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Striving for a diverse workforce is a dominant issue for human resource professionals. Its evolution in human resources has given diversity a new face. But a simple definition of diversity is different for each organization. Today diversity in the workplace encompasses more than the traditional view that focuses primarily on gender and race. It has taken on a much broader definition. The changing demographics of the labor force and marketplace are making it necessary for companies to step up their diversity recruitment programs. According to the Society for Human Resource Management, leveraging workplace diversity is increasingly seen as a vital strategic resource for competitive advantage.
What is Diversity?
What is your organization's definition of diversity? Today, there is more to diversity than just gender and race. It has evolved from anti-discrimination compliance to focusing on inclusion, and the impact on a company's bottom line. Diversity in today's workplace refers to racial minority groups, ethnic minority groups, women, older persons, persons with disabilities, persons of nontraditional sexual orientation, persons for whom English is a second language, and other nontraditional groups. According to one human resource generalist, another dimension of diversity even includes characteristics that influence our lives and our value systems. Some of these include geographic location, income, religion, recreational habits, educational background, work experience, parental status, and marital status. So, there is no one set definition. The definition of diversity depends on the organization and its stage of development regarding workforce diversity.
Why is Diversity Recruiting Important?
Diversity recruitment is good for business. Diversity recruiting is important to a company's profitability. In today's global economy, buying power rests in the hands of people from all walks of life. To appeal to this large customer base, companies need to hire people from all walks of life. By employing a diverse workforce, companies can tap into their specialized insights and knowledge about the marketplace. This is why it is becoming increasingly important for a company's makeup to reflect the makeup of their customer base.
Diversity recruitment is also important if a company wants to build a quality workforce. Demographic changes that are affecting the labor pool and available talent will make diversity recruitment a growing factor in the coming years. Companies will have to adjust to the changing demographic composition of the labor force to stay competitive in today's marketplace. What are some of these demographic changes that will affect the labor force in the coming years?
The labor force is becoming more diverse. Minorities are the fastest-growing part of the labor force. The growth rates for diverse groups are projected to be faster than the rate for whites. The Hispanic labor force is projected to grow by 34 percent from 2004 to 2014. The Asian labor force is expected to grow at a comparable 32 percent. The African American labor force is projected to grow by 17 percent from 2004 to 2014. The labor force of women is expected to grow by 11 percent during this period.
In contrast, the labor force of white men is only expected to grow by 7 percent during this period. As a result, 57 percent of the labor force will be women and people of color by 2014, reaching nearly 92 million. White men will be a minority, only representing 43 percent of the labor force, or 70 million, by 2014.
The workforce is aging. The labor force will be affected by the aging of the baby-boom generation (persons born between 1946 and 1964). The labor force will continue to age, with the number of workers in the 55-and-older group projected to grow by 49.1 percent. This is nearly 5 times the 10 percent growth projected for the overall labor force. With competition for talent growing, companies are becoming increasingly concerned about how to retain older workers.
The workforce is becoming more global. Over the next 10 years it is hard to believe that North America and Europe are only expected to produce 3 percent of the world's new labor force, while 75 percent of the new entrants will come from Asia.
Advantages to Having a Diverse Workforce
Companies that diversify their workforces will have a distinct competitive advantage over those that do not, especially in the coming years. There are several predominant factors that motivate companies to have diverse workforces. A recent report from the Society for Human Resource Management identifies six key reasons recruiting a diverse workforce should be part of an organization's strategic goals and objectives:
Another advantage of having a diverse workforce is being able to utilize its knowledge when it comes to relating to different groups in the marketplace. This is becoming very important as purchasing power in the United States starts to shift in the near future. According to the Selig Center for Economic Growth, the purchasing power of minorities in our country will outpace that of whites in the next five years. For example, in 2009, the combined buying power of African Americans, Hispanics, Asian Americans and Native Americans is expected to exceed $1.5 trillion. This is more than triple the 1990 level, by a gain of $1.1 trillion, or 242 percent! The buying power of whites, in comparison, is only expected to increase by 140 percent. Imagine having a diverse workforce to help reel in the immense buying power of our future minority population.
Positive community relations are another advantage of employing a diverse workforce. When companies develop outside relationships or partnerships with minority communities and suppliers, they are building a reputation for goodwill and establishing themselves as an "employer of choice." In the long run, a company can experience lower turnover once it has built a favorable reputation and a more positive employer brand. These positive external relationships help it to better attract the best talent.
