the measureable value of diversity and inclusion

1 www.launchpadrecruits.com

THE MEASURABLE VALUEOF DIVERSITY & INCLUSION

IN THE WORKPLACE


Introduction

What is Unconscious Bias?

The Business Case For Diversity & Inclusivity

Technology’s Role in Fostering Diversity & Inclusivity

Conclusions

IN THIS REPORT

03

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3 www.launchpadrecruits.com© 2016 Launchpad. All rights reserved | May 2016

Diversity and inclusivity (D&I) in the workplace is one of the most pressing and controversial topics in the business world today. This subject receives extensive coverage nationally and internationally – but are we simply paying it lip service? We explore the approach organisations are taking to make an impact in this area, and consider just how far they still need to shift.

Recent studies show there is a clear business upside to devoting energy and resources to the pursuit of equality and inclusivity in the workplace. Indeed, cultivating a diverse workforce isn’t just the right thing to do – it can help your bottom line, create more productive and sought-after teams, reduce turnover and bolster innovation. Rarely does a moral imperative have such tangible business benefits, and yet this area still doesn’t get the attention or action it deserves.

Much of the diversity conversation has centred around the 2010 Equality Act and its effects. Addressing “protected characteristics”, such as race, gender, religion, sexual orientation and disability, the Act consolidates laws that had previously been separate in order to give marginalised workers the highest degree of legal protection possible.

THE MEASURABLE VALUE OF DIVERSITY& INCLUSIONIN THE WORKPLACE


But not all biases are so obvious to identify – the topic of “unconscious bias” has been fervently discussed in nearly every industry for years. The idea is that the words and actions of virtually every professional are unknowingly guided by deeply held favouritisms, prejudices and preconceptions. While many are seemingly innocuous, they can still have a demonstrable and negative impact on the organisation.

As you might imagine, these biases typically revolve around race, class and gender – especially with regard to the ongoing wage gap and the shortage of female workers in STEM (Science, Technology, Engineering and Mathematics) related industries.

In response, governments and companies across the globe, including leading Silicon Valley firms like Google and Facebook, have adopted active strategies to address both conscious and unconscious bias in employment. Meanwhile, in the UK, similar initiatives are helping push companies in the right direction, with many going to great lengths to comply with laws like the Equality Act.

However, the issue of diversity and inclusivity is, at its best, a tricky one. Because of the highly-subjective, often invisible nature of such biases, it’s exceedingly difficult for HR professionals to actively address them, much less craft a coherent strategy to neutralise their negative effects.

THE MEASURABLE VALUE OF DIVERSITY& INCLUSIONIN THE WORKPLACE


Frequently, racial bias is understood as a social issue, and not necessarily a business one. If a resume is stellar, who cares whose name is at the top? Unfortunately, research indicates that racial bias causes quality – even exceptional – applicants to be regularly overlooked.

For example, a 2014 market research study conducted by John Nunley and his colleagues at the University of Wisconsin tested racial hiring bias by sending out over 9,000 fictitious resumes to online job advertisements. Each advert received four resumes with virtually identical qualifications, the only significant difference being a “black sounding” or “white sounding” name attached.¹

All told, assumedly black candidates received 14% fewer callbacks or interview offers than their equally matched, “white” counterparts. Significantly, that number dramatically increased under the influence of one variable – when applying for customer-facing roles, presumed black candidates received 28% fewer responses. The team also found this disparity increased accordingly with the requisite qualifications for a position – in other words, black candidates are most likely to be discriminated against at the highest levels.

1 http://cla.auburn.edu/econwp/Archives/2014/2014-06.pdf

© 2016 Launchpad. All rights reserved | May 2016

RACIAL PREJUDICES

http://cla.auburn.edu/econwp/Archives/2014/2014-06.pdf


GENDER INEQUALITYA 10-year study by the World Economic Forum indicates that, while the global average for women’s annual earnings has seen a noticeable increase, it still sits well below that of their male peers. From 2006 to 2015, the rate for women leaped from approximately £4K to £7.5K. That seems like an impressive rate of growth – until you realise that the average earning for men was £7.5K back in 2006, when the survey began. That number now stands at £14.5K, nearly twice that of women.²

In the UK, according to the Office for National Statistics, the gender pay gap stands at 14.2% for full-time work. This means that, in 2015, women effectively worked for free from November 9th until the year-end close.³ When you factor in part-time work, the gap widens to nearly 19.1%.

