William Wong, Dec 2019
The Shadow Workforce
Their Impact on the Overall Diversity
In my previous post I covered a magnitude of benefits of a diverse workforce, what some leaders in our industry is doing about it, and tips on how to tackle it head-on. But if achieving a diverse workforce is the ultimate goal, then conventional wisdom suggest we ought to look at every talent pool that adds up to the total workforce of a corporation.
Illustration: Michael Deforge/Bloomberg
And yet, these folks are sharing the same office space, dining at the same facilities and often functioning in high contribution roles. Some estimate that 40% of the workforce is contingent and for some corporations, the shadow workforce has even overtaken their perm counterparts (wink wink Google). So why are statistics on these shadow workforce no where to be seen on any of the diversity reports? Companies can spend all their money and efforts to increase diversity, but if they fail to consider the total workforce, then they're only fighting half the battle... or at least 60% of it.
Unfortunately when the subject of "workforce" comes up, people tend to only think about the traditional employer-employee type typically known has permanent or Full Time Employees (FTE). We neglect to take into consideration the contingent workers, independent contractors, project-based employees and part-timers.
I'm not a legal expert so I can't speak on the topic of co-employment but can chime in on the second challenge. When we look at the breakdown of this shadow workforce, most companies tend to have the majority as either project-based workers (via solution providers) or as a contingent workforce (from staffing agencies directly or thru a MSP). This info can be easily obtained by looking at your spend (rogue spend can cause some inaccuracies).
So here's the deal - these partners will sing and dance until the cows come home on how much they care about your diversity goals, but their number 1 priority is to turn a profit (and that is OK, we just need to accept this fact). To do this, they'll look to min/max every staffing requisition they are given to fill or projects to complete. Finding a diverse talent will take longer, require more leg work and ultimately may cause them to miss the hire/deliverable. It's not in their best interest to help you with your diversity goals - after all, a diverse workforce mainly benefits your company, not theirs. To combat this, you need to think about a solution that will entice your partners (not punish them) to play ball. Here are some suggestions:
A Carrot over the Stick
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Provide rebates/bonuses for meeting diversity metrics (again, do not punish them for not meeting these goals). I'm sure there's someone in procurement that will think of an ingenious way to handle this w.o increasing the bottom line, like doing a cost reduction initiative to remove 1% off the top, but then give a 1% rebate if diversity KPIs are met. This is dirty, don't do it. As much as companies tier their staffing partners, they tier you as well - and what you're essentially doing is forcing them to prioritize other work over yours. The war for talent is real, don't put your company's hiring needs as someone's second priority. Just chop up these bonuses as the cost of having a diverse workforce.
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Time Advantage: If $$$ isn't in the equation, then consider offering a 24 hour head start for partners that have proven to provide diverse talent. You can determine this by either looking at diversity fill rates or diversity interview ratios. I prefer the interviews vs. hires metrics as a gauge because seeding diverse talent into the interview process plays such a critical role.
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Submittal Slots: If your organization is using an MSP, chances are they're utilizing some sort of mechanics to control the flow of resumes to the manager. This can be in the format of limiting the number of shortlisted candidates that the manager actually sees and/or halting the req after a certain time has elapsed. Diverse talent can take time to procure, so having this type of shortlisting process actually hurts diversity recruiting. Consider allowing 1 diversity submission slot per agency that overrides this limitation.
Roadmap to Diversity & Inclusion
The key to a successful strategy involves a 3 prong approach that requires each to play their own part. A diversity recruitment plan does not begin and end within talent acquisition. It needs to start at the top of the organization and flows thru every single employee. Training is a crucial element in this equation - anyone that is involved in the hiring process (not just Hiring Managers) should be coached on how to reduce bias. The last and final piece is to implement diversity sourcing tactics and seed underrepresented groups into the pipeline.
[ 1 ] Corporate Responsibilities
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Top of the food chain. A Diversity & Inclusion is not an HR issue, it's a business issue. The focus and strategy should be created at the CEO/COO/CHRO level, with a top executive assigned as a champion and tasked with leading and sponsoring the program.
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Beef up your diversity branding. How is the company being portrayed to the outside world? Does your website have a section dedicated to diversity, with pictures and/or awards? Are your social media channels expressing this as well? It could be something as simple as pictures on glassdoor. The important takeaway here is how your company is making an impression on people.
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Consider offering a flexible schedule. Research have found one of the main reason why people leave their job is because of a long commute. Stack that up with the fact that diverse neighborhoods are typically further away from downtown/expensive part of town. By offering solutions like shuttles or flex schedules, you're dramatically increasing your odds of hiring and retaining diverse employees. McKinsey's research also indicated the top incentive women are drawn to is a flexible schedule.
