March 25, 2021

The Real Cost of Hiring Bias: Why Inclusive Recruitment Is a Business No-Brainer (+ 4 Real HR Formulas to Help You Prove It)

Illustration of a head with the the brain showing and the word Bias in the middle

For too long companies have avoided the thorny issues around hiring bias—but post-2020, those issues can no longer go on unchecked. 

With older people struggling to stay in work, women having to choose child care over careers, and disproportionate unemployment among people of color, the time to put diversity, equity and inclusion (DEI) first, is now.

But even companies who actively try to boost DEI often only scratch the surface—and getting it not-quite-right costs time and money. 

From unconscious bias to unwilling managers, the obstacles to an inclusive hiring process are difficult to overcome. But when you can actually see the real cost of hiring bias, you and your internal decision makers will have even more incentive to get it right.

In the words of our friend Stacey Gordon of Rework Work, “Many organizations assume that bias comes in the form of overt discrimination and since they’re not doing that, there isn’t anything wrong with their process.”

It’s just not enough.

“For companies to track and measure inclusive hiring practices, they first have to decide what to track and measure and why. Then the how will reveal itself. When you don’t know why you’re doing something or what effect you expect it to have, tracking it is very difficult. It’s like trying to measure how fast a marathon runner ran the marathon when there was no specific path laid out,” says Stacey.

The good news is, with a handful of metrics to prove the ROI on your DEI efforts, a deeper understanding of what makes us all biased (and how to conquer your inner judge), and some concrete steps for meaningful operational change, you can drive for diversity in a truly tangible way.

Ready to tackle hiring bias for good? Let’s do this.

Beyond the noise: What does hiring bias actually look like?

Everyone was affected by the Covid pandemic—but some groups have been hit harder than others. Where hiring bias already existed, the issues have been pushed to breaking point. 

Let’s break it down to see what hiring bias actually looks like today: 

  • Black workers have seen a 13% drop in employment rates vs. a 7% employment drop for white workers. 
  • During the first 6 months of the pandemic, workers aged 55+ were 17% more likely to be laid off than their younger colleagues.
  • Hispanic women have experienced historic levels of unemployment, which rose to a devastating 20.5% in April 2020. 
  • Mothers of children aged 12 and under are 3X more likely than fathers to have lost their jobs due to Covid. 

In other words, DEI is no longer just about boosting company culture, it’s about lifting up our entire community.  

As the founder of Future Work Design, Katie Augsberger has over 15 years’ HR experience and several HR awards under her belt.

“I think what most folks get wrong about the role of bias, is that we think we can totally remove it. We cannot.  Bias exists in each of us, and unfortunately, bias is deeply baked into many of our HR tools and processes. The best we can do at this moment is reduce the opportunity for it, learn to name it when it's happening, and hold ourselves and our organizations accountable for outcomes,” she explains.

How to avoid unconscious bias in hiring

Unconscious bias is the silent killer of even the best-laid recruitment plans. It’s the bias you can’t see, that everyone is prone to. 

Ethan Salathiel, Co-Founder & Executive Coach at Bound Coaching and Behavioral Change explains, “Unconscious bias is in us all. We make fast judgements about the world and people all the time. So, when looking at shortlists and recognizing familiarity—such as people that went to the same University as us—we’re in danger of recruiting in our own image rather than embracing difference and diversity.”

Here are a few ways to avoid unconscious bias in hiring:

  • Know your weaknesses (and challenge them): “Being aware of your own biases and taking the time to challenge yourself to think differently is part of the solution,” says Ethan. 
  • Minimize your need-to-knows: To make the hiring process as fair as possible, make sure you only ask for the information you really need. Tech is your friend with this one. For example, background check tool Checkr allows you to filter out unnecessary info about low-impact criminal records. 
  • Get more eyes on the prize: If you’re still wary about the role of unconscious bias (and you probably should be), ask relevant colleagues to sense-check your decision making—even better, ask a diverse range of colleagues for their views.  

Ready to make your hiring more inclusive? Check out our list of the top job boards for finding diverse candidates.

4 meaningful metrics to prove inclusive hiring is a business no-brainer

Numbers speak louder than words—and for managers with their heads in data all day, it can take using data to convince them DEI is a worthwhile investment. 