Building and Maintaining a Diverse Workforce
An effective diversity recruitment program can provide companies with a valuable competitive advantage. Competing for skilled and talented employees is challenging, and will become even more challenging as demographic trends change the labor force. In addition, competition from other countries, lower education levels of U.S. workers compared with other countries, U.S. immigration challenges, and fear of terrorism in the U.S. add to the stress of competition. To make the task more difficult, the retirement of the Baby Boomers in the next 10 years makes retention of older workers a key concern. For these reasons, an organization needs to be prepared and take steps to help turn an average diversity recruiting program into a "shining star."
Use Referrals
Referrals can be a powerful tool for diversity recruitment programs. Diversity referrals work well when current and former employees can adequately market your organization. Employee referral programs should routinely measure employee perception. This way, both current and former employees are empowered with the information necessary to express why they work where they work, and why someone might want to consider joining them. There are four ways to improve the effectiveness of an employee referral program:
Offer Incentives, Recognition, and Rewards
Few companies are offering rewards for identifying or hiring diverse people. Employees can be given a small reward for just identifying the names of diversity candidates. Rewarding managers for great diversity recruiting is a must. About 5 to 10 percent of all individual hiring managers' pay should be based on diversity recruiting and retention results. The success of diversity recruiting could also be tied to senior management pay, as well as the director of recruiting and the vice president of human resources.
A company can make itself more appealing to its diverse workforce by increasing employee satisfaction. For example, benefits and workplace programs, such as reward initiatives, flexible work arrangements, and phased retirement, are appealing to older workers.
Establish College Relationships
Establishing relationships with colleges is another good way to diversify the workforce. Companies can establish ties with the student chapters of minority professional organizations. One way is to sponsor scholarships for school minority groups, such as the student chapter of the National Black MBA Association. Bringing in students as interns is another effective strategy, with the idea of eventually hiring them to participate in a management training program.
Connect With External Diverse Professionals, Organizations, and Communities
In addition to building college relationships, companies can build other outside relationships with minority organizations. Relationships with community and philanthropic groups also help companies with their long-term diversity efforts. A program that recruits from part-time schools, community colleges and other post-high school educational programs can help pull in more minorities.
Components of a Successful Diversity Recruitment Campaign
Establish Clear Goals
A successful diversity recruitment campaign starts with clear goals. Having a plan for building and maintaining a diverse workforce will give organizations an extra edge for when those changes come. For a diversity program to work, a company must make sure that goals are tailored to the needs, issues and goals of the organization and its core values and priorities. The goals of a diversity recruitment program must be communicated throughout the entire organization in an effort to achieve both internal and external objectives. All levels of employees should be made aware of the importance and function of diversity recruitment program objectives. Training is one good way to accomplish this. Once these internal objectives are reached, it makes it easier to reach external goals. Employees are better able to assist the organization in their efforts to identify key diversity candidates.
Build the Business Case for Diversity
Powerful and effective arguments need to be made for excellence in diversity recruiting. For a diversity program to work, an organization must build a "business case" or economic case to managers for having a diverse workforce. Top management must support diversity for reasons more than just avoiding legal issues or to be politically correct. They have to be made aware of the business and monetary impact that diversity recruiting can have on the bottom line of an organization, pointing out the many advantages of having a diverse workforce. Senior management must be committed to the vision to provide strength to the program and must be held accountable for results. According to an article by the Society of Human Resource Management (SHRM), "creating a culture of inclusion requires leadership commitment throughout the entire business enterprise."
Use Market Research
Human resource professionals should make use of the latest market research to diagnose and improve their existing diversity recruitment campaign. Market research can benefit diversity recruitment in two important ways: identifying candidate demographics, and identifying their job selection decision criteria. Market research can help an organization understand "who" it is trying to sell to, and their basic demographics. Market research also helps identify what these candidates expect in a job through the use of surveys and focus groups.
Build Diversity Message into Company Employment Brand
Another very important way to make diversity recruiting more effective is to build a diversity message into your recruitment brand. Minorities need to be shown that a company is a good place for them to work. Get the word out that your company is a good place to work by using referral programs, sponsoring minority- or women-based events, providing unique workplace benefits, using award programs to recognize employees, and using your recruitment website to post your company's core values and profile individual employees.
Use Metrics
Using data about their workforce can help companies track results and identify diversity management concerns. Metrics help identify strengths and weaknesses in a diversity recruitment campaign. They can also help support the business rationale for diversity, because metrics provide a true measurement of why diversity matters. Employees and management need proof that diversity is a business issue and has strategic importance to organizations.
Using HR Metrics to Track Diversity Recruitment
According to a recent survey by The Conference Board, over three-fourths of human resource professionals indicated that they expect their use of human capital measures to help meet strategic goals will increase over the next three years.
