Why You Can’t 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 a diverse corporate workforce at every level of their organization.
For many HR and talent leaders, the first solution that comes to mind is hiring. Companies are attempting to make good on DE&I commitments by recruiting with diversity in mind. But so is every other organization, which renders the traditional hiring process – one that unfortunately has structural biases built-in – even more competitive, expensive and ineffective.
But here’s the reality: hiring is also only one half of the equation. Business leaders need to think about retaining and developing talent — which requires building an inclusive company culture. In this article, we’ll cover:
- Structural barriers that don’t allow you to hire your way to a diverse corporate workforce
- Why fostering inclusive cultures is necessary to retain and engage diverse talent
- How you can create a culture of opportunity in your organization
3 main structural barriers to hiring diverse talent
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. Here are 3 of the most common barriers to hiring a diverse corporate workforce.
1. Referrals hinder diversity
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.
2. Subconscious bias pervades
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.
3. Waning talent pool
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: Inclusive cultures are necessary to retain and engage diverse corporate talent
Even if companies have 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.
Lack of diversity in leadership weakens your retention and employee experience
Consider these impactful statistics about representation, belonging and inclusion.
- Representation: 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.
- Belonging: 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.
- Inclusion: 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.
Key takeaway: 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.
So what do you do instead?
Empower your entire workforce with equitable access to education and mobility
The solution to the talent acquisition and retention problem isn’t outside the organization. Employers can boost DE&I talent efforts by turning inward and providing much needed opportunities to their existing employees.
The front line is often the most diverse – and overlooked – employee population
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 skilling 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.
How Chipotle increased retention 3X
Take Chipotle, for example.
To better attract and retain talent, they worked to transform their tuition reimbursement benefit into an education and skilling 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
- 3X retention rate among participants
- 7.5X more likely to move into management positions.
Want to see this process in the real-world? Check out our case study on a financial services company that not only made their education more inclusive – but saw a higher ROI.
Lean into the virtuous cycle of education and mobility to achieve a diverse corporate workforce
It’s a virtuous cycle. Leveraging education to create upward mobility for all employees improves diverse representation at both management and leadership levels, further driving retention and attraction efforts. But that’s just the tip of the iceberg when it comes to the ROI of DE&I.
When you create a culture of opportunity where all employees can thrive, you modernize your talent strategy and elevate your employee value proposition – creating a distinct market advantage. To learn more, speak directly with one of our experts.