Surprisingly, among Britain’s highest earners, that gap widens to an astounding 55%, according to the Trade Union Congress (TUC). TUC General Secretary Frances O’Grady recently remarked, “It is shocking the UK still has such a large gender pay differences at the top of the labour market after more than four decades of equal pay and sex discrimination legislation.”⁴

Interestingly, these biases seem to only exist among those who don’t interact with female bosses directly. A massive 2013 UCLA study indicates that while almost half of professionals strongly prefer male over female managers in theory, professionals aren’t likely to rate their current boss more positively or negatively as a result of his or her gender.⁵

2 http://reports.weforum.org/global-gender-gap-report-2015/report-highlights/3 http://www.theguardian.com/world/2015/nov/09/gender-pay-gap-women-working-free-until-end-of-years/4 https://www.tuc.org.uk/equality-issues/gender-pay-gap-uk%E2%80%99s-top-earners-hits-55-says-tuc5 http://hum.sagepub.com/content/64/12/1555.full.pdf+html

“It is shocking the UK still has such a large gender pay differences at the top of the labour market after more than four decades of equal pay and sex discrimination legislation.”

FRANCES O’GRADYTUC GENERAL SECRETARY

http://reports.weforum.org/global-gender-gap-report-2015/report-highlights/

http://www.theguardian.com/world/2015/nov/09/gender-pay-gap-women-working-free-until-end-of-years/

https://www.tuc.org.uk/equality-issues/gender-pay-gap-uk%E2%80%99s-top-earners-hits-55-says-tuc

http://hum.sagepub.com/content/64/12/1555.full.pdf+html


CLASS DIVIDESocioeconomic discrimination is one of the most difficult biases to tackle because it happens to be the least visible. And yet, the signs of relative advantage (or a lack thereof) are all too clear – and they make an enormous difference.

According to research from the government’s Social Mobility and Child Poverty Commission, class discrimination in hiring, especially among top firms, is widespread. One central problem is that to enter elite organisations, applicants must pass a de-facto “poshness” test – a judgement of character is necessary in order to ensure right fit hires, but this particular strain routinely “exclude[s] youngsters who have the right sort of grades and abilities but whose parents do not have the right sort of bank balances,” according to Rt. Hon. Alan Milburn, Chair of the Commission.⁶

Similarly, graduates from Russell Group Schools, elite universities where students disproportionately come from wealthy backgrounds, have a hiring rate of 9%, versus the 3% of graduates countrywide.

But even as pernicious and unhelpful as class, gender and racial discriminations are, they’re merely a few pieces of a much larger picture. There are actually hundreds of other potentially destructive biases that must be countered in order to bolster diversity and inclusivity within the workplace.

70% of last years’ job offers from top law and services firms (providing 45,000 of the UK’s best jobs) were given to students from selective state or private, pay based institutions, and who represent just 11% of the population pool.

6 https://www.gov.uk/government/news/study-into-non-educational-barriers-to-top-jobs-published

https://www.gov.uk/government/news/study-into-non-educational-barriers-to-top-jobs-published


WHAT IS UNCONSCIOUS BIAS?

While the previously mentioned areas deserve ample attention in their own right, the vast majority of unconscious biases that professionals confront on a daily basis are far more subtle. They affect virtually every decision we make, including who gets hired, who gets a raise, who leads a team project and in whom you choose to place your trust.

Unconscious biases are the unwitting preferences we hold for some people over others, based on deeply-ingrained social categorisations we unknowingly construct throughout our lives.⁷ More than mere opinion, these categorisations have deep neurological roots in the essential wiring of our brains.

In childhood, we learn to make associations between types of people and qualities – perhaps we see older people as more frail, mothers as nurturing, young men as assertive, etc. – and those categorisations morph and solidify as we age through experience, media exposure and hearsay. Interestingly, we don’t have to even believe these categorisations for them to affect us. An unconscious biological reaction can

take place in just 30 milliseconds.

