Opinion | Gender diversity as part of an organizational strategy

We know gender diversity works. Research across the world has shown that gender-diverse companies are associated with higher return on equity and higher profits than homogeneous companies. A McKinsey report shows that companies in the top quartile of gender diversity have shown 15% higher net profit than those of various countries’ respective national median industry companies.

Major organizations have realized the benefits of having a gender-diverse workforce. Companies are also coming to realize that gender bias is rampant across organizational systems and can counter their efforts to promote diversity. For example, Amazon found that its Artificial Intelligence (AI) recruitment tool differentially rejected female applicants for several years because of bias.

From public statements by top management to conducting two-day diversity workshops, measures to counter this have often been top-down and non-data driven. Therefore, a larger question remains: Are the measures taken to improve gender diversity working? As part of a gender equity project to study global organizations at Harvard’s Kennedy School of Government, I found that companies in India inadvertently reject female applicants from their recruitment processes by having differential standards to evaluate male and female applicants.

Some firms rejected women of specific age groups based on their likelihood of getting married or becoming pregnant. Recruiters often asked personal questions directly or indirectly during the interview. Another firm inadvertently set a higher bar for female candidates, seeking 20% higher work experience compared to their male counterparts.

Due to lack of granular data, the recruiting teams were often unaware of the gendered selection rates of candidates. The top management continued to encourage women to apply without realizing the leaky recruitment value chain underneath. The recruitment process consists of several sub-processes: from designing a job ad to the final on-boarding process. Bias can exist at all these levels and have a significant effect on the number of women getting recruited. Studying 800,000 job advertisements in India, a World Bank report found that 60% of all gender-targeted ads preferred men over women. Gendered wordings in a job ad affected perceptions of who belonged and who didn’t and led to a difference in the number of men and women who applied.

Organizations have a huge financial, social and ethical responsibility to take active measures to eliminate bias in their systems. They need to take two key actions. First, invest in a gender-lens data collection and reporting process. Having clean data and a shared understanding of what the data represents is crucial. For example, Google could reduce the attrition rate for post-partum women by 50% after data showed that the attrition rate for female employees was twice that of their male counterparts. Data can also help assess the impact of your interventions. For example, most companies have employee referral policies because they increase employee satisfaction and tenure. But research has shown that people network with and refer people like themselves. In an organization that already has fewer women than men, referrals can prove to be a double-edged sword. It is impossible to know if your referral process, or any other intervention for that matter, is working without having a gender-lens data system.

Second, invest in a team. In India, diversity is often added onto the human resources (HR) team’s already overflowing plate. This takes away the focus and attention the issue of diversity deserves and creates a conflict of interest as well. The HR team is usually responsible for screening out resumes in the initial stage of the recruitment process. Because hundreds of candidates apply, the team often rejects as many as 95% of all applicants from the process. The leaky pipeline for female applicants begins at this stage. This needs to be plugged before the leakage can be effectively dealt with downstream in the remaining stages of the recruitment process.

Given how sensitive a topic bias is, it is not easy to acknowledge implicit bias. If the HR team is both responsible for diversity and for the differential rejection of female applicants, objectivity and accountability suffer. Having the HR team own diversity solely also makes it a figurehead issue and alienates it from the rest of the organization. Best practices across the world have a diversity team spearheading all initiatives and have broad participation from employees across hierarchies and departments.

Granted, setting up systems through a gender lens is a financial commitment that not all companies can afford to make. It takes time and consumes essential resources. But making diversity statements or implementing ideas without scientific measures to track progress can prove costlier, in terms of both reputation and resources. While companies ought to continue encouraging more women to apply, it is economically more efficient to also ensure that interventions are working to receive “bang for the buck”. “If you exclude 50% of the talent pool, it’s no wonder you find yourself in a war for talent,” said Theresa Whitmarsh, executive director of the Washington State Investment Board, at Davos 2016. Organizations need to do more in this war for talent. Invest in data. Invest in a team. Leverage these to begin the process of creating a diverse and inclusive workforce.

Mathangi Swaminathan is graduate student at Harvard’s Kennedy School of Government.