7 Bottom Line Reasons Diverse Hiring Is Good Business Sense

Building smarter, efficient and agile teams takes more than just filling an open position. It's about attracting top talent while avoiding the culture-fit hiring trap. “This trap is known as trying to recruit someone with the skills and experience to help scale a company, but when interviewing candidates, focusing on office cultural issues instead."

When you focus on more than just finding a good cultural fit for the office, you just might see you're not another company facing diversity issues.

But as anyone who's ever tried to recruit top candidates can tell you, it's no easy task. Sometimes you need a different approach to help you reach your goal. So, here are seven bottom-line reasons that diverse hiring can fast-track your path to finding the top talent you need.

How Lack of Diversity Keeps You From Attracting The Best And Brightest Talent

As you probably know, the STEM talent gap and low unemployment rate have made it tougher than ever for businesses to recruit the skilled talent they need. The “war for talent" is on and skilled workers are in demand. Maybe that's why almost one-third of senior leaders say finding talent is their most significant managerial challenge.

Here's an illuminating statistic: “A whopping 82% of companies don't believe they recruit highly talented people. For companies that do, only 7% think they can keep it."

Potential employees are more discerning than ever about which companies to work for. For example, almost half of American millennials consider a diverse and inclusive workplace as an important factor in a job search.

So when it comes to attracting and retaining employees in a competitive world, it's important to understand the role increasing diversity plays in becoming an employer of choice.

For Tech Companies, Building More Inclusive Workplaces Is Not A Luxury

It's no secret the tech sector has a diversity problem.

What may surprise you is the impact the lack of diverse hiring practices is having on many companies.

Tech giants like Google and YouTube have faced lawsuits because of their hiring practices.

A National Urban League study sparked criticism of the tech industry after revealing that at companies like Twitter, Google and Facebook, fewer than 3% of tech workers identify as black. According to the report, “In the vast majority of [social media and tech] companies, fewer than 5% of the workforce is African American. By contrast, at least half of the workforce in these companies is white."

A lack of diversity can make a company unattractive to potential employees. For example, research found that 47% of millennials want to work at diverse companies. Yet, according to research conducted by Bloomberg, "all-male teams make about 38% of the decisions in a typical large company, and the gap is even worse among less diverse firms like those in Silicon Valley's technology industry."

As you can see, there are very real consequences to bias in the workplace.

What Every Hiring Manager Should Know About Having a Diverse Workforce

Here are seven bottom-line benefits of building a more diverse workforce.

1. You'll Have More Sales Revenue -- According to the American Sociological Review, companies reporting the highest levels of racial diversity generate nearly 15 times more sales revenue than companies reporting the lowest levels of racial diversity.
2. You'll Attract and Retain Better Applicants -- Glassdoor research found that 67% of job seekers said a diverse workforce is important when considering job offers. Most high-quality candidates (54% of women and 45% of men according to a PwC survey) will research whether a company has diversity and inclusion (D&I) policies in place as they decide whether or not to accept a position. Candidates also investigate the diversity of the company's leadership team when deciding whether to accept a job offer (61% of women and 48% of men according to the same survey). In other words, diverse hiring has a direct link to employee retention and engagement.
3. You'll Connect With Your Customers -- A diverse team can help you develop new ideas and products your customers can relate to. Maybe that's why almost half (49%) of employers surveyed for LinkedIn's Global Recruiting Trends 2018 said they focus on diversity to better represent their customers.
4. You'll Solve Problems Faster -- Research published in Harvard Business Review found that cognitively diverse teams solve problems faster than teams comprised of people who are cognitively similar. The researchers noted that, “people like to fit in, so they are cautious about sticking their necks out. When we have a strong, homogeneous culture, we stifle the natural cognitive diversity in groups through the pressure to conform." Another research study found a direct link between inclusive decision-making and better business performance, reporting diverse teams make better business decisions 87% of the time.
5. You'll Be More Innovative -- Deloitte has published research showing when employees feel their company is “'committed to and supportive of diversity, and they feel included', their ability to innovate increases by 83%."
6. You'll Earn More -- A recent study published in Harvard Business Review found companies with higher diversity in areas like gender, immigration status and age "had both 19 percent points higher innovation revenues and 9 percent points higher EBIT margins, on average."
7. You'll Have Higher Cash Flow -- A 2015 study from Bersin by Deloitte reported diverse companies showing 2.3 times higher cash flow per employee over a three-year period than non-diverse companies did. Also, a study from McKinsey found “companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry median."

These insights into the changes happening in the workplace should help you prepare for...

The Future of the Workplace

The role of the hiring manager has changed dramatically along with the workforce and economy. That evolution will continue as globalization leads to an increasingly diverse workforce.

But that doesn't mean the need to build more inclusive workplaces in the IT industry today is any less important. Tomorrow's technology companies will need to be innovative, competitive and they'll have to be attractive enough to top talent to deal with an increasingly agile and restless workforce.

With a majority of decision-makers planning to increase headcount in 2019, it's important to remember that diversity and inclusion aren't just buzzwords. And, they aren't about quotas. Hiring managers need to fill their pipeline with the best and brightest talent so their firms can compete globally.

In other words, building more diverse and inclusive workplaces is good for business, especially in the technology industry.