7 http://www.enei.org.uk/data/files/EOR_Jan._13.pdf

http://www.enei.org.uk/data/files/EOR_Jan._13.pdf


WHAT IS UNCONSCIOUS BIAS?

Neurologically, these unconscious biological reactions kick in a full 250 milliseconds before conscious thought begins, and can take place in just 30 milliseconds.⁸ In fact, we process about 200,000 times more information every second than we are consciously aware of. This means our unconscious opinions don’t just influence our actions – they actually hold more sway than our conscious reasoning.

Is this all bad? Not necessarily – unconscious thinking allows us to be the functioning, social beings we are. And although our brains become less adept at altering these categorisations as we age, they’re not set in stone.

Still, they dramatically impact our evaluations of people, leading us to cheer on mediocre ideas as exceptional, and to write off exceptional ideas as dumb luck. It’s often the case that supposedly well-reasoned hiring decisions are based purely on intuition. And this illogical process of “feeling out” who deserves what can involve many fallacies.

That’s a full 250 milliseconds before conscious thought begins.

8 http://www.cipd.co.uk/NR/rdonlyres/666D7059-8516-4F1A-863F-7FE9ABD76ECC/0/ Reducingunconsciousbiasorganisationalresponses.pdf


TYPES OF UNCONSCIOUS BIAS?

9 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2570773/10 http://gap.hks.harvard.edu/no-credit-where-credit-due-attributional-rationalization-women%E2%80%99s- success-male-female-teams11 http://gender.stanford.edu/sites/default/files/motherhoodpenalty.pdf

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2570773/


TYPES OF UNCONSCIOUS BIAS?

While the above biases are the most common in the workplace, there are hundreds of other cognitive biases that affect our day-to-day reasoning. Other examples include the “availability cascade”, which increases the likelihood we will believe in an idea the more it is publicly repeated (even if it’s false); the “hard-easy” effect, which causes us to be more confident in the results of difficult tasks, rather than easy ones; and “loss aversion”, which causes people to be almost twice as likely to avoid losses than accept gains.¹²

As difficult and unintuitive as it can be to address these biases, there is an important reason why HR professionals must strive to overcome them: they directly impact a business’ ability to deliver and reap the benefits of its people strategy. It may feel most natural to hire and work with people with whom you readily identify, but this mindset significantly hampers your ability to hone in on only the best and most productive employees and ideas.

12 http://psych.fullerton.edu/mbirnbaum/psych466/articles/tversky_kahneman_jru_92.pdf

http://psych.fullerton.edu/mbirnbaum/psych466/articles/tversky_kahneman_jru_92.pdf


THE BUSINESS CASE FOR DIVERSITYAND INCLUSION


THE BUSINESS CASE FOR DIVERSITY AND INCLUSION

In essence, D&I in business means surrounding yourself and your team with as broad a variety of opinions, backgrounds and experiences as possible. Of course, businesses should strive for equal opportunity for its own sake, but the path to such an achievement can often be unclear – companies typically strive to hire the most effective candidates, so shouldn’t meritocracy rule?

The reality is that it doesn’t, and managers must make a conscious effort to seek out candidates with diverse backgrounds and ideas. The best way to do this is by broadcasting a solid company culture and improving the candidate experience, which, of course, begins with the recruitment process.

As it turns out, taking an active role in promoting diversity has tangible business benefits – a solid D&I-minded recruitment strategy fosters intellectual diversity, enhances productivity, increases company desirability and has been directly linked to an increase in revenue. In fact, a recent American Sociological Association study found that for every 1% increase in the rates of gender and cultural diversity within an organisation, there is a 3% and 9% rise in sales, respectively.¹³

13 http://www.hrmagazine.co.uk/article-details/beyond-gender-diversity-dont-forget-the-tinted-ceiling

http://www.hrmagazine.co.uk/article-details/beyond-gender-diversity-dont-forget-the-tinted-ceiling



As a result, leading companies are realising that on-boarding as diverse a team as possible isn’t just something managers should do – it’s something they must do in order to stay competitive. And research bears out the fact that this is a very good idea. In companies where employees feel this notion of D&I is well-represented, workers demonstrate:

The results are particularly striking in organisations with diverse leadership teams. Indeed, such companies had 53% higher earnings and returns on equity than non-diverse teams. In the UK, this discrepancy was an astounding 66%.¹⁵

14 https://www.cebglobal.com/exbd/human-resources/corporate-leadership-council/diversity-and-inclusion/index. Page?15 http://www.mckinsey.com/insights/organization/is_there_a_payoff_from_top-team_diversity

http://www.mckinsey.com/insights/organization/is_there_a_payoff_from_top-team_diversity



A similar study conducted by the Center for Talent Innovation found that at companies with diverse leadership, employees report they are:

This is likely why, in a Forbes study of 321 global enterprises with over $500 million (£350 million) in annual revenue, 85% agreed or strongly agreed that diversity is critical for fostering workplace innovation.¹⁸ This is exactly what Intel CEO Brian Krzanich means when he says that “a fully diverse and inclusive workplace is fundamental to how we deliver business results.”¹⁹

16 http://www.talentinnovation.org/publication.cfm?publication=1400 17 http://asr.sagepub.com/content/74/2/208.short18 http://images.forbes.com/forbesinsights/StudyPDFs/Innovation_Through_Diversity.pdf19 http://www.forbes.com/sites/larrymagid/2015/06/09/intel-capital-investing-125-million-in-businesses-led-by- women-and-minorities/

http://www.talentinnovation.org/publication.cfm?publication=1400

http://asr.sagepub.com/content/74/2/208.short

http://images.forbes.com/forbesinsights/StudyPDFs/Innovation_Through_Diversity.pdf


A 1% rise in a workforce’s gender and cultural diversity results in a 3% rise in sales and a 9% rise in revenue.

American Sociological Association survey


WHAT’S BEING DONE ALREADY?

As a direct result, global business leaders like Facebook and Google are taking proactive steps to counter conscious and unconscious bias to foster a more diverse, innovative workplace.

In mid-2014, many large companies began to openly disclose their diversity information, numbers that were once thought to be a guarded trade secret. The results were fairly grim:

Google was 61% white and 70% male, Apple was 72% homogeneous within its executive leadership roles, Asian males were over-represented across the board and nearly all companies showed abysmal numbers for women, black and Hispanic employees.

In the face of intense public scrutiny, compounded by the realisation that being more inclusive of gender, race and disabilities would provide access to a wider pool of talent, these companies unveiled massive programs designed to uncover and combat unconscious bias. More than 26,000 employees have since taken part in Google’s unconscious bias workshops – Facebook’s series of bias management videos and recommended strategies have been extremely popular as well.

In 2014, 61% of Google’s workforce was white.

70% of Google’s workforce was male.


WHAT’S BEING DONE ALREADY?

Since then, a £5.5 billion-per-year diversity training industry has emerged, each consultant and tech start up therein striving to help counteract workplace bias and ensure equitable hiring practices for paying customers.²⁰ It’s become nearly a mandate for visible companies to take part.

Implicit bias tests, such at Harvard’s Project Implicit (we encourage you to take it), have become a foundation of this movement – they assess how rapidly and readily participants associate certain groups with either positive or negative words.

70% of respondents, regardless of background, race or gender, more closely associate men with “careers” and women with “family” – 76% have an implicit preference for white people over black people.

If everyone has unconscious biases in some way, shape or form, all professionals can candidly admit this and take steps to remedy the situation. Given the demonstrated failure of diversity programs in past decades, this big leap has been gaining a lot of steam in recent years.²¹

Apple was 72% homogenous within its executive leadership roles.

20 http://www.forbes.com/sites/ellenhuet/2015/11/02/rise-of-the-bias-busters-how-unconscious-bias-became-silicon- valleys-newest-target/21 http://static1.squarespace.com/static/5186d08fe4b065e39b45b91e/t/51e3234ce4b0c8784c9e4a ae/1373840204345/Paluck_Green_AnnRev_2009.pdf


HOW’S IT GOING FOR THEM SO FAR?