HR expert and strategic talent management MVP, Dr John Sullivan, says: “I find most diversity metrics garner little or no interest from executives, primarily because most reported diversity metrics are literally 100% operational in nature. Instead, restrict your metrics to those that strictly cover strategic business results to get more attention, credibility, and funding.” 

Here are four meaningful metrics that your managers will actually care about: 

1. Percentage of diverse hires in high-impact professional and management jobs

“Diversity hiring numbers can be deceptive if the hiring only occurs in low-level hourly jobs. Instead, demonstrate that your diversity hiring is occurring in jobs with the highest business impact,” says John. 

Let’s break that down into numbers:

“First off, separate your diverse hires over the last year by job,” says John. 

“Then, calculate the percentage of all diverse hires placed in jobs with the highest business impact (i.e., product development, customer service, professional, management, and executive jobs). 

Then compare diversity hiring percentages in each job category to the target. 

Showing that more than 30% of diversity hiring is in high-impact jobs will impress executives, ensure that diversity hiring is visible and have a greater impact on leading the direction of the company,” he finishes.

New hire performance levels

“All new hires do not reach the same performance level. This delayed assessment metric allows you to demonstrate that this year's diverse new-hires have delivered higher on-the-job performance than last year's diversity hires,” explains John.

Here’s how the must-know metric works: 

“The best way to determine if recent hires are top performers is to assume their manager would judge only top performers to be ‘instantly rehireable’. Recent hires’ re-hireability can be determined with a simple survey of the new hire's manager after six months,” explains John.

Here’s what the survey should include: 

  • “If today you had a chance to reopen the hiring decision for this employee, would you today wish to consider other candidates? 
  • Or would you pass on the opportunity to see new candidates? 
  • Based on their performance so far, would you choose to keep this recent hire?” 

“All of the ‘instantly rehireable’ diversity employees would be considered top performers. The percentage of improvement in the average ‘re-hireability rate’ from one year to the next would be an indication that you are now getting better performing hires,” explains John.

  1. Diversity employee turnover rates

1 in 4 candidates say their desire for a better company culture is among their top reasons for leaving a role—and each one of those failed hires costs you money.

Here’s how to work out exactly how much you can save by boosting company culture and reducing turnover: 

Let's say you're a 100 person company with a 10% annual turnover rate.

ND = 10

If you spend $20,000 per person on hiring, $10,000 per person for onboarding, learning, and development, and lose out on $40,000 for lost productivity each time you have to refill a role. 

C = $70,000 

ND x C = $700,000 (your annual turnover rate).

Now let’s say you focus on DEI to boost company culture and manage to bring this number down by 20%. That’s already a saving of $140,000! 

Looking for more help with employee turnover? Find out What Your Employee Turnover Rate Really Says About Your Company.

Prove your business impact

There’s only one way to 100% persuade managers to invest in new programs: convince them it will boost revenue.

Lucky for you, DEI and increased revenue go hand in hand. In fact, according to a recent Deloitte report, companies with inclusive talent practices generate up to 30% higher revenue per employee.

Here’s how to apply that to your company productivity: 

Let’s say your company generates $30K in one week with 100 employees.

$30K / 100 = $300 weekly revenue per employee. 

Now say you implement an inclusive talent program that ups your revenue by 30% per employee. That means an extra $330 weekly revenue per employee, which increases your total by a whopping $3K per week!

Beyond the numbers: Ask the right data questions 

It’s easy to get caught up in the power of numbers. But remember, measurement and tracking is only as good as the interpretation and sustainability of that data over time. 

Ethan Salathiel explains, “Companies should track and measure inclusive hiring practices more systematically. Often, we focus on one element at one point in time—like ensuring that key DEI questions are asked in the initial candidate application form. This provides data to show that X% of candidates identified as Y, so the organization can report they’re recruiting from a diverse pool of people. However, what happens to the successful candidates after they’re onboarded?”

For Ethan, data is only as powerful as the questions you ask of it. 

“We need to be asking the right questions of the data to truly move the dial on inclusion, such as ‘How long does it take people from diverse and minority backgrounds to get from onboarding to senior management?’ and ‘What are the relative diversity pay gaps at each level and why?’ This type of information will signpost any barriers or bias in the employee lifecycle, and gives the opportunity for organizations to address any issues more holistically,” says Ethan.

