Why you can’t just hire your way to a diverse corporate workforce

If 2020 was the year corporate America committed to DE&I, then 2021 is the year the world expects companies to take action and ensure diverse representation at every level of their organization. 

For many HR and talent leaders, the first solution that comes to mind is hiring. Organizations are attempting to make good on DE&I commitments by recruiting with diversity in mind. But so is every other organization, which makes the hiring process competitive and expensive. Beyond that, traditional hiring practices have structural biases built into the process.

Hiring is also only one half of the equation. Business leaders need to think about retaining and developing talent — which depends on building an inclusive culture. 

The solution is to look inward and invest in a company’s existing workforce. Keep reading to learn why. 

Structural barriers to hiring diverse talent hinder progress

Hiring more underrepresented employees isn’t as simple as it may seem. The disparities in representation exist because of deeply rooted historical and structural policies and practices in the U.S., and these barriers can’t be torn down without intentional effort. 

To start, consider that traditional methods of recruitment show signs of bias: 29% of US hires come from referrals, and since employees tend to refer people like themselves, this does little to foster diversity. Subconscious bias also reduces hiring and compensation of certain candidates: a Yale study showed that scientists who had taken courses on how to “hire objectively” still had bias, finding that they still preferred to hire men over women and were willing to offer men about $4000/yr. more in salary. 

Beyond hiring practices, the pool of talent isn’t exactly growing. More and more Black employees are leaving the corporate world altogether, while enrollment in higher ed—an important talent source for recruiters — is on the decline, particularly for students of color. In addition, the pandemic has caused women to drop out of the workforce in record numbers

Beyond hiring, an inclusive culture is needed to retain talent

Even if companies had little trouble hiring diverse talent, acquiring that talent is just the beginning of the employee lifecycle. Business leaders also need to think about how to retain those employees. 

Unfortunately, a lack of diverse leadership has a compounding effect on representation by reducing retention for employees of color. In a 2019 survey, Black men who had senior leaders of color were 15% more likely to stay with their company than those who did not.

Building belonging also has critical implications for employee experience. A survey by BetterUp found that belonging was linked to a 75% reduction in sick days, a 50% drop in turnover risk, and 56% increase in job performance. Employees also see inclusion as a prime consideration for employment: 80% of respondents to a Deloitte survey said that inclusion was important when choosing an employer, and 39% said they would leave their current organization for a more inclusive one.

Business leaders need to encourage employees to stay and advance at the company by creating a culture of inclusion and belonging—as well as opportunities to learn and advance. 

Education and upskilling can help develop and retain diverse talent

The solution to the talent acquisition and retention problem isn’t outside the organization. Employers can boost DEI talent efforts by turning inward and investing in their existing employees.

After all, most companies already have a diverse workforce: 41% of frontline employees are non-white. When it comes to education and talent development, this group is often overlooked and not cultivated to be upwardly mobile at the organization. 

This provides a unique opportunity. Innovative employers are finding that by investing in education and upskilling for all employees, particularly the frontline, they can create career paths to leadership for underrepresented talent and boost their employer brand in the process, further driving talent attraction and retention. 

Take Chipotle. To better attract and retain talent, they worked to transform their tuition reimbursement benefit into an education and upskilling program that better served their diverse frontline population. Instead of asking employees to pay out of pocket—something many hourly workers couldn’t afford in the first place—the company covered 100% of the cost of tuition, books, and fees for degrees in business and technology. Since making these changes, the fast casual restaurant has found that 85% of program participants are hourly crew members, and they’ve seen a 3X retention rate and 7.5X more likely to move into management positions.

It’s a virtuous cycle. Creating upward mobility for all both improves diverse representation at management and leadership levels and boosts employer brand, further driving retention and talent attraction efforts. And by designing a program that works for the whole workforce, organizations are accessing a largely untapped area of opportunity that can drive outsized outcomes for the business. 

Written by Guild Education

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