But for all the excitement, the results have been mixed. Despite thundering PR campaigns and public releases of training programs, diversity at leading tech companies such as Google and Facebook has remained steadfastly dismal.²² Amazon currently leads the pack with a 37% female workforce, a figure that isn’t exactly impressive.

Chief among the concerns of addressing unconscious bias is the inherent contradiction in trying to train something that is, by definition, uncontrollable.²³ It’s also impossible to chart the success of these programs without clear data trends – because of the relative newness of such techniques for addressing unconscious, there aren’t yet clear results suggesting they’re effective. While the conversation surrounding diversity has markedly improved, the tangible benefits of unconscious bias training are still uncertain.

What’s worse, recent research from a team at Washington University in St. Louis suggests that spreading awareness about unconscious bias actually promotes stereotyping.²⁴ Paradoxically, if people know everyone else is biased too, there’s less shame in acting out on those impulses. Where politeness and social fear may have once kept people’s mouths shut, anyone can now follow a blunder with, “Hey, we’re all like this, and I’m doing my best to learn.” As one of the studies authors, Melissa Thomas-Hunt, put it: “People tend to do whatever other people are doing.”

Nonetheless, we can’t pretend that a surging international conversation surrounding diversity, bias and inclusivity is not productive. For companies striving to improve diversity and promote cross-pollinated discussion, the law and social discourse is on their side – determined action and self-reflective critiques will gradually produce a more diverse, invigorated workforce. One area in particular, technology, is helping companies to do this across the board.

“People tend to do whatever other people are doing.”

MELISSA THOMAS-HUNTWASHINGTON UNIVERSITY, ST. LOUIS


TECHNOLOGY’S ROLE IN FOSTERING DIVERSITY & INCLUSIVITY

In every way, the challenges of conscious and unconscious bias are human problems – for just this reason, many companies are using technology and rethinking their processes to eliminate personal biases to the greatest extent possible. Where humans have trouble undoing unconscious bias, systems can be designed to make the process more fair.

While such reflection must obviously take place within every organisation, many managers have seen rapid improvements applying these strategies to outward-facing operations – namely, the hiring process. After all, a diverse workforce doesn’t just appear out of thin air. And like an inclusive staff, recruitment strategies tend to work best when they draw upon a variety of different perspectives.

The most popular step towards gaining objectivity has been to standardise the application process. By creating discrete criteria that all applicants must meet for a certain job, recruiters are prompted to deeply assess specific business qualities, rather than simply form an opinion of an applicant. Companies can actually aggregate the scores of recruits – by tabling an objective assessment, recruiters leave personal impressions at the door, and are much more likely to select the most qualified hire.²⁵

22 http://www.theverge.com/2015/8/20/9179853/tech-diversity-scorecard-apple-google-microsoft-facebook-intel- twitter-amazon23 http://diginomica.com/2015/09/18/what-i-learned-from-taking-facebooks-workplace-bias-course/#.Vf_B-24 http://www.ncbi.nlm.nih.gov/pubmed/2531436825 http://www.cipd.co.uk/NR/rdonlyres/666D7059-8516-4F1A-863F-7FE9ABD76ECC/0/ Reducingunconsciousbiasorganisationalresponses.pdf

http://diginomica.com/2015/09/18/what-i-learned-from-taking-facebooks-workplace-bias-course/#.Vf_B-

http://www.ncbi.nlm.nih.gov/pubmed/25314368



In other words, the interview process should be goal-oriented: companies must know exactly what they expect from a particular position so that recruits can be “selected in”, rather than ruled out – the latter tends to be a harsher and more subjective action. While Google has little to show for its diversity strategy, it has mastered the art of the structured interview. By using a standardised interview and question rubric, they allow the data to select the best candidates for them.²⁶ This can take some getting used to – interviewers covet the ability to “spot” superstar recruits – but is by far the most efficient and effective process in the long run.

In fact, many companies are using technology to identify and control biases against characteristics like race, gender, age and even name. In this way, companies can conduct blind interviews, where candidates are screened for qualifications alone.²⁷ Conducting a psychometric assessment alongside a structured interview is also helpful to gauge personality and work-habit fit. To track and aggregate the progress of candidates more broadly, companies use applicant tracking systems – they provide crucial feedback on the kinds of results their processes produce, and allow recruiters to screen candidates by keyword.

