In just four years, research published by credible institutions — paired with compelling business results — has contributed significantly to the change in business executive sentiment on gender, cultural and ethnic diversity programs. It’s progressed from a nice-to-have initiative into a must-have operational requirement.
McKinsey’s most recent talent report provides a compelling argument: The top 25% of organizations in both gender and ethnic diversity are more likely to outperform their industry peers on profitability by 33%. Conversely, the bottom quartile of firms in diversity are likely to underperform their peers by 29%. With empirical evidence like this, it’s no surprise that organizations have moved off the sidelines and into action, usually by setting diversity metrics to increase women in management roles and non-Caucasian headcounts.
While diversity goals are quite consistent across industries and geographical areas, diversity strategies can vary greatly. Some companies hire more recruiters to increase the number of diverse candidates at middle and senior levels. But one of the most efficient ideas is to focus on entry-level or early talent hiring and development. Here are some reasons this could make sense for your organization:
It’s the fastest way to make lasting change.
Early talent is a much more diverse population than Gen X or baby boomers, so companies can make broad impacts more quickly by starting at the bottom of the organization. In 2020, we estimate that up to 4.4 million Gen Zers will replace 3.6 million retiring baby boomers — the least diverse sector of the labor force.
Focusing on early talent takes a solid step toward addressing the ‘broken rung.’
Sheryl Sandberg’s LeanIn.org November 2019 report uncovered a disturbing trend revealing how few women progress from individual contributor roles into management, leading to most organizations today having weak female executive pipelines. Sandberg’s organization recommends that hiring more women from more diverse demographics at the entry level is a great start toward long-term improvement in female diversity in the executive suite. As one example, Whirlpool Corporation is actively hiring more women than men at the entry level.
Diversity boosts morale among Gen Y and Gen Z.
There is growing evidence that recruiting early talent from a larger pool of universities across a wider variety of geographies makes a greater contribution to cultural diversity in organizations. And more than any other generation before them, Gens Y and Z appreciate diversity.
While the practices of recruiting early talent remained about the same from 1990 to 2010, the sector is now in a full-blown renaissance thanks to new technology and millennials’ knack for embracing it. Some organizations are much more proactive in the way they recruit soon-to-be college grads, and they leverage online talent marketplaces to increase the volume of diverse applicants. They also find graduates they often couldn’t reach through traditional campus recruitment tactics, especially if that campus is not among the top 50 institutions and not located near a major city.
A recent McKinsey study found that 30% to 45% of the global working-age population is unemployed or underemployed, so clearly, there is more work to do to increase the efficiency of connecting job seekers with employers. This gap is comparable for early talent in the U.S. today: Over 40% are underemployed at graduation.
Many tech and Fortune 500 companies are also accelerating their early talent hiring, and we are seeing a rapid shift from the early adopters to a majority investing in early talent. Now is the time to future-proof your workforce by investing in early talent hiring and development strategies.