Around 10 years ago I was doing some work with a FTSE 500 company…name obviously withheld to protect the innocent….and the subject of recruitment came up. This was in the days following the publishing of the Lord Davies “Women on Boards” report which aimed to push the issue of gender equality forward.  The company in question was pretty typical of the time in that their own board was heavily reliant on white men between the ages of 55-65 to fulfil their main leadership positions. More than that though, when you dug deeper the senior team and those at the next level down tended to share the same interests and cultural backgrounds. This led to the question “When we say cultural fit (I’ll explain why I dislike this term later) do we really mean people who are like us?”

Why it’s an easy trap to fall into

With the average person spending 90,000 hours at work over their lifetime it’s perfectly natural that we want colleagues who are great to work with and easy to get along with. Alignment to a set of shared values IS important when you’re recruiting so that new people assimilate quickly to the company and adhere to the overall values of the business. After all our values as a business should run through how we operate day to day, how we make decisions and how we look to grow. However, Derek Loosvelt, a writer for the industry insights website, The Vault, believes that, “too often, fit and cultural fit means something to the effect of ‘You are like us in that you look like us, appreciate the same kind of food as us, come from the same racial and socioeconomic background as us, support the same professional sports team as us, even are the same gender as us.’” By following this train of thought in their hiring processes I’ve seen companies (large and small) start with great intentions when looking to hire on cultural fit but ending up assembling teams that look, sound and think the same as well as having the same interests. So how costly is it to get hiring wrong and simply take people who think the same way as you?

The Business Case for Diversity

Strong commercial arguments for diversity in the workplace have been compellingly made in recent years but with the rise of movements such as B Corps it’s also now the case that there are moral and ethical imperatives for businesses to consider when it comes to hiring people. By 2025 it’s estimated 75% of the global workforce will be made up of millennials (those born between 1981 and 1996) so it’s more critical than ever that businesses understand their audience and develop a culture that millennials want to be part of – or risk being left behind.

In terms of performance Credit Suisse Research Institute found that companies with one or more women board members had higher average ROI and better average growth than companies with male only boards. 

Diverse teams are also better positioned to unlock innovation that drives market growth. Diversity further enables the creative thinking and adaptability that innovation requires. Moreover, those companies with the highest levels of digital investment exhibited the strongest link between diversity and innovation revenue. Diverse management teams were more innovative than less diverse teams, and this was confirmed by BCG after surveying 1700 companies of varying sizes and differing country locations. BCG used as the indicator of innovation the portion of revenue from products and services launched within the last 3 years. Companies with above-average diversity produced a greater proportion of revenue from innovation (45% of total) than from companies with below average diversity (26%). This 19% innovation-related advantage translated into overall better financial performance.

So, having made the case that this stuff matters, what are the simple things that SMEs can do to ensure they’re building a team to drive great performance both in the future as well as in the here and now?

5 Simple ways for SMEs to recruit more effectively-without spending money!

  1. Stop talking about cultural fit and think about values alignment- the idea of “fit” leads to a binary notion that people either fit or they don’t, which is how companies end up with a uniformity amongst their people. Company values shouldn’t be a set of words on a wall, they should be something people can hold themselves and others accountable to in making decisions, bringing challenge and new ideas
  2. Improve your Recruitment Communications – start by refreshing the wording of all of your job descriptions.  Research has shown that ‘masculine-coded’ language such as “active”, “confident” and “driven” had a negative impact on attracting a diverse range of candidates. Interestingly, the effect of feminine-coded words like “interpersonal”, “honest” and “support” on male applicants was found to be negligible.
  3. Introduce blind applications- whilst CV’s are still commonly used they can introduce unconscious bias to the process as snap judgments are made on the grounds of age, race, gender and nationality. Instead why not think about introducing situational judgment testing or a bespoke test that mimics the challenges of the role? Scores can then be reviewed by interviewers and interviews awarded based on the highest scores.
  4. Make your interview process structured- whilst putting interviewees at ease and trying to get to know the person in front of you is great, it’s also really important that all candidates are interviewed and assessed against a common, agreed framework. Otherwise bias can again creep in leading to unfair and flawed decision making.
  5. Have an interview panel not just one person- which sounds obvious but having a broad representation of people from different backgrounds, business functions and age ranges can lead to better decision making. One other thing I’d recommend is that the leader or most senior person on the panel speaks last- that way you’re likely to get away from hierarchical thinking and really hear what the rest of the team think. In turn this will be a great step towards avoiding group think.

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