How to actually reduce hiring bias (AKA less talk, more walk)

Know your biases

Tim Sackett, recruiting talent expert and podcast hero, is a highballing HR pro with over two decades in the game. 

When it comes to walking the diversity walk, Tim is all about focusing on unconscious bias. 

“The biggest lie HR pros can tell is that ‘It's everyone else, but not me.’ The truth is, unconscious bias is in all of us: HR, TA, hiring managers, men, women, Black, and white. No one is immune from hiring bias. It might seem like nothing, ‘Oh, sure, I like hiring people from Harvard, but that can't be bad, right?!’ Well, if you're hiring someone from Harvard over a better candidate who went to a state school then, yes, that's a bias that is hurting your organization,” explains Tim. 

And when it comes to overcoming that bias, there’s only one answer: Put. The. Work. In. 

“Every single one of us has biases when we hire. The key is knowing what your biases are, so you can mitigate those,” he says.

Go beyond the resume

Ethan Salathiel, Co-Founder & Executive Coach at Bound Coaching and Behavioral Change, has dedicated his life (and business) to building inclusion in the workplace. 

That’s how he knows bias starts and ends with the candidate experience.  

“Bias is all around us. We need to critically analyze employee experience by examining hiring process touch-points—what it looks and feels like for the candidate,” says Ethan.

But if you can’t get beyond the resume, you’ve fallen at the first hiring bias hurdle.

“If people don’t fit the job role requirement ‘on paper’, it doesn’t necessarily mean they can’t do the job. We live in an age where innovation and resilience are key qualities for the evolution of the workplace. We should be looking for hints of this in people’s resumes and giving these aspects greater weight (for example, evidence of agility and cross-transferable skills),” explains Ethan.

Although tech can help screen resumes—it’s still important to ensure there’s a human behind the hiring tool.

“Sadly, it’s often a case of ‘computer says no’ with resume screening software—(in some cases) searching for keywords takes the human element out of the process. We have to screen in order to shortlist but it’s about the weighting and importance placed on these tools. At the end of the day, we have to sense-check and realize there are human beings on the receiving end of the process,” he says.

Always include a pilot project

Sarah Corboliou knows great inclusive hiring when she sees it. 

As Head of Employee Success at Unito, Sarah oversees the company’s DEI programs and has been integral in the company’s efforts to remove gender bias in hiring: in 2020 they had an impressive 50/50 women to men ratio among executives and management, and their female employees’ salaries are a solid 6% over the industry average.

For Sarah, one of the biggest hurdles is to learn how to spot high potential, even when the candidate is holding back in an interview. 

“As we all know, minorities tend to 1) not be as comfortable as men when it comes to selling their skills & experience and 2) might not have resumes that are as impressing (e.g. More junior on paper but tons of potential and raw skills). If all you have to make a hiring decision are impressions gathered from interviews, there’s a big chance white males might look like the best candidates for the job. The truth is, interviews bias you towards candidates who are good at selling themselves. It’s a great skill to have when looking for a job, but it’s not a necessary skill in most roles!” says Sarah. 

Her solution is simple: include a pilot project in the hiring process. 

“Adding a pilot project to the interview process allows us to test out our candidates in a less artificial environment. Some people we thought were the perfect candidate in the interview, end up completely failing during the pilot. It also allows us to comfortably let less straightforward candidates pass the interview stage because we know we’ll get a chance to test them out before hiring them,” she says. 

The results speak for themselves.  

“Among these candidates, we often see women who were under-selling themselves in the interview, minorities who don’t have the ‘right’ experience but have amazing potential and learning abilities, and all kinds of people who just don’t shine in interviews and are disregarded by other hiring processes,” says Sarah. 

Say no to salary negotiations

Sarah also believes transparent salary grids can have a major impact in empowering minorities. 

“We all know women are compensated less than men—and that’s partly because they don’t feel comfortable negotiating their salaries at the offer stage,” says Sarah. 

Her win-win solution is to do away with salary negotiation. Period. 

