We all know there are costs associated with making a new hire. Hours of manpower and work go into sourcing, screening, recruiting, interviewing, hiring, and onboarding a new employee. Making this process efficient and cost-effective is a must for any business.
Most estimates put the average cost-per-hire at around $4,000 for a mid grade employee, but higher-level positions can cost even more. If you’re a corporation who hires hundreds or thousands of employees every year, an inefficient hiring process can make a huge dent in your budget. Companies have found a variety of ways to address this issue, from automated recruitment platforms to creating employee referral programs to easily source talent.
Everyone knows about the hidden costs of neglecting your hiring process. But few are aware of the hidden costs associated with neglecting workforce diversity.
In many ways, recruiting and hiring talent is similar to selling a product. Candidates move through different stages of awareness. In latter stages, applicants do research on the position, the company and its culture, and, eventually, reach a decision-making process if they are offered the role. At each stage in this funnel, the company’s diversity and inclusion infrastructure, plans, and program visibility influence a candidate’s perception and decision-making.
Jobseekers are paying attention to D&I efforts; 67% of active and passive candidates stated that a company’s diversity efforts are important to them when evaluating new job offers. Not only that, but 57% of all current employees surveyed felt similarly. Meaning, the current workforce is also expecting change or, at the very least, acknowledgement of this meaningful issue. Neglecting diversity efforts can actively drive qualified talent away from your company, as employees and job seekers alike prefer opportunities within diverse companies.
There is an abundance of talent from all backgrounds, cultures, and walks of life. These professionals, in addition to their skills and years of experience, bring unique viewpoints and fresh perspectives that provide companies a competitive advantage. Companies that limit themselves to ‘same of the same’ candidates for example, people who graduated from a handful of universities, can’t be surprised when they end up with a homogenous company culture. And homogeneity can be costly.
Homogeneity hamstrings company performance, has severe impact on an organization’s ability to innovate, and there simply isn’t much of a business case for continuing to carry on with a uniform workforce. Refusing to invest in diversity because “this is the way we’ve always done our recruiting and hiring” ignores the massive economic, social, and reputational benefits that a diverse workforce brings to the table. The case for diversity has been proven by extensive research, whereas the business case for homogeneity has not. Companies can be successful when they’re composed almost entirely of white men, but in an interconnected and global market, these homogenous companies will quickly go the way of the dinosaur. Organizations that refuse to change with the times and innovate to the needs of their audience will find themselves replaced by their more inclusive counterparts.
The truth is, diversity also relates directly to a company’s financial performance. It has already been proven that diverse companies, for example, those with women in major leadership positions, are more likely to be profitable, and the business case for high levels of corporate diversity grows stronger with each new study. Neglecting diversity in recruitment efforts will eventually impact your talent pool and your bottom line. And this is without even going into what immense impact diversity has on innovation.
While some organizations now recognize the hidden costs that come with not prioritizing diversity and inclusion in their recruitment effort, they are also recognizing the hidden financial costs that come with sticking to a homogenous workplace environment. There are the obvious effects of bad publicity — walkouts, employee pushback, and, occasionally, loss of business from frustrated consumers.
Many PR blunders can be attributed to a lack of diversity. Without a variety of viewpoints in the room, blind spots can emerge. Unconscious bias puts “blinders” on a public relations strategy and creates tunnel vision. This leads to mistakes that, had the room been more diverse, might have been avoided. For example, KFC recently issued an apology for a sexist, objectifying ad they ran in Australia. In it, a woman in a low-cut top pushes up her breasts and examines her breasts in the reflection of a car window. The window rolls down to reveal two young boys, ogling her, and a disapproving mother in the driver’s seat. The woman sheepishly suggests KFC in a rather bizarre transition.
Would this ad have made it to the air had a woman been involved in its ideation? Perhaps, but perhaps not. These sort of mistakes impact a company’s reputation and employer brand, which can make recruitment difficult and more costly. Outside of the realm of recruitment, the rise of consumer activism encourages customers to ‘vote with their wallets.’ Companies with negative reputations will not only have a harder time finding talent quickly, it could also potentially impact profits.
Oftentimes, these disasters can be avoided by having diverse perspectives at all levels of leadership. A variety of viewpoints creates higher levels of cultural awareness and more opportunities for mistakes to be stopped before they ever even occur.
These factors compound on each other and lead to stagnation. To keep up with their competitors, companies need to pursue diversity recruiting and commit to it on every level of leadership. Neglecting diversity efforts will end up costing you candidates, funds, and leads to a negative business reputation. In today’s ultra-connected world, organizations can’t afford not to invest in diversity and inclusion work.
The good news is the embracing diversity is a lot more cost-effective than neglecting it. The benefits are obvious: increased innovation, higher profitability, and a happier, more productive workforce, just to name a few. Partnering with D&I professionals, educating your employees, and getting feedback from your staff are all concrete steps organizations can take towards investing in diversity. So, take a look at your organization’s D&I strategy and discover ways it can be improved. You can’t afford not to.
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