Human Resources’ role in the success of any business is crucial. Its function is to design practices and programs that will benefit the organization and help bolster profitability. The challenge is to draw a direct correlation between HR’s efforts and the profitability of the company – and prove your worth to the boss.
Socially responsible search is a new practice that can elevate HR’s role from transactional to transformational. It’s a new way of thinking about talent recruitment and it’s supported by research.
According to decades of research by McKinsey and Company, organizations that purposefully recruit and cultivate gender and racially diverse employees outperform companies that remain homogenous. As early the late 1990s, data clearly showed that a deliberate approach to talent management could yield higher financial returns. Since 1997, McKinsey has honed their research questions and found even more interesting correlations.
McKinsey’s data in the report “Diversity Matters” revealed a statistically significant connection between the numbers of women and ethnic minorities and profitability of the company. The companies in the top quartile for gender diversity were 15 percent more likely to have financial returns that were above their national industry median. Companies in the top quartile for racial and ethnic diversity were 35 percent more likely to have financial returns above their national industry median.
As talent markets mature in advanced economies and emerging markets, the talent pool tightens and top talent becomes more scarce. Diversity management is the best one way to proactively cultivate new talent without running into the same shortages as your competitors.
Diversity management and socially responsible search should also reflect social change, but there’s no reason to pick “more profitability” or “social responsibility.” Hiring from a more diverse talent pool is not only good for the bottom line and more profitable – it’s the right thing to do.
A 2013 Gallup poll called “The State of the Global Workplace,” correlated lack of employee engagement to a lack of diversity within those companies. Coincidentally, underrepresented groups – for example, people who identify as LBGTQ, are often untapped markets of highly skilled executives, many of whom who have advanced degrees.
The McKinsey Diversity Matters report notes that increased diversity is beneficial to women and ethnic minorities, but only in companies when representation reaches 15% or above. Psychological outcomes are not as positive when diversity appears to be a token effort.
McKinsey’s report also found: The most important drivers within those companies are advantages in recruiting the best talent, stronger customer orientation, increased employee satisfaction and improved decision-making.
The lesson in all of the data appears to be – make a real effort! Socially responsible search encompasses the best practices of diversity and inclusion can set your organization apart, prove your value to the CEO – and make it a destination for top talent.