Effectively measuring diversity initiatives has been a struggle for many companies. For some, measuring results is tough because the necessary data needed to measure diversity has not been collected. For example, diversity programs usually produce intangible results, such as improved communication or improved teamwork. Once these intangibles are converted into monetary values, companies can determine their Return on Investment (ROI). Following are traditional tools used to measure diversity:
Research shows that broader measures are likely to be more comprehensive and can better demonstrate the business impact of diversity management. Companies can establish broader organizational metrics in the following six categories:
Measuring the ROI of Diversity
There are several intangible variables linked to diversity results that can be converted to monetary values. These include:
There are five basic steps for converting intangible results into monetary values:
1. Identify a unit of measure that represents a unit of improvement
2. Determine the value of each unit
3. Calculate the change in performance data
4. Determine an annual amount for the change
5. Calculate the total value of the improvement
The Diversity Return on Investment (DROI) is calculated by using the diversity initiative cost and benefits to get the Benefit/Cost Ratio (BCR). BCR = diversity initiative benefits divided by diversity initiative costs. This ratio is also called a Cost-to-Benefit ratio.
The DROI calculation is the net benefit of the diversity initiative ÷ the initiative costs: DROI% = (net diversity initiative benefits ÷ initiative costs) x 100. This is the same basic formula used to evaluate other investments in which the ROI is reported as earnings divided by the investment.
Here is an example: the initial cost of a diversity awareness program may be $50,000. The measurable value of the program is determined to be three years. During a three-year period, the program will have a net savings of $30,000 ($10,000 per year). Since the average book value is about half the cost, the average investment in this case is $25,000 ($50,000 ÷ 2). The average ROI = annual savings/average investment ($10,000/$25,000)
= 40%.
Barriers to Success
A significant barrier to the success of a diversity recruitment campaign is the lack of knowledge about the advantages of having a diverse workforce in the first place. Workplace diversity is not usually seen as a means of increasing sales and profits. Instead, diversity staffing is often mistaken for affirmative action or even as reverse discrimination. Another barrier to success is the myth that diversity staffing has never been proven to work.
Another barrier to the success of a diversity recruitment campaign is that the educational levels of some minorities are historically lower than other demographic groups. Consequently, recruiters are still challenged to find enough people to fill certain positions. Overall, 31 percent of non-Hispanic whites age 25 and older have a Bachelor's degree or higher. Among diverse groups, Asians are generally educated to a higher level than other minorities. In fact, 49 percent of Asians age 25 and older have a Bachelor's degree or higher. In contrast, only 12 percent of Hispanics and 18 percent of Blacks age 25 and older have a Bachelor's degree or higher. Also, although Blacks are better-educated today and are much more aware of opportunities than they were even 10 years ago, fewer are enrolling in high-demand technical college programs, such as engineering and other sciences.
Even just plain geography can be a barrier to recruiting diverse candidates. Minorities tend to live in urban areas. Hiring Asians to more rural areas, or even small cities, is challenging because they live primarily in coastal cities. The greatest gain in Asians over the past decade is in cities such as New York, Los Angeles, and San Francisco. To help solve this problem, some companies have set up small offices in urban areas so that employees who prefer to live in the city can still be employed by them. Adjusting work polices to allow more telecommuting and virtual work can help give companies that leading edge in recruiting a diverse workforce.
One more thing that can be a barrier to the success of striving for a diverse workforce is lack of clear goals. Determining your company's definition of diversity is a first step. It is important to make clear the purpose and goals of a diversity recruitment program so a company can assess successes and effectiveness of the program.
Conclusion
The definition of workforce diversity is still evolving. Because companies all have different needs to fill in terms of diversity, and are at different stages in developing their workforce, their definition of diversity will be different as well. Once an organization has decided what diversity means, that definition should be used to create specific diversity program goals and be communicated to the entire organization. It is important for the entire workforce to realize that there are more than just legal reasons why a diverse workforce is advantageous. Providing a strong business case to senior management that diversity has direct impact on profit is imperative. Using metrics can help an organization track progress of a diversity recruitment program and find strengths and weaknesses. Metrics can also help prove that diversity recruitment is important to a company's bottom line. At the same time, a company needs to communicate that it really is a great place to work, and include its diversity message in its employment brand.
In a competitive labor market, you need the services of consultants with proven techniques and powerful solutions. NAS Recruitment Communications has the expertise to offer you consultation on a wide range of employment issues, and the most extensive capabilities in the industry. To discover how NAS can help you develop the employment brand and media strategies to meet your long- and short-term needs, contact NAS today.
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