It’s often helpful to leverage this data to assess the tendencies of HR staff themselves – do certain individuals or processes tend to yield biased results? Are our recent hires the best possible fits, both experientially and socially, for our organisation?

26 http://www.wired.com/2015/04/hire-like-google/27 http://www.hrgrapevine.com/markets/hr/article/2015-11-18-how-technology-can-help-recruiters-overcome- unconscious-bias

http://www.wired.com/2015/04/hire-like-google/



Using this data, companies can make informed, data-led decisions in key areas of their people strategy, which, in turn, will have a direct positive impact on business performance.

Of course, interviews will always be a necessity. But as it turns out, the location, timing and setting of an interview largely determine how biased a given interviewer will be. As a 2015 CIPD report indicates, interviewers tend to be particularly “sloppy” and prone to snap judgements during times of mental fatigue or high “cognitive load.” The result is that, after multiple interviews, hiring managers are prone to relying on preconceptions to make decisions, rather than facts.²⁸

The remedy to this is twofold: the primary purpose of initial interviews should be to gather information, not make decisions, and the interview process should not be rushed – or at least spread out over several days. Technology can provide the ideal framework to manage processes, maintain consistency and provide an essential audit trail.

Adopting multiple forms of tech also allows companies to reach a broader demographic, in effect catering the hiring process to the needs of a more diverse applicant pool. By incorporating mobile services and engaging in social media, companies can make it far easier for candidates otherwise limited by location to apply. Better yet, managers can track the location and impact of any social media or hiring campaigns.

The primary purpose of initial interviews should be to gather information, not make decisions.



More than anything, soliciting feedback from candidates – both with successful offers and without – is invaluable to gaining better a better understanding of the candidate experience. The more seamless and positive your process becomes, the better the odds that more talented candidates from a wider range of backgrounds will come your way.

Using these strategies, HR teams will have a clear sense of a candidate’s attitude, experience, personal conduct and ability to perform well in their role by the time final interviews roll around. The key to upending unconscious bias and making it a moot point is to refine your strategy so you can select based upon merit alone. By defining the qualities you seek, your enterprise can ensure that it attracts the most diverse pool of qualified applicants possible.

The more seamless and positive your process becomes, the better the odds that more talented candidates from a wider range of backgrounds will come your way.

28 https://www.cipd.co.uk/binaries/a-head-for-hiring_2015-behavioural-science-of-recruitment-and-selection.pdf


CONCLUSIONSMike Ruddle, Managing Director of Capita’s Talent Consulting business puts his finger on the nub of the issue: “The big question to ask is, are we, as HR professionals, up to the challenge of changing our processes to support this requirement?”

“It is clear,” Ruddle explains, ”that if we fail to take heed that we should place diversity and inclusion at the centre of our policies and strategies we are likely to fail in our ambitions. And we haven’t even mentioned the role of technology and big data in supporting collaborative, flexible working practices or personalising talent management.”

Of course, some organisations are already making concerted efforts to address the area of diversity and inclusivity. Claire England, Inclusivity Manager at Berwin Leighton Paisner, explains:

“At BLP, diversity and inclusion is a strategic priority – we’re committed to creating an inclusive and inspirational culture where all of our people are valued, motivated and able to be themselves. This commitment was clearly illustrated by my appointment as Inclusivity Manager in 2014, and since then, I have formed an Inclusivity steering Group with Partner-Level representation to drive this agenda forwards – with the Managing Partner chairing this committee. But I wonder if this is as firmly at the top of every law firms’ agenda.”


CONCLUSIONSIndeed, as promising as the broader global trends are for ending workplace discrimination and promoting greater diversity, we’re still witnessing many notable shortfalls. It could be that we have our sights set much farther than where our feet lie – as with any process, we should expect to make many mistakes before we find lasting solutions through trial and experience. At the very least, conversations surrounding D&I have blossomed, allowing companies in the UK and worldwide to take a candid look at their current level of diversity and shape coherent strategies for a more inclusive future.

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