Research suggests that companies with a highly diverse workforce are 36% more likely to outperform their competitors. Organizations that focus on hiring diverse talent observed a 57% increase in team collaboration, and they are also 70% more likely to succeed in new markets.
In the past few years, HR leaders were successful in making a strong case to increase the firm’s diversity and rolled out several key initiatives to this end. But everything changed in 2020. The COVID-19 pandemic is unlike any other in the 21st century. Companies and business leaders had to face the most important test of their leadership abilities. HR leaders were put in the forefront to handle the new and gnarly challenges posed by the pandemic– new ways of interacting with customers, employee wellbeing, working from home, hiring in the pandemic, engaging the remote workforce, etc. These unexpected challenges have slowed down the Diversity & Inclusion efforts for companies (especially for the companies with limited HR resources).
An increase in vaccination rates and higher adaption of companies to let employees work remotely are slowly helping companies to plan strategically and act on their key initiatives again amid COVID ambiguity. Hiring diverse talent might feel like a daunting task on the surface, but the current market conditions present a unique opportunity. COVID – 19 pandemic has disproportionately impacted diverse groups. A COVID-19 gender equality survey suggests that women make up to – 54% job losses in the US and 23% job losses in India post-pandemic. The pandemic also added significant mental stress to women. It is estimated that the time women spend on taking care of their family increased – 30% in India and by 2 hours a day in the US. These factors have impacted women disproportionately as they dropped out of the workforce or worked for fewer hours to take on additional family responsibilities. By ramping up D&I hiring, companies are uniquely positioned to hire the impacted diverse talent.
The abovementioned factors advocate for the need to run the diversity hiring initiatives as a serious and well-developed program, rather than promoting it as an awareness campaign within the company. This is precisely where data and analytics can help HR leaders.
Talent Market Analytics
Talent market analytics is the analysis of external labor market data facilitated by the use of econometrics, statistics, and data analytics. The purpose of implementing talent market analytics is to develop a hiring strategy and to hire candidates to meet the firm’s strategic objectives.
The process of understanding the external labor market using data is not new and the data to make these strategic hiring decisions is publicly available for the most part. In the United States, government agencies such as The Bureau of Labor Statistics (BLS) and Census Bureau provide data from several surveys that can help you to understand employment, wages, labor participation, education, etc. broken down at the level of gender, race, city, and job classification. In India, certain high-level statistics by State and City are available from sources such as the Office of the Registrar General & Census Commissioner, India, Ministry of Statistics and Programme Implementation. Other paid services such as – LinkedIn Talent Insights, Gartner TalentNeuron, EMSI, etc., provide access to the labor market data with a nice user experience.
Forward-thinking companies are already using labor market insights to source talent and understand each region’s diversity. But most of their efforts stop at creating PowerPoint presentations or developing vanity metrics that are not actionable. Below is a 4-step framework that companies can follow to improve their D&I hiring using talent market analytics.
Defining diversity and inclusion for an outsider can seem like a simple task. But the reality is very different; what D&I means to one company can be completely different from others. The objective of increasing D&I can be very different within various business units of the same company. For instance, IT and HR organizations within the same company can have an extreme gender/ ethnicity imbalance towards a specific group.
There are several primary dimensions of Diversity – Gender, Age, Race, Ethnicity, Physical Abilities, and Sexual Orientation. Some of them are visible and can be easily quantified, while others are hard to summarize.
Organizations need to define what D&I means to them. They need to clearly understand how the D&I efforts can improve their outcomes, and they need to do it at the function or business unit level.
After defining what diversity means to your company as a whole and to each function, it is time to quantify and measure what you currently have in your organization. Employees typically self-declare information about their ethnicity and race during the application process. The point of quantifying the diversity is to make sure you have an excellent foundational understanding of where you are starting and set realistic and achievable goals on where you want to go.
A good deliverable of this exercise should be a secure dashboard that can give leaders insights into the current diversity by organization, function, etc. Below is an example of a dashboard that was created using made-up data. It shows you the overall gender diversity of the firm, and the information is further broken down by several dimensions (year-over-year, function, etc.). It is imperative to understand the diversity w.r.t several other key HR metrics, for instance, the below dashboard studies – the variation in promotions awarded by gender, distribution of gender across locations, and the diversity of the workforce by tenure.
Once you developed a solid understanding of your firm’s diversity, it’s time to establish benchmarks using external talent market data. The significance of this effort is to help your requiting/ talent acquisition/ sourcing teams to get a pulse on the available talent. It will help the HR function to build a diverse candidate slate and present it to the hiring managers. For instance, the below chart shows the Female applicants who applied to the open requisitions vs. the talent available in the external market. The information is broken down by the job function.
The hardest part of this exercise is to align the companies job roles/ profiles with the external market. Most of the time, it is impossible to get complete alignment; it is essential to understand that the purpose of creating benchmarks is to get a directional understanding of the external talent market.
Measure the Impact of Diversity Initiatives
Ultimately, companies should integrate the requisition and external benchmark diversity data to measure how well they track their set D&I goals. For instance, they can assess the heterogeneity of received job applications and compare them with external talent market data for each job function, location, department, or hiring manager.
In the end, hiring managers should always hire the best and the brightest, but as an HR function, we can be sure that we presented a diverse slate of candidates that are in line with what we see in the external market.
Though it’s possible to analytically measure the impact of your D&I initiatives by recruiter, requisition, manager, etc., it’s essential to realize that improving D&I is a long-term game. Micromanaging D&I initiatives can cause unwanted stress among the recruiters; measuring the progress made on initiatives every quarter probably makes sense.
Diversity is no longer a hot topic or compliance necessity only. It’s crucial for fostering happy workplaces, productive employees, and a healthy bottom line. Because of that, companies should take control over their DI&E initiatives to ensure maximum success across all departments and organizational levels.
Although many business leaders rely on traditional strategies to achieve that, those that want to improve their diversity hiring should leverage external talent market analytics to get authentic insights. With this data, recruiters can customize recruitment and use labor demographics info to gear their strategies towards diverse and qualified job seekers.
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