We are in the dawn of the Fourth Industrial Revolution. The World Economic Forum (WEF) posited that the disruption caused by enterprise and consumer digitalization in the third industrial era forced more than half of Fortune 100 companies in the year 2000 out of business.
This new era will bring even greater changes at a faster rate, threatening the existence of powerhouse multinational corporations (MNCs) due to an unprecedented technology insurgence. Those businesses that thrive or fail will do so based on their leaders’ ability to rethink workforce and customer experiences in how people live, work and interact.
One defining area of HR that is primed for disruption is talent acquisition. “Hiring people is already the No. 1 challenge faced by CEOs and business leaders,” says Nicole Sahin, CEO of Globalization Partners. This new industrial era may be a defining moment for HR leaders, one that requires future-proofing the organization by creating the right culture and infrastructure to identify, attract and acquire the best talent.
The Cold, Hard Truth of Talent Acquisition
White men account for 72 percent of leadership positions even as overall racial demographics continue to diversify; by 2044, there will be no one race in the majority in the U.S. These numbers are meaningful when we consider the expectations of the people who are the keystone to success or failure. “The primary practice holding companies back is the reluctance to do something different,” Sahin says. This might explain why the WEF believes that gender parity will not be realized for another 170 years.
Companies that continue to treat diversity as an option rather than a reality fuel the persistence of the power imbalance in industry positions of power and influence. Despite public commitments to diversity and inclusion from CEOs, men continue to represent the majority population in the corporate pipeline for early talent. Despite the fact that women hold 57 percent of college degrees, fewer women than men are hired into entry-level positions, accounting for 48 percent. The talent gap broadens in the journey to top-level positions, resulting in a significantly disproportionate number of men in C-suite positions, where women hold only 21 percent of jobs.
Racial diversity is also lagging, and different races of workers have vastly different perspectives about the future. For example,43 percent of black Americans believe racial equality in the workforce will never be realized, compared with 11 percent of whites who express such doubts. Black Americans account for a meager 15 percent of C-suite positions and of entry-level positions.
For those in the workforce, pay disparity continues to prevail. Women, on average, make 20 percent less than their male peers, and black men make 70 percent of what white males make on average — and the figure is down 10 percentage points from 1979. One of the reasons that pay gaps continue to exist is the practice of using previous salary as the benchmark for current salary. While states and cities across the U.S. have created regulations to end this practice, few believe that this will change talent acquisition and pay offers.
Early studies show that men are offered 1.2 percent more than their presumed previous salary while women are offered 1.8 percent less. Only 35 percent of businesses have institutionalized a statistical approach to pay-equity analysis in order to make better compensation decisions, and 34 percent have implemented a formal process to remediate pay inequities. Pay disparity from the point of hire is not the only inequitable practice that will challenge an organization’s ability to acquire talent in a more diverse culture; the status quo in talent acquisition is that women are hired for their experience while men are hired for their potential.
It’s Time for a Revolution in Talent Acquisition
The underrepresentation of women and racial minorities, particularly in technology jobs and industries that will define the future, is significantly affected by an unconscious bias held by hiring managers to acquire talent that looks like the person they see in the mirror. Yet as the Fourth Industrial Revolution matures, the power balance between hiring managers and the applicant pool will shift. In addition to the continued importance of digitalization, large global brands are at risk from smaller businesses with talent-acquisition practices that better meet the desires of the gig economy and traditional applicants who place value on workforce composition. “Diversity is becoming a base requirement for companies to offer. The workforce is actively forcing this shift,” says Debbie Millen, chief operating officer at Globalization Partners.
Changes made in talent-acquisition trainings and practices have failed to create cultures that truly embrace inclusivity. “Companies cannot do what they have always done in terms of recruiting talent and expect different outcomes,” says Nancy Cremins, chief administration officer and general counsel at Globalization Partners. The training is not working because current systems are laden with unconscious bias.
The general sentiment from business leaders is that traditional approaches will be obsolete in the near future. “The only way to future-proof the HR infrastructure is to change how HR is done,” Sahin says. There are 150 different forms of unconscious bias that affect workforce-based decisions. This is particularly limiting when decisions are mostly informed from intuition biased toward characteristics that do not represent potential or credentials. “Gut feel is inaccurate in helping us select the next great employees,” says Dr. Gabriela Burlacu, a solution manager for D&I at SAP SuccessFactors.
Supported by a cultural shift toward inclusive practices, the role of technology in disrupting talent acquisition will be a determining factor in business continuity. Evidence of the hard and soft positive effects of diversity at every level of the business has been proven through hundreds of research reports. Business leaders who transform the questions about diversity and inclusion from “why” to “how” will be in a better position to leverage innovations in recruiting marketing, talent-pipeline management, and hiring and onboarding of the best talent for the job — and not just some of the best talent.
“The bottom line is that technologies are here and they can significantly improve a leader’s ability to make accurate, unbiased hiring decisions,” Burlacu says. Organizations have been testing the impact of technology solutions that help to accelerate cultural and practical change. From removing irrelevant data such as name, address and age-related data from resumes to embedding machine learning to detect and help remove biased language from job descriptions and performance reviews, to artificial intelligence to interrupt decisions that are affected by unconscious bias, the disruptive innovation at the dawn of the Fourth Industrial Revolution are helping organizations accelerate material changes in talent acquisition from both the employer and applicant perspectives.
(Editor’s Note: Not all experts are are as optimistic about the role AI can play in fighting bias. Read more here: AI Recruitment Tools: What Lies Beneath)