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Written by
Changeboard Team

27 Jan 2013

27 Jan 2013 • by Changeboard Team

Accountability in business

The economic crisis, corporate scandals and banking disasters have pushed board accountability to the fore. Business leaders have been forced to come up with innovative solutions to change the way they do business to create competitive advantage. 

According to McKinsey & Co, companies with diverse executive boards enjoyed 53% higher returns on equity during 2008-10, while earnings before interest and taxes margins at the most diverse companies were, on average, 14% higher than those of the least diverse. 

Subliminal messages

According to Denise Keating, CEO of the Employers Network for Equality and Inclusion, unconscious bias happens ‘all the time’. “Research has shown that when the unconscious brain sees two things occurring together it begins to wire these together,” she explains. “For example, constant exposure to images and stories of women in child caring roles reinforce these neural connections.” 

According to Keating, our biases affect our perceptions of competence and therefore our hiring and talent management decisions. A 2012 study by the Policy Exchange found ingrained age bias in the UK labour market, while a 2009 study by the Department for Work and Pensions found significant ethnic bias. These studies, and others investigating areas such as appearance and sexual orientation, says Keating, indicate high levels of unconscious bias and the extent to which our unintentional people preferences play out in recruitment.

Keating highlights three types of bias. Affinity bias leads us to ignore the faults of people we like and notice those of people from groups we unconsciously don’t like. Confirmatory bias leads us to search for or interpret information that confirms our existing perceptions. And social comparison bias often manifests itself in the recruitment process – we like to appoint people from our ‘in group’. 

Raj Tulsiani, CEO of executive search firm Green Park, says: “Unconscious bias becomes tricky when ingrained in selection and promotion criteria, because it can lead to organisations hiring or promoting the same mindset, with leaders creating a ‘mini-me’ culture. Anything that stops the best candidate getting the best opportunity effectively harms the organisation.”  

Embracing diversity

One stumbling block could be that not all companies have recognised the benefits of having a diverse workforce. But with increased pressure on organisations and recruitment departments to streamline costs, is there ever any justification for bias? In this cost-focused environment, doesn’t hiring ‘like for like’ reduce risk and guarantee cultural fit?

“In the post-financial crisis environment, companies that harness the power of divergent thinking will succeed over those that cannot diversify and build their talent pool,” stresses Tulsiani. But he warns against simply paying lip service to it. “You need to apply insight and go beyond legal, moral or reputation-driven ‘tick box’ exercises,” he advises. 

For inclusive recruitment practices to be truly successful, Tulsiani believes that businesses need to decipher why diversity is important for their growth and ability to change on a practical level. He asserts that addressing unconscious bias needs to be integral to your overall HR strategy, but you need to determine whether this sits within the HR strategy or the business strategy, and why. “If it’s part of the HR strategy, there are many excellent training courses available,” he says. “But the real issue is around tackling which internal cultures, issues and candidate experiences are stopping your business being an employer of choice.” 

The role of agencies

Tulsiani highlights another issue to consider: diversity in your HR supply chain. He believes the recruitment industry has a responsibility to support the talent communities that it serves – if this doesn’t happen, unconscious bias can become endemic. “You can’t have diversity of thought in your organisation without diversity in your supply chain,” he says. 

Some headhunters provide practical diversity training and guidelines so that their consultants are positioned to avoid wilful discrimination, as opposed to the plethora of ‘vanilla’ non-embedded diversity statements, he says. But these recruiters often fall prey to one of the simplest forms of unconscious bias – a negative assessment of non-standard CVs and career paths. 

Tulsani explains: “CVs from diverse candidates often don’t look conventional, ie good school, good university, good corporate experience. So the recruiter may unconsciously exclude the minority applications, feeling that they are doing the best by the client. Often they lack the individual relationship or applied methodology to be able to provide detailed analysis in favour of the candidate.” 

Business compact

This issue has been recognised by the government, too. In April 2011, the deputy prime minister launched ‘Business Compact’ which aims to “ensure that recruitment processes don’t allow people to be inadvertently screened out because they went to the wrong school or come from a different ethnic group.” 

Business Compact suggests companies “could include increased use of name-blank and school-blank applications where appropriate” – so if a recruiter is not privy to the candidate’s name, ethnicity or background, there’s less chance of bias coming into play. However, it raises the question of how successful simply deleting names can be. Surely a ‘biased’ recruiter would reject candidates they believe are inappropriate further down the line anyway. 

Whatever complications Business Compact may throw up in the immediate term, more than 150 companies have signed up including Clifford Chance, BP, Aviva, Ernst & Young and Sainsbury’s. This demonstrates that many organisations are thinking positively about taking steps to promote unbiased recruitment practices for the future.

Role of HR

If you want to help eradicate selection bias within your own organisation, there are several steps you can take, suggests Keating. Review your person specifications and remove all unnecessary requirements that act as job filters or ways of narrowing your talent pool. Then only choose images and text that will appeal to a broad range of possible candidates. “Research shows that minority groups respond to adverts that reflect their social identity. But ensure that any case studies you use as part of selection tests do not favour any particular group,” she adds.

Keating also suggests you set diversity targets for recruitment agencies. “If you don’t ask you don’t get,” she says. “Without direction from their clients, there will be little motivation for recruitment agencies to field a wide range of talented candidates.”

Finally, be aware of the ‘halo effect’ – this operates at an unconscious level and allows candidates to pass through a ‘favourable filter’, by sending unconscious codes about who they are and their relationship to the interviewers, says Keating. 

Keating believes HR can influence staff and managers/leaders within organisations through training, workshops or coaching and mentoring. 

She adds: “Although specific unconscious bias training is in its infancy in the UK, several organisations have asked their staff to take ‘Implicitly’ – an online test of their people preferences. They are taking this forward into their people management processes and incorporating it into leadership training, to great effect.”

When it comes to equality, inclusion and diversity, Tulsiani believes the level of sophistication within HR varies wildly from one business to another. “The issue is not lack of effort or procedures; it is the lack of applied insight and business relevance. Until the business understands at board level how diversity can help them achieve their primary aims as a business, HR has a thankless task to best create the conditions for competitive advantage through diversity.”

Promoting diversity in recruitment: top tips

  • Include positive role images in your marketing materials, but more importantly, highlight yourcommitment to diversity. 
  • Involve a range of people when drawing up person specifications and be challenging. Ask: ‘do we really want this for success or is it just what people (and I) do? 
  • Pay attention to the language used: Does it contain overt bias or invoke concern about stereotyping? 
  • Check competency lists for words associated with sport, the military, home or caring. Are they included for good reason?
  • Schedule assessments and interviews to be inclusive and avoid the risk of indirect discrimination.

Denise Keating

Denise Keatingchief executive, Employers Network for Equality & Inclusion

ENEI is the only not-for-profit organisation in the UK supporting employers on all protected characteristics within the Equality Act 2010.

Raj Tusani

Raj TusaniCEO and co-founder, Green Park

Raj is one of the leading figures in the UK’s senior interim management and executive search industries.