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Don't just say you love diversity, embrace it! Celebrate international holidays and allow your staff to take time off for community activities.
Embrace Your Partners
Asking your partners to help with diversity is going to be tough but it's the best possible choice you have after working thru this issue internally. What do I mean by that? Let me try to explain using an analogy. Let's say your workforce is a vehicle that is meant to take the company from point A to point B. Your internal workforce is the front-wheel drive and does 60% of the workload, while your shadow workforce provides rear-wheel drive capabilities and fills in the remaining 40%. Instead of just relying on your own workforce (FWD), wouldn't you want all-wheel drive capabilities to overcome any obstacles in your way - especially when your competition is trying to get to that very destination before you?
Making sure your staffing/solution partners are part of your diversity plans does just that. When it comes to brainstorming for implementation tactics, I normally ask myself 3 questions:
[ 1 ] Efficiency: What can provide me with the greatest return with the least amount of resource/time invested (ROI/ROTI)?
If I engaged my partners about diversity, I'm looking at an extra 40% pool (or whatever number your shadow workforce consists of). Any increase in their labor pool is going to move the needle significantly in the right direction. In terms of work efforts, your team most likely has all the content already - you just need to re-purpose it for your partners.
[ 2 ] Scalability: Is it simple, repeatable and work on a mass scale?
Definitely! As long as I create a training program, develop proper incentives, and deploy the correct messaging to keep diversity a top priority.
[ 3 ] Risks: What are the repercussions in terms of financials, time, legal and ethical.
Can't speak about legal, but everything else looks free and clear. There is very little in terms of financial risks - you're already spending money on your own diversity program. Bringing your partners into the fold just helped create an economy of scale for your budget.
Taking your partners under your wings fulfills all three criteria with flying colors. Treat them like an extension of your team and teach them everything you know about diversity hiring. I'm sure your team has made many mistakes during your journey, so let's not have your partners repeat them. Here are some suggestions on how to do just that:
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Pulse Check: Conduct an initial survey to see where your partners stand in terms of diversity (knowledge, skillset, abilities). Ask them to elaborate on their diversity tactics and how they go about tracking stats. You may even learn a thing or two that you can add to your internal diversity efforts.
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Summit: Invite all your partners to a Diversity Summit so you can show them the benefits, teach them your tactics and warn them on pitfalls.
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Champion: Have one of your diversity SME be a keynote speaker in your Supplier Summits. Don't throw these? Then just invite them all over for a chat about diversity and host it annually if not twice a year.
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Analytics: It's hard to track diversity numbers unless you have data to back it up. If your program utilizes an MSP, they will be the ones to partner with on this. If not, then create a set of standards for partners to follow and report quarterly. I know this is going to take more work for everyone, but diversity is worth it!
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Messaging: Make sure they know your messaging on D&I, and they include it as part of every job posting.
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Tweak Your Tactics: Examine your current strategies and see if any tweaks need to be done in order to mirror the same efforts on their side. For example, instruct your partners to scrub any information on the resume that may create bias (e.g DOB, years attended school or graduated from school, personal info, street address, etc.). Warning - some ideas sound great on paper but may not be very practical IRL. For example, I've seen some folks scrub the name of candidates and replace it with initials. While this could be a decent tactic to reduce bias, the side-effect gives me pause in actually implementing it. I tried this w/ one of my managers, and she wanted to interview a candidate that turned out to be someone she already knew and was not interested in ever hiring. I even thought about disclosing the full name after an interview request to mitigate this but ultimately decided to scrap the entire idea because it involved too many moving parts. In terms of effectiveness, probably best to focus our efforts in sourcing/building a diverse pipeline. Taught me a nice lesson, but wouldn't have known unless I tried it out.
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Scorecards: Figure out what diversity KPIs are important to your organization and score each of your partners on this separately than their regular performance review. Remember that not all of your great suppliers will have diversity capabilities. Don't punish and kick them off the list just because they can't fulfill your diversity needs but otherwise doing an awesome job. See if your existing pool has anyone that can fill in as Diversity Partners. If not, then go source a couple and make sure you're constantly optimizing this list.
I'd love to hear about what your organization is doing to tackle this subject. Do you have any success stories that you'd like to share or lessons that you'd like to warn us about? Message me at info@staffingiq.io.
While I understand companies are holding tight to many of their methods to maintain a competitive advantage, I think the issue of diversity in the workforce transcends beyond company profits and stock prices. Google, Facebook, Apple and Microsoft understands this but we can't just rely on them to lead the charge. Making the world a better place is everyone's responsibility.