2014 Gender and Race Benchmark Trends: Recruitment. Opportunity Now and Race for Opportunity

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1 2014 Gender and Race Benchmark Trends: Recruitment Opportunity Now and Race for Opportunity

2 Key Findings Unconscious bias continues to play a role during all the stages of recruitment of BAME candidates, from application, through shortlisting and interview to job offer. There is a significant drop-off in the proportion of BAME graduates and apprentices progressing from application to hire stages of recruitment. White candidates overall tend to progress from application to hire in similar proportions. This proportion increases among apprenticeship applications and is largest among graduate applicants. The number of organisations ensuring ethnically diverse interview panels (where possible) has nearly doubled in three years ( ), but fewer than 50% of organisations ensure this Organisations where the rate of conversion from applying to being hired is similar between BAME and white candidates do the following: - Target diverse candidates at recruitment fairs; - Mandate unconscious bias training during recruitment; - Ensure ethnically diverse recruitment panels; - Use a variety of recruitment sources to attract a wider pool of applicants. 114 organisations participated in the 2014 Gender and Race Benchmark; 27 from the public sector and 87 from the private sector. 86 organisations submitted data on ethnicity and 108 submitted data on gender. However, we find that in nearly all sectors there is a drop-off in the proportion of BAME applicants getting from application to hired. In some sectors the drop is dramatic at all stages - Legal, Finance, Retail, and Professional Services. In just two sectors the proportion of BAME candidates at shortlist stage improves by the hiring stage Support Services and Uniformed Services. Although the proportion at applied, shortlisted and hired is almost consistent, these sectors experience very low BAME application rates. Evidence 1: Percentage of BAME candidates at each stage of recruitment broken down by sector Applied Shortlisted Hired Professional Services Construction & Housing Finance Government - Central & Local IT Legal Retailers Support Services Uniformed Services Utilities Focus on ethnicity In every sector, BAME candidates are disproportionately deselected at recruitment stages compared to white candidates. All things being equal, the trend lines in Evidence 1 would be horizontal, indicating that BAME candidates are progressing through recruitment stages (application to shortlist to hire) in similar proportions. The 2014 Benchmark data shows that on average a BAME candidate will have to apply for more jobs than the average white candidate in order to successfully gain employment. This is consistent with Race for Opportunity research into recruitment and promotion which highlights that BAME employees experience fewer promotions than white peers and are less likely to be hired through external agencies than white candidates 4. Page 1 of 9

3 A concerning trend in the 2014 Benchmark data is that employers are showing greater bias against BAME candidates, with additional bias for BAME men during recruitment (Evidence 2). The disparity between the proportion of men applying for jobs and being hired is greater than it is for BAME women. Evidence 2: Percentage of BAME men and BAME women at each stage of recruitment process Evidence 3: Percentage of BAME candidates at each stage of recruitment broken down by recruitment type Applied Shortlisted Hired BAME Women BAME Men 0 Applied Shortlisted Hired A worrying trend is the low application to hire ratio for BAME graduates and apprentices. It is less likely that a BAME graduate applicant will secure a graduate role than a BAME applicant for an apprenticeship (Evidence 3). Given that graduate intakes tend to supply the talent pool for fast-track and leadership programmes, this trend has worrying implications for ensuring a BAME talent pipeline into senior positions. We would like to see more applications from BAME candidates for apprenticeships, which typically go to younger workers an age range where the wider BAME population is well represented. Focus on gender All recruits BAME All recruits White Graduates BAME Graduates White Apprenticeships BAME Apprenticeships White The recruitment situation for women overall differs significantly. Generally, women do slightly better than men in the recruitment process, although some sectors still experience very low application rates from women (Evidence 4). In eight out of 10 analysed sectors, the proportion of women to men increases as candidates progress through hiring stages. The lowest hire rate of women is in the Manufacturing and Uniformed Services sectors. Page 2 of 9

4 Evidence 4: Percentage of women candidates at each stage of recruitment broken down by sector Evidence 5: Percentage of women candidates at each stage of recruitment broken down by recruitment type Applied Shortlisted Hired 15 Applied Shortlisted Hired All recruits Graduates Apprenticeships Professional Services Construction & Housing Finance Government - Central & Local IT Legal Manufacturing Retailers Support Services Uniformed Services Utilities The sector with the largest proportion of hires in 2014 was the Legal sector, with an intake of 60% female, 40% male. In the Professional Services industries, recruitment of women and men is almost at parity (48% women, 52% men). In 2014, just over a quarter of applications for apprenticeships came from women, an indication that apprenticeships are not attracting female talent or are not marketed as viable career options to women (Evidence 5). Apprenticeships are more likely to be a route into careers in sectors that typically struggle to attract, recruit and retain female talent such as STEM, Construction and Transport. A continued low rate of applications from women for apprenticeships could contribute to continued occupational segregation between men and women, and restricts these employers from accessing candidates from the widest talent pool. Attracting diverse talent Since launching the Gender and Race Benchmark three years ago, there has been little progress in the steps organisations have taken to attract BAME and female talent (Evidence 6). Efforts apply to attracting female talent, and we would like to see much stronger progress around ethnicity. Evidence 6: Methods of attraction relevant to race and gender Run pre-application events or similar for diverse groups Target diverse candidates at events Openly advertise all jobs Diverse images in recruitment literature Actively promote our diversity work to prospective employees Welcome applicants from diverse backgrounds 49% 47% 44% 65% 74% 70% 90% 94% 92% 90% 94% 94% 85% 88% 86% 81% 92% 90% Page 3 of 9

5 A welcome development is an increase in attraction interventions that reflect an overarching strategic approach to gender and/or race equality. An example is the equality proofing of job descriptions (Evidences 7 and 8), which supports not only the recruitment and progression of female and BAME talent 5, but is also a key element in tackling pay gaps 6. Targeted recruitment to address occupational segregation of women indicates that an organisation is monitoring and analysing workforce data and putting action plans in place to change how it attracts female talent (Evidence 8). An area for improvement is more organisations running pre-application activities for diverse groups, which we identified as a critical success factor in securing employment for BAME candidates in our 2012 Gender and Race Benchmarking Trends Analysis 7. Recently, Race for Opