Strategy & Leadership

Companies must treat diverse recruitment like any other strategic growth imperative

July 06, 2020


July 06, 2020

John Rice

Founder and CEO

John Rice is the Founder and CEO of Management Leadership for Tomorrow (MLT), a national non-profit organization that is transforming the leadership pipelines of our most influential organizations by driving breakthrough results for individuals and institutions. 

Prior to MLT, John was an executive with the National Basketball Association, where he served as managing director of NBA Japan, and as director of marketing for Latin America. Before joining the NBA, John spent four years with the Walt Disney Company in new business development and marketing.

John serves on the Board of Trustees of Yale University, and he is a Director of Walker & Dunlop, a NYSE-traded real estate finance company. He was appointed to President Obama’s Advisory Commissions on Educational Excellence for African Americans and on Historically Black Colleges. He is an advisor to Northeastern University’s Center for Inclusive Computing. John also serves on a number of non-profit boards, including the Woodrow Wilson National Fellowship Foundation, and venture philanthropy fund New Profit.

John received his MBA from Harvard Business School and his BA with honors from Yale, where he was a three-year starter on the basketball team.

As America hits an inflection point on race and racism, the corporate sector has also reached a turning point on its diversity and inclusion (D&I) journey.

Employers of all kinds will now be required to make a choice: back up their strong anti-racism statements by upgrading their D&I efforts or continue to fall short. The good news is that a winning playbook for D&I strategy and execution already exists; companies just need to follow the formula they effectively apply to every other aspect of their business.

In corporate strategy departments, companies articulate three-to-five-year quantitative and qualitative targets along with interim progress indicators. They then identify and prioritise the key investment levers that provide the best shot at achieving those goals. These levers are informed by a deep understanding of underlying challenges and opportunities.

If companies applied their core business planning frameworks to their D&I strategy, they would accelerate progress towards achieving a critical mass of minorities at all stages of their leadership pipelines. Instead, they fall into a doom loop. They fail to define success because discussions about goals in the context of race and gender are uncomfortable and perceived (incorrectly) as legally risky while sceptical executives inappropriately associate targets with quotas. They fail to understand the root cause of the challenges because the conversations are awkward and getting candid insights isn’t easy. Without goals and an understanding of underlying drivers, it is impossible to prioritise investment levers or establish interim metrics. Such companies must simply revert to a strategy defined by “let’s do better than last year”, which would not be acceptable anywhere else in the firm. Too many otherwise well-managed organisations settle for those six words. The strategy thus becomes a series of “random acts of diversity” instead of a coherent set of investments aligned with intended outcomes.

Employers fall into similar traps as they execute their D&I strategies. They once again fail to follow best practices that they know drive change in other parts of their business, including defining roles and responsibilities, establishing clear accountability and mapping out key processes. Companies need to recalibrate their talent-acquisition and talent-management engines to actively include a focus on diverse talent. Recalibration in talent acquisition, for example, should incorporate changes that (a) maximise the number of diverse candidates entering their recruiting process and (b) optimise the yield of those passing through every stage of the screening process.

Successful implementation of any D&I initiative requires three things:

  1. Know-how:  Most companies’ recruiting tactics resemble those of elite universities: build an aspirational brand; promote its distinguishing features; watch the applications flow in; admit the candidates they know best because of their family relationships; and admit the very best of those they do not know based on how they look on paper. Hiring (akin to university faculty recruitment) remains an opaque process built around insider referrals and targeted outreach to those whose profiles fit narrow competencies.
    Employers can acquire the know-how of diverse talent recruitment by emulating how oil companies operate. Oil engineers determine where the deposits should be; invest over multiple years in drilling capacity to find the wells; build the infrastructure to transport the raw materials to refineries; and execute a highly-curated process to transform them into finished products.
    • Invest in identifying and building relationships with candidate pools over the course of one or two years so there is a critical mass of diverse candidates primed and prepared to enter the recruiting process.
    • Proactively cultivate diverse candidates at every stage of the screening process and facilitate relationship-building with existing staff so that lesser-known talent can compete on similar footing to white candidates who may have insider friends and family paving the way.
    • Take an asset-acquisition mindset: get to know great candidates, cultivate them and find roles for them as positions become open rather than trying to find unknown candidates that fit the narrow criteria of specific roles on an ad-hoc basis.
  2. Capacity: Organisations expect recruiters and hiring managers—who are already working at a deficit because most do not have diverse networks—to move the needle on diversity recruiting without allocating more than 10-20% of their time to it. This is a pipedream. Concentrate bandwidth and don’t spread it across the organisation. Any one recruiter should be fully dedicated or at a minimum 50% allocated to identifying and cultivating relationships with diverse candidates who fit the profiles of successful people in the organisation.
    Employers must also allocate sufficient bandwidth to ensuring diverse candidates have a fair chance at getting through the process. Recruiters, hiring managers and HR staff need to be trained to monitor and enforce adherence to process enhancements. These include diverse interview panels, diverse candidate slates and transparent decision-making, all of which reduce persistent bias in the screening process. Otherwise, hiring managers will continue doing what they have always done—hiring those with whom they have the most in common.
  3. Accountability: When an organisation has the know-how and capacity in place to execute a winning approach, then and only then can they hold their staff accountable for results.
    Recruiters should be evaluated and compensated not only on candidate pool outcomes but also on how far diverse candidates progress. Incentives should be weighted to medium-term outcomes (one or two years) rather than three-to-six-month hiring objectives because rewarding short-term outcomes will only work against a firm’s strategic goals. Human resources staff must be held accountable for process quality metrics. They must ensure that hiring managers are trained on unbiased, anti-racist hiring practices and that they are held accountable for following them. Senior executives and hiring managers should have a meaningful percentage of their performance evaluation and incentive compensation tied to diverse hiring outcomes at both the department and business-unit levels. That way, hiring managers have discretion on individual hiring decisions but must make those decisions knowing how they will influence their department’s progress towards its annual hiring goals.

It should come as no surprise that well-managed companies embed know-how, capacity and accountability into all their other high-priority change-management initiatives. Whether it’s strategy or execution, an operating unit or D&I department, rigour always wins. So when organisations let their standards for rigour in D&I fall below their own bar, the results are poor. Failure bolsters the flawed belief of sceptical executives that increasing diversity comprises excellence when it’s actually their own approach to diversity that counts.


The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.

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