HR & Management
4 reasons diversity in hiring improves productivity and profitability
5 min read
17 April 2018
The most fundamental argument for increasing diversity in hiring is that there is a large, partially untapped pool of talent that has been previously overlooked.
For some people, factors beyond their basic ability to do the job create additional challenges to getting work. The argument from employment equity is that there are numerous barriers to employment for certain individuals and groups.
Their circumstance may mean they cannot work for months or years in unpaid internships to pay their (unpaid) dues prior to a paid position. Others have valuable skills, but cannot work Monday to Friday, 9 to 5 because of personal or family responsibilities. Some prospective high potentials have physical or mental challenges that have developed from a malady, misfortune or military service.
Listing all of the barriers to employment, and ranking or rating them, is a counter-productive endeavour that will enrage the Twitterati in one way or another. The focus must be on identifying the attributes that predict the ability to do well at work, and not letting irrelevant characteristics get in the way.
Some people have natural advantages that help them get ahead. This is not an argument in creating barriers for them. Really, it boils down to finding the best person for the job. It is about best practice in hiring, development and promotion. Identify people based on factors that predict their potential to succeed, and don’t base hiring decisions on irrelevant criteria.
Best practices in employment equity are essentially the same as best practices in identifying high potential. It means making selection, training and retention decisions based on factors that accurately and reliably determine performance. It ultimately boils down to finding the best people, wherever they may be, in the interested of making the best decisions for the business.
The best HR practices create an environment where everyone has the opportunity to compete without unnecessary barriers, and the firm hires the best candidates.
Reasons for diversity and employment equity
1. Fundamentally, the question of hiring and promoting is about finding the best person for the job. Identifying top candidates has always been a business imperative. Employment equity can increase the size of the potential talent pool. Bias in hiring, selection or recruitment reduces the potential talent pool by excluding people who do have the potential to be successful. Poor selection criteria leads to hiring people who are not necessarily the most capable.
2. Equitable employment policy can enhance the range and breadth of knowledge and experience that employees bring to a firm. A more diverse workforce can bring a greater understanding of target markets, clients and prospective employees. Innovation and insight can come from any source. Diversity can enhance organisational learning because teams may have a wider range of knowledge and experience to draw from.
3. Equitable employment practices typically lead to greater diversity. Being surrounded by the most talented, intelligent and motivated people is more engaging for everyone. This means that high potential people with a broader range of experience and background bring new, interesting and useful knowledge and abilities to work.
4. While there are intrinsic reasons that can improve profitability and productivity at work, there are also more clear-cut, legal reasons. In employment law, the legality of identifying the appropriate characteristics which determine a candidate’s performance is referred to as bona fide occupational requirement (BFOR) or bona fide occupational qualifications (BFOQ). This means people are judged based on factors that predict their ability to perform well in the job.
A competitive advantage
Evidence supports the value of strong, equitable hiring practices and diversity in firms. Research from McKinsey in 2015 across hundreds of companies in North America, Latin America and the UK shows those with greater gender and ethnic diversity were more likely to outperform local competitors. Similar studies find companies with greater diversity are more effective at expanding market share.
The idea of diversity and having equitable employment practices is, fundamentally, an issue of firms developing the best practices to draw from the widest possible talent pool and find top talent.
Ian MacRae is co-author of High Potential: How to spot, manage and develop talented people at work.