The Key to Unlocking a High-Quality Talent Pool? Data-Driven Diversity.
The Key to Unlocking a High-Quality Talent Pool? Data-Driven Diversity.
With the growing expectations of environmental, social and governance (ESG) for organizations, employers are under pressure by stakeholders, regulators, customers and investors to promote inclusive and socially responsible workplaces. But there is another group that also wants to see these practices from companies: talent. Studies are showing that talent, both current and potential employees, want to see diversity and ESG initiatives within their organization.
Diversity is more than an element of ESG, it also leads to better decision-making, improved innovation and increased employee engagement. Gabrielle Christman, President & CEO at Hunter International explains, “Diversity not only allows an organization to bring together different perspectives and experiences – which can leave to more informed and well-rounded discussions, a diverse workforce can also lead to innovative ideas, and improve employee attraction and retention.” Christman continues, “As society continues to put emphasis on the importance of diversity and ESG principles, job seeker motivations will reflect that, and employers will be expected to have made real efforts in recruiting and promoting diverse talent.”
However, just focusing on diversity is not enough for companies to enact change within their organizations. Christman explains, “Data-driven diversity is all about knowing your numbers. Understanding where you are will help you benchmark and set goals for where you want to be.” She continues, “While evidence-based, metrics-driven diversity practices can be intimidating to leaders, it is key in making improvements in this increasingly important space.”
Read on as we dive into the importance of data-driven diversity as it relates to attracting and retaining top talent and how employers can make strategic efforts to improve their practices.
The Importance of Diversity to Job Seekers
Job seekers today want to know about and understand an organization’s mission, values and initiatives before even applying for the role. As younger generations continue to enter the workforce, diversity numbers will play a larger part in this. A recent monster survey found that 83% of Gen Z candidates said that a company’s commitment to diversity and inclusion is important when choosing an employer.
The same sentiment goes for job seekers. A study conducted by Stanford researchers in partnership with Zippia found that job seekers were more likely to click on job postings when companies’ diversity scores were included. The researchers who conducted the study wanted to further understand how often diversity numbers were being shared by organizations. In their research, they found that of the firms who filed the Human Capital Disclosures with the SEC (more than 3,000 firms), only 17 percent disclose a firm-wide metric of racial or gender diversity. This is a large miss for the 83 percent of organizations that are not disclosing that information, as merely having the information publicly available helps bring in additional interest into open positions at the organization.
The study also found that having positive diversity numbers also may be of larger importance than other position benefits, such as salary. The study found that participants were more responsive to a 1% change in diversity scores versus a 1% change in median salary. As employers consider their hiring strategies, including diversity numbers (and working to improve them) in their employer branding efforts may bring in more applies and overall increase their talent attraction results.
The Importance of Diversity to Employees
When putting together a talent strategy, it is important to consider strategies to bring in top talent into the organization. However, to ensure top talent stays once they are hired on, companies should make sure that their talent strategy considers existing employees as well.
When it comes to diversity and inclusion, employees want to see efforts from their company as well. Research by Great Place to Work found that when employees trust that they, and their colleagues, will be treated fairly regardless of race, gender, sexual orientation or age, they are 9.8 times more likely to look forward to going to work, 6.3 times more likely to have pride in their work and 5.4 times more likely to want to stay a long time at their company. For employers, these numbers can be the difference between retaining top employees and losing them.
However, as a Harvard Business Review article points out, while some organizations are making efforts to offer DEI trainings, they are seeing little-to-no progress when it comes to make real change at their companies.
So, where can employers start? Beyond creating a diverse and inclusive workplace and increasing education and programming, employers can demonstrate their efforts to employees by exhibiting their diversity numbers and their goals for the future. Below, we will explain how employers can get started with data-driven diversity and make real impacts within their organization.
The Business Case For Data-Driven Diversity
Beyond talent attraction and retention, there are other benefits to implementing a DEI strategy within an organization. In fact, workforce diversity has been shown to have an impact on a company’s financial performance. McKinsey research found that 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. They also found that 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.
Beyond financial performance, diversity is also linked to innovation. A study by Harvard Business Review found that the most diverse companies were also the most innovative. They found that companies with greater-than-average diversity had 19 percent more innovation revenues. Innovation in essential in businesses who are constantly looking for the next product improvement and/or advancement in their field.
And while these numbers shouldn’t be surprising, it points out that along with employee engagement, attraction and retention, diversity can impact bottom-line numbers in more ways than one. Executive teams that want to truly move the needle should consider adopting a data-driven approach to diversity.
How Employers Can Get Started With Data-Driven Diversity
After getting leadership and executive teams on-board with a data-driven diversity strategy, employers will first need to assess what metrics to measure. Beyond the demographics of groups in various positions, metrics should include actionable numbers to identify areas in which there might be barriers to certain groups. These can include numbers about salary, time at which it takes different demographic groups to move up positions, how groups move through the hiring process, etc. From there, employers can assess the data and identify areas of concern. Are there discrepancies in data between groups? Do certain groups seem to fall-off at specific areas? These questions and more should be utilized to understand areas of improvement.
Once identified, it is essential for leaders to take action. Employers should create tactics to address concerns and set goals that are both specific and measurable. Organizations can start by making small, thoughtful initiatives to make improvements within their organization’s talent attraction, retention and promotion strategies. Gathering employee and manager feedback from these initiatives is essential in understanding the effectiveness of each tactic.
Once employers make a commitment to diversity, they should not shy away from self-promotion. It is important that as initiatives are being made, companies display their efforts and progress toward goals. Information regarding this should be promoted to employees, prospective talent and stakeholders. However, companies should be conscious of keeping audiences updated while still being protective and thoughtful about sharing the data.
Additionally, employers should set a process for reviewing data and benchmarking progress periodically to ensure progress is being made toward their goals. While knowing the numbers is important for employers, keeping them updated and tracking progress is essential in making real change. Setting a process for reporting and reviewing numbers with key decision-makers will allow for organizations to keep themselves accountable in their DEI efforts.
The first step for organizations is to know their numbers. From there, actionable and strategic steps should be taken to create measurable, impactful change within the organization.
Looking for a hiring partner that can help transform your talent attraction efforts? Learn more about Hunter’s workforce solutions!