Why fair hiring decisions help companies survive
Diversity, inclusion and belonging might sound like buzzwords, but they are critical for a modern business to succeed especially during challenging times.
This was proven during the last global recession when research from Devah Pager showed that companies with fair hiring practices in place were twice as likely to survive. Her research showed that the percentage of companies who went out of business due to biased hiring practices rose from 17% to 36.4%.
We’re now facing another global recession and the question is will we learn from past mistakes? Or will we keep hiring the same way and potentially fail during the economic downturn?
When the economy is doing well, fair hiring processes are often overlooked, assumed or forgotten about. Companies tend to rely on the easiest and quickest approach such as employee referrals, recruiting from the same universities and short informal hiring processes. CVs, application forms and unstructured interviews are often the norms that companies are willing to accept.
Can you fill a job with this approach?
But will you confidently know you hired the best person for the role… probably not.
You might get lucky and hire the right person, but more likely than not it won’t work out, which can result in a huge cost to the business. Some estimates for the cost of a bad hire range from $15,000 to $240,000 or roughly 30% of an employee’s annual salary, in short, it costs your business a lot of time and money.
The biggest problem that we have in hiring at the moment is people trusting in their gut, relying on intuition and bias to try and make an effective hiring decision. If people keep relying on intuition without using data and structure in their hiring process they will keep being lucky, or wrong.
When it comes to hiring we believe that there has to be more consideration; a fair and structured approach using data has to be an essential part of the process. It will be the only way companies can build diverse teams, represent the people they serve and succeed as a business in the future.
Hiring is difficult.
There are no two ways about it, hiring the right people is hard and interviews can be one of the most challenging aspects for companies to get right. Candidates and interviewers have to overcome a lot of obstacles and often the process is stressful for both of them.
The interviewer wants to give a good impression of the company and encourage the candidate to buy into the brand, team and role that they are hiring for. They are trying to ask the right questions and capture as much information as possible to make an informed decision on who is the best candidate for the role.
The candidate is trying to sell themselves, be likeable and build some rapport with the interviewer whilst trying to show that they have the behaviours, skillset, mindset, ability or attitude that will make them stand out and seem perfect for the role.
Both parties want the interview to flow like a natural conversation without breaks, pauses or incessant note-taking or typing. They both want to find out as much about each other as possible in the short amount of time they have interacting with each other.
A fair interviewer will be patient, waiting until after the interview to review and score the evidence and data they have collected. A poor interviewer will have either made their decision on “intuition” during the interview or will ask themselves questions like “Could I go to the pub with this person?” or “Do they feel right?”. This is not a fair or accurate approach and won’t work when you are growing your company or are already hiring at scale.
Consistency is vital, especially for interviews
People often ask me why we still use interviews when it comes to hiring if they are hard to get right.
If interviews are fair, structured and the right amount of time is invested into developing them they can be one of the most accurate, cost-effective and efficient ways to hire. Incredible teams can be built from a diverse range of backgrounds if everyone in your organisation knows how to interview well and uses a consistent approach.
Applying the right processes and safeguarding your interview approach will help make interviewing a fairer, less biased and ultimately more successful part of your overall business strategy.
By ensuring the same consistent approach to your selection process for all candidates and supplying your interviewers with the right framework, question set and scoring criteria result in a more objective decision.
This structured approach ensures the same questions are being asked of all candidates, covering the same ground and allowing them to all have the same chance of answering each question. Good interviewers will know when to ask probes to get more information from more reserved candidates or to keep other more talkative candidates on track.
This does not mean that you have to lose all personality from an interview, it can still be a two-way conversation, but it is very focused and structured to ensure fairness for everyone.
Alongside this, studies have shown that when candidates feel the hiring process is fair, they perform better in interviews and assessments. Keeping your hiring model fair and open to applicants creates a level playing field allowing the best candidates to excel.
If you have fair hiring practices you are more likely to succeed in building a diverse workforce.
Why diversity and inclusion matter
Over the last few years, diversity and inclusion have changed from a tick box exercise into a core part of the strategy of companies.
Many companies now act on a global stage and are realising that they need to represent the customers that they serve within their workforce. There are so many reasons for needing diversity and inclusion as a core part of how an organisation operates, not just in the representation of customers, diversity of thought or because it is the right thing to do.
Studies have shown that everything from employee satisfaction to productivity improves with a more diverse workforce. Happier employees are more productive and do better work. It is that simple.
However, it is not just about hiring a diverse range of employees, but also the celebration of those differences. Allowing all of your employees space to be individuals as part of your organisation will allow them to feel more represented, more welcome and more accepted in the workplace.
Through better and fairer hiring decisions, a more diverse and harder working team can be created that will perform to a higher level and are more likely to help your business survive and thrive in the long run.