Diversifying Your Candidate Pool
The fact that diversity in the workplace helps drive organizational growth and improved performance has been well established. We’ve discussed before how leading financial firm Goldman Sachs will not take companies forward unless said company includes at least one ‘diverse’ candidate on its board. While this may indeed be viewed as an attempt at good PR, the underlying performance boost seen in companies which are more diverse than not is undeniable. BCG found in their 2018 study that companies with more diverse management teams have 19% higher innovation driven revenue, and companies with at least one diverse board member saw a 31% jump in their average share price within a year of going public above those who did not.
Global research and consulting powerhouse McKinsey & Company have examined and continue to examine diversity in the workplace for several years. Their latest report, Diversity Matters, examined diversity in the workplace in Canada, Latin America, the United Kingdom, and the United States, and their results strongly suggest that diversity supports increased performance. Their findings:
- “Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
- Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians (exhibit).
- Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).
- In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
- Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, perhaps because earlier efforts to increase women’s representation in the top levels of business have already yielded positive results.
- In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.
- While certain industries perform better on gender diversity and other industries on ethnic and racial diversity, no industry or company is in the top quartile on both dimensions.
- The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator shifting market share toward more diverse companies.”
While McKinsey & Company are the first to put forth that correlation does not mean causation, it’s very difficult to maintain that there is not clear benefit to striving to seeking out and maintaining a diverse staff makeup.
Much of the above will not come as a surprise to many. Individuals in leadership, human resources or recruiting positions may be well aware that increasing levels of diverse staffing at their companies or organizations will bring benefit, however it may seem like a daunting task to actively raise these levels. Seeking out recruitment firms which specalize in diversity sourcing or pipelining is an excellent strategy, however there are some easy strategies which can be employed to help move away from homogenous organization. Forbes recently asked their Forbes Coaches Council for advice on how to source and hire diversely. We found the following to be three of the most accessible tips they shared:
“Make Your Search Intentional
Companies need to be intentional to make sure that each and every search has a diverse candidate pool. If they do not see a diverse pool responding to a posting, it is their responsibility to reach out one-by-one to diverse candidates and ask them for participation. Chief diversity officers in any company or college might be a good source for local candidates. – Barbara OMalley, Exec Advance LLC”
“Don’t Look At Names
Ask your recruiting company to black out the candidate’s name on resumes. First impressions, even just a name on a resume, can sway the best diversity recruiting efforts. – Bijal Choksi, BC Consulting Inc.”
“Send The Right Message In Your Employer Marketing
It’s important to send a clear message in terms of marketing the company as a diverse workforce and inviting people in. Demonstrate how the company is doing this in line with its mission and values, to attract the right candidates. Enlist employees to assist in creating this environment and recruitment, and make it easy and fun. Be proactive in meeting the needs of potential candidates. – Sharissa Sebastian, Sharissa Sebastian – Life & Leadership Coaching”
The full list can be found here.
While moving your workforce from a homogenous unit to a diverse mix may seem like a big lift, the benefits will far pay off in the long term. Please feel free to reach out to us to have a conversation about boosting the diversity of your organization, we always love to have interesting conversations!