Tackling the Pipeline Problem

1. Are we adequately planning for workforce needs on a regularly scheduled basis to allow for an objective recruitment cycle for open roles? The real or self-imposed need to fill a role quickly might lead to shortcuts (e.g. using personal networks or posting to an internal site) that exclude qualified applicants from the role. Using a standard approach to recruitment allows room for achieving greater candidate diversity by posting opportunities in more locations, bringing more objectivity into the interview process, interviewing more than one diverse candidate at a time (which is proven to increase the odds of hiring a diverse candidate), and building relationships with potential hires before needs are identified.

2. Are we intentionally building positive relationships with diverse populations and organizations that go beyond immediate recruitment needs? Brand equity plays a significant role in talent development at every stage, and impressions are likely to differ across cultures. In a strong talent market, these impressions often serve as a gateway to hiring.

3. Have we mitigated bias in our hiring and promotion processes? Recent research by Judd Kessler and Corinne Low highlighted “How Companies Committed to Diverse Hiring Still Fail.” Their findings showed how race, gender, and prestige (e.g. graduating from an elite university) still impact the hiring decisions of managers, even in firms that have stated commitments and initiatives around diversity and inclusion.

4. Do we have robust structures in place to develop and support our workforce? At the basic level, this might include formal mentorship and sponsorship opportunities for diverse talent. Today, many companies recognize the need to build an ecosystem that educates all employees on best practices for working and leading diverse teams as well as creating opportunities for building community and leadership pathways across silos within the organization. Successes in diversity recruiting at junior levels could be thwarted by a firm’s inability to retain professionals as they progressed to more senior positions. It’s easy to see the ethical case for diversity, equity, and inclusion, but does it deliver for shareholders? A study by McKinsey found that there is a strong financial case for diversity, but that progress is slow: companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile—up from 21 percent in 2017 and 15 percent in 2014. Similarly, companies in the top quartile for ethnic diversity were 36 percent more likely to have above average returns. Still, many observers question whether this is correlation or causation. We would like to believe it is the latter, and regardless, who among us wouldn’t prefer to lead an organization that values and promotes diversity, equity (fairness), and inclusion? Your stakeholders will demand it, and increasingly your shareholders will, too. State Street Global Advisors, the asset manager that typically votes five to ten percent of the shares of the largest publicly traded companies, launched new policies in 2020 for engaging with companies on topics of board and workforce diversity. Last year, they told board chairs that going forward they expect companies to communicate specifically on 1) the role of diversity in the company’s human capital management practices and strategy; 2) the company’s goals regarding diversity; 3) measures of the diversity of the company’s board and global employee base; 4) goals for racial and ethnic representation at the board level; and 5) the board’s role in overseeing diversity and inclusion. Given that the voting power of the Big 3 asset managers often reaches a quarter of a company’s outstanding shares, CEOs and boards take these pronouncements seriously. They can make or break a contested vote on director reelections or the annual advisory vote on executive pay. HBS graduates will soon be making decisions about how to best recruit and retain team members for their organizations. We have a few suggestions: gain awareness of your implicit biases, challenge your initial assumptions, and work hard to evaluate candidates objectively. Within your teams, advocate for and support diversity with the understanding that it will only make the collective stronger. When leading or working closely with organizational leadership on recruitment, ask the questions we raised above, share examples of other firms genuinely pushing toward similar goals, and engage with diverse organizations and institutions beyond just recruitment. The past year added urgency for all of us involved as business leaders to hold ourselves and our organizations accountable to improve the environmental and social conditions that we perpetuate. Unfortunately, blaming a lack of diversity on the depth of the talent pool reflects a traditional institutional mindset that is out of touch with the needs and experiences of a contemporary workforce and the communities the organization serves. Let’s use this moment as a learning opportunity that will help us create the change we wish to see and make a positive difference in the world.