer: more diverse companies will naturally have access to more diverse networks.

Stage 2: Perception

Now consider yourself as job applicant who just realised that your firm is advertising for new positions. Before making a decision on whether or not to apply to your organisation he or she will form an opinion based on their perception about your company’s suitability for them. This perception will be affected by how you describe the job and how it is presented in marketing materials. If in case you mention competition while posting jobs ads or talk about free beers as well as foosball tables then some highly qualified young women along with elder workers might never be attracted toward such job posts. Some very talented black women may choose not applying when they find out that all leadership team members on your website are white people apart from being male most of them too As well as if your website is not inclusive to persons with a vision handicap, it will be an unwelcoming place for disabled individuals. Again, more diversity creates even more diversity.

Stage 3: Reputation

These days, the way you present yourself to potential candidates is only part of the story; it’s actually more about how you treat your employees. There are websites like Glassdoor and Dipper where your staff will be sharing their experiences. In fact, when deciding where to apply, most candidates will base their decision much on what they hear others saying about companies rather than what these companies claim in their adverts. However, this might be viewed from opposite perspectives since firstly if employee reviews show that there is exclusion of people e.g., color or LGBTQ community in your records despite high levels of diversity being advertised on your website, then you reduce your talent pool size. Secondly if existing staffers inform applicants that your company really advocates for inclusion across all facets irrespective of whether it has a variety of workers or not including people having diverse backgrounds will still apply for jobs at such places Thank God for diversity! Therefore by definition inclusion can assist in increasing access to diverse talent bases through hiring.

Stage 4: Hidden prejudice Bias

Regarding diversity and inclusion, the notion of bias has become quite popular. However, some firms fail to recognise that hidden biases may have a massive negative impact on initial screening job applicants. Several studies indicate that simply changing the name on a résumé to make it sound like a woman’s will significantly lower chances of getting interviewed. The same prejudices are found while comparing white-sounding names with African-American-sounding or Anglo names with Asian names. Being aware of those biases, adopting measures including blind resume reviews as well as having more diverse teams reviewing resumes can help in mitigating this bias and stop you from further narrowing your candidate pool.

Stage 5: Templates

Even if the CV got through stage one there could be other areas in the interviews where the interviewers’ biases further reduce your potential candidate pool. Most often, companies employ qualitative, subjective interviews which are highly ineffective and biased along many dimensions of diversity. Usually people tend to do pattern-matching assuming that someone who looks like them or went to their school has high chances of being successful too since they were successful themselves. Also people naturally have an affinity for those similar to themselves for this reason candidates sharing their social characteristics usually get preferential treatment by the interviewer leading to biased hiring which is Affinity Bias in fundamental terms. In any event, having more diversity in your workforce – or at least acknowledging these prejudices – can dramatically enhance the ability to attract talent from different backgrounds.

Stage 6: Remunerations

Suppose one among your splendid candidates had successfully passed all first five stages and you want to extend an offer now. Instead of adjusting offers based on individual basis they have been made must be commensurate with a value you associate with each position offered! Reports show disparities in first salaries due to both race/gender discriminations resulting into significant salary disparities between white males and other racial groups (Lebel et al., 2017). One of the most harmful practices in determining the salary offered to a new employee is to ask about salary history, a practice that is illegal in many States and municipalities because it perpetuates inequities. In conclusion, by giving lower salaries to diverse candidates you will increase the likelihood of their refusal especially when they have access to numerous tools for evaluating how fair your offer is. Again greater diversity among those who make hiring decisions and an inclusive culture can prevent your offers from turning into biases in this context.

Putting it all together: Compounding effects of diversity and inclusion

To some extent, hiring a candidate is like selling a product: your funnel has multiple stages, there are several factors affecting your conversion rate at each stage, and any leads lost at a particular stage cannot be recovered later.

However, the main difference is that sales funnels are influenced by a function (Marketing, advertising, pricing, sales and distribution) at each stage while in recruiting your entire diversity and inclusion efforts matter throughout all stages therefore causing a compounding effect. To take an example, if you assume that your lack of diversity and inclusion has reduced your candidate pool by only 10% at each of the six stages after the six stages the pool would have been reduced to 53% of its original size leading to a situation where half of the candidates that could have been great employees got eliminated; or rather when it is 20%, from the original population your prospective employee pool becomes 1/4.

On other hand, if one’s organisation lacks diversity there is sort of chicken-and-egg dilemma: they simply cannot turn their current team into diverse ones in order to attract more diverse candidates. However, irrespective of levels of diversity present in an organisation ways can be found to increase inclusiveness.

The positive side is that embracing culture of inclusion will not only enable it recruit from larger talent pools thus enhancing its diversity but also create virtuous circles with tangible ROI across all areas in your business. Even though you are cynical regarding business advantages coming with diversity evident from this article should be enough for you to see how having an included recruiting process reimburses itself as well as increases the average quality talent by enlarging a qualified candidate pool hence getting an upper hand on competitors for labor market.