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by Edward Chang, Siri Chilazi, James Elfer, Cansin Arslan, Erika Kirgios, Oliver Hauser, and Iris Bohnet

Most people don’t think of themselves as biased or prejudiced, and people often explicitly endorse diversity as something companies should strive for. But many organizations struggle with DEI. Why?

Implicit or unconscious biases can lead to inequitable decision-making. More mundanely, people are just busy. They have lots of competing priorities and lots to occupy their brains. Even if they care about DEI, they might not have it top of mind as they go about their work. As a result, they might not see how their decisions are relevant for DEI and so might inadvertently make inequitable decisions.

To fix this, managers and organizations should make DEI more immediately obvious, or salient, when it matters most — that is, when consequential decisions about such matters as hiring, promotions, and performance evaluation are being made. Our academic research and experiences partnering with companies suggest that to make real progress on DEI, managers and organizations need to make DEI salient in those moments of consequential decision-making. We’ve identified three particularly effective ways of doing so.

1. Ask managers to hire for more than one job at a time.

Many hiring decisions are made in isolation, with only one person being hired at a time. When this is the case, diversity simply just isn’t that salient to decision-makers, who are often thinking not about diversity but instead about technical skills, cultural fit, or how quickly a candidate can start. This shouldn’t be surprising, because diversity is a property of groups, not individuals. You can describe a group of people as “diverse” or “homogeneous,” after all, but not an individual person.

On the other hand, when people make collective hiring decisions — when they hire multiple people at a time — our research shows that people select more diversity. They start thinking about the candidates they’re selecting as a group, which makes diversity more salient and leads to hiring decisions that improve it. For example, rather than hiring one person every month, a company might benefit from grouping these decisions together and hiring three people very quarter. The total number of people hired will be the same, but making collective decisions every quarter should lead to more diversity. Relatedly, it might also be beneficial to give one person oversight over hiring decisions across teams or departments, enabling that person to make collective hiring decisions.

(more…)

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by Peter Cappelli

A couple of years ago, I started to write a book about how we actually manage employees—how we hire, how we determine pay, how we manage performance and so forth—because the reality is so different from textbook descriptions.

What I found in researching Our Least Important Asset … was a common theme to the contemporary approaches. First, they focus on doing things as cheaply as possible (e.g., we measure cost per hire carefully but not quality of hire) but only consider up-front costs rather than longer-term costs. Keep positions vacant as that reduces payroll costs, for example, and don’t worry about how the work gets done or the effects on turnover.

Part of the explanation for that shift has to do with financial accounting standards, which punish employment costs relative to other expenditures. I wrote about this in a previous column.

But there is another part of the explanation that has to do with changes in business leadership and the backgrounds of those who lead companies. It is based on the old scientific management idea that the way to maximize performance is to have experts figure out the one best way to perform jobs and then monitor employees closely to ensure that they do it. It is as if the last hundred years of management—from the Western Electric studies on—never existed. How did we get so far back so quickly?

A paradigm problem in people management

A generation or so ago, corporate leaders likely went through years-long “management development” programs when they were hired, where they were taught lots of things but mainly about managing employees. They were required to succeed at running smaller groups before running anything bigger.

Related to that is a striking rise in the number of engineers who now run companies. LinkedIn data suggests that almost a third of CEOs now are engineers by training where the optimization approach to problems is deeply ingrained. Even in business programs, majors like finance and accounting—let alone operations research—have the same cost-minimization focus.

To be clear, the goal here is not cost minimization, per se; it is optimization on numbers that are easily measured, such as headcount and payroll. That doesn’t include productivity, which is hard to measure, let alone employees’ discretionary effort or other big costs such as turnover. The problem is not what managers are taught in these programs, it is what they are not exposed to—anything about actual employees as humans. (more…)

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by Emily DeNitto

Pioneering female fighter pilot Mandy Hickson on what she’s learned about overcoming obstacles, being a better leader—and living a good life.

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For organizations seeking a collaborative win-win approach to outsourcing, the Vested sourcing business model is worth consideration. It is the product of nearly 20 years of research at the University of Tennessee, beginning with a deep-dive funded by the United States Air Force on outcome-based outsourcing in 2003.

UT’s ongoing research into the world’s most successful outsourcing relationships, including those from Dell’s and the Canadian government, has uncovered five key rules for establishing win-win strategic partnerships that work collaboratively to achieve business outcomes. When a company and its outsourcing partner follow these rules they become vested in each other’s success: A win for the buying company is a win for the service provider.

The model offers a significant shift away from the transaction-based model commonly used in IT oursourcing arrangements, and its rules resolve several structural flaws that can emerge in transaction-based and managed servicesagreements.

For example, a buying organization might want “outcomes,” but the contract spells out dozens or even hundreds of service level agreement metrics instead. The buying organization might also want “innovation,” but the contract with the supplier has an 800-page Statement of Work with exacting details on how the supplier should perform each of the activities in scope. Or it might want the supplier to implement “efficiencies” while spelling out a transactional pricing scheme that inherently incentivizes the supplier to perform more transactions.

Instead, the Vested sourcing model refocuses business partnerships from a “what’s-in-it-for-me” transactional approach to a highly collaborative “what’s-in-it-for-we” model that promotes (and rewards) the parties when they collaborate. For example, instead of negotiating who will bear the risk of inflation, the parties embrace the fact that inflation is a reality of business and collaborate to identify and invest in operational efficiencies to mitigate the risk of inflation.

The following five Vested rules might sound simple, but UT research has found that most companies fail to follow them in an effort to the refocus on the outsourcing relationship on mutual success. (more…)