“We have full salary transparency and fixed salary grids (we even bumped the salaries of traditionally women-dominated roles to help close the gap), which means there’s no room for negotiation. We evaluate a candidate's level of seniority in their role during the hiring process (6 levels, from entry to director or principal), and this gives us a salary that is already set in stone,” explains Sarah. 

No matter what candidates think they’re worth, Unito’s pre-planned salary grid means everyone is paid fairly. 

“If a candidate was asking for 10K less than they’re worth, it doesn’t matter, we’ll still pay them the same as employees in the same role, at the same level. If a candidate went to a fancy university or was referred by an investor, it doesn’t matter either: they will be paid the same as others in the same role. Our employees know nothing happens behind closed doors and they trust they’re being paid fairly throughout their tenure at Unito,” she says.

Streamline your hiring process

Known as the ‘Michael Jordan of Hiring”, Dr John Sullivan is a true HR powerhouse. 

He knows that when it comes to hiring bias, the hiring process is often as much to blame as the bias itself. 

“Blame the hiring process’s design, not biases, for most hiring failures,” says John, “Focusing on bias alone is where most recruiting leaders go wrong. Yes, there are lots of conscious and unconscious biases in the hiring process. However, the largest percentage of hiring discrimination and hiring errors are caused by hiring subprocesses (i.e., screening and selection) that fail because of their design.”

It’s not just John who believes the hiring process has its downfalls. 

“Google found that most interviews predict no better than a coin flip. Yet everyone still uses them, thinking that a 30-minute conversation where the information is never verified can predict performance on a job,” says John.

And the issues go even deeper.

“The process for identifying job qualifications is so broken that most screening requirements have little value in predicting on-the-job success. For example, years of experience and college degrees intuitively seem valuable, but they simply do not consistently predict on-the-job success,” he explains. “Other hiring processes, including the sources used, resume screening, candidate slate selection, and reference checking, are so flawed that they seldom end up predicting the best performers.”

For John, hiring bias always comes down to process—to get it right, you need to create a streamlined hiring process that works for everyone. 

“You should look at biases. But the real reason nearly 50% of all hires fail is the sub-hiring processes aren’t validated to ensure they’re accurate predictors of who will be a top performer on the job,” he says.

Keep the conversation going

As the Director of Recruitment for Spark Lifecare, Rachel Hammerton has had plenty of opportunities to put her psychology degree to use.

For Rachel, the key to fighting hiring bias is understanding how it plays out in your own mind, and in the minds of the other people on your hiring team.

“We believe that the first step is understanding our own biases. By having an understanding of them, we are better able to mitigate the effects of such biases and truly make the most inclusive working environment possible,” explains Rachel.

“Everyone has biases, but it's important to know what they are, be flexible with our approach, and tailor it to each person. Some people may not engage in the process as a whole or take appropriate equity, diversity, and inclusion training. Other mishaps may include not having accountable structures in place to check on both implicit and explicit biases as well as a lack of mentorship throughout the hiring process as a whole. Another misunderstanding can include the lack of a diverse and inclusive panel, as they can provide a varied lens/perspective to the process.”

And according to Rachel, that process must be ongoing.

“Inclusivity and diversity is an ongoing process. As such, we believe in transparency regarding our diversity, asking for personal feedback through surveys or on a one-on-one basis, and keeping track of the feedback from all members within our community to be able to properly review our policies. We also believe in embedding feedback processes in places for new hires, regular staff and community surveys regarding Equity, Diversity, and Inclusion initiatives, and having specific EDI outcome goals that we are striving for. Providing EDI training to all staff is also an important way to continue engaging in and providing services within an EDI lens.Furthermore, monthly or quarterly reports on such EDI efforts in an organization can provide the accountability that feedback is taken and acted upon as well.”

For Rachel and the high impact hiring team at Spark Lifecare, it’s all about the process of listen, act, rinse and repeat.

Make hiring bias a thing of the past

If there’s one thing we all need post-2020, it’s to move forward

The pandemic has left us with an awesome opportunity to get rid of the things that just don’t work, and build a better workplace—and DEI is central to that.

By utilizing powerful technology and insightful analytics, you can show the rest of your teams how things could look if you invest in an inclusive workplace. 

So what are you waiting for?