The Recruiting Incentives That Punish Diverse Talent

By Alan Stein

Summary: Most companies are less diverse than they should be, but conscious discrimination may not be why. In this piece, the author –– a Fortune 500 leadership veteran –– identifies the short-sighted “butt in seat” (BIS) incentives that recruiters operate under as the true culprit. The three main points of candidate entry (cold application, recruited from outside, or referred in) all contain systemic biases that punish underrepresented talent. If you want a more equal workforce, this is where true change begins.

In 2018, Salesforce paid who knows how much money to acquire the website address Equality.com.?

The homepage exclaims “Let’s build a more inclusive workplace and world” above an inspirational video of people from one underrepresented group after another expressing hope against a background of softly struck piano keys.

Equality.com also declares some ambitious goals, such as having 50% of Salesforce’s team be made up of underrepresented groups (Women, Black, Latinx, Indigenous, Multiracial, LGBTQ+ employees, People with Disabilities, and Veterans) by the end of 2023. Not to mention doubling the percentage of the company’s Black leaders compared to the U.S. average.?

Yet, if you continue scrolling, Salesforce’s documented success leaves much to be desired. As of March 2023, just 3.4% of the company’s leaders (meaning VP and up) are Black or African American. Just 3% are Hispanic or Latinx. And just 1.7% are multiracial.?

If you think I’m about to criticize Salesforce, think again. I spent nearly 30 years in leadership at Google, Meta, and Salesforce itself. I believe that the company wants to do better. I applaud them for publishing these numbers. In an age when every company says diversity matters, I think Salesforce means it. Actually, I think many companies do.?

Good intentions aside, though, diversity at most companies is still much lower than it should be.

Today, I want to share what I see as the true reason. It isn’t racism (although that certainly still exists) or conscious hypocrisy, but something rooted in the very incentive structure of corporate hiring.

Over the course of interviewing more than 2,000 candidates and hiring 200, I got a front row seat for how companies hire.

What I saw is that recruiters strive to hire “good enough” people quickly –– NOT to search for the absolute best candidates. With rare exceptions (think top executives) recruiters hastily fill the candidate pipeline so they can hire someone and move on.

The reason why recruiters emphasize speed and volume over candidate quality is because that is how they are incentivized. I spoke to recruiters often when I was a hiring manager. At multiple companies, recruiters told me that their bosses tracked how long it took them to get a BIS (Butt In Seat) for each open role.

Within the world of corporations, incentives govern everything. The fact that recruiters are on the hook for BIS sends diversity way down the priority list, no matter what the company’s executives say in public.

Allow me to spell out how a recruiter’s BIS mandate shapes the way they fill roles. As well as how this stifles the possibility of a more equal workforce.

First, a hiring manager tells a recruiter who they need. They might say, for instance, “I want a Program Manager with five years of experience in ad serving.” Next, the hiring manager tells the recruiter that they want candidates from certain types of companies, with such-and-such job titles, and specific types of work experience.?

At that stage, the recruiter (who, never forget, needs to get a BIS as fast as possible) will post the role on the company’s website. Sometimes, the role will also get posted on job aggregator sites like Indeed, but the company’s website is the most voluminous channel to get candidates applying.?

However, this is precisely where the systemic biases that limit diversity start rearing their ugly heads. The candidates who apply for new roles via the company website tend to be experienced ones with less fear of rejection. Meaning, typically, white men who fit the on-paper job description.?

Women, people of color, and underrepresented groups who don’t often see people like them in these roles are more likely to disqualify themselves and not apply. In an essay for Harvard Business Review , Tara Sophia Mohr discussed the oft-repeated observation that men will apply for jobs if they meet even 60% of the posted qualifications, while women will only apply if they meet 100% of them.?

Thus, a selection bias is set into motion –– and it only gets worse as the standard recruiting process continues.

After a new role gets posted on the company website, the second main way that recruiters try to fill open roles is with proactive recruitment. The recruiter will go on LinkedIn or to their own networks and look for candidates who have worked at household name companies, gone to prestigious universities, or held high-level job titles that are relevant to the role.?

However, the same historical biases that cause underrepresented groups to be less likely to apply on the company’s website are present here also. Although women are now graduating from college at higher rates than men, a recruiter who is sourcing their pipeline from top companies and titles is going to get a much higher percentage of white men than women and people of color.?

Furthemore, the mix of men and women gets even more lopsided further up the leadership pyramid. According to McKinsey's Women In The Workplace 2022 report , “for every 100 men who are promoted from entry-level roles to manager positions, only 87 women are promoted, and only 82 women of color are promoted”, creating an entrenched dynamic where “men significantly outnumber women at the manager level, and women can never catch up” because “there are simply too few women to promote to senior leadership positions.”

Don’t forget: even if a recruiter sincerely wants to slow down and search for deserving underrepresented candidates, the BIS incentive discourages it.

The third major point of entry for candidates into new roles is referrals. Data from Zippia show that 40% of new roles are filled by referral. If my company is looking for a new UX Designer, and I tell the recruiter about my friend Jim who’s a really great UX Designer, my recommendation carries a lot of weight.?

Which isn’t a problem in and of itself –– except for the fact that I, as a white man, probably have far more white men in my network than Latina single moms. The same is true throughout the corporate world. People inside of companies know a lot more people who are similar to their existing workforce than those of different backgrounds.

Making matters worse, many candidates are not proactively leveraging referrals at all. While 40% of roles are filled by referral, only 7% of candidates pursue referrals to get hired!

Astute readers might object that –– while recruiting is biased for current employees –– many diverse candidates are hired out of undergraduate and grad school programs.

This is true, and yet, ultimately, another source of bias and unfairness on the career ladder.

Even though companies hire more diversely out of school, those candidates often lack mentors and advocates at work.

When I got into American Express and later Google, I met plenty of other white male Columbia MBAs in positions above me. There were networks of Columbia Googlers and Columbia Amex people that I joined and benefitted from. Sure, there were Black and Latinx groups at those companies too, but not many senior leaders belonged to them.

Everything above forms a massive structural barrier to underrepresented candidates who want to rise into positions of power, build generational wealth, and own their careers.?

The entire recruiting playbook is weighted on what candidates have done before, not what they can do now.

And the plain truth is that birds of a feather flock together unless you break up that inertia.

There are several promising ways of doing so that I will share in future essays, but the take-home point from my time in hiring is clear.

The current biases and lack of diversity are a direct product of the prevailing incentives.

If you tie a recruiter’s incentives to the outcome you want them to achieve, you will be amazed how quickly they do what you want them to do.?

Change doesn’t come from a heart-warming website, paying $20,000 to sponsor a conference, or wearing company t-shirts that say “We Love India.”

Tie diversity metrics to the recruiter’s pocketbook and a diverse workforce will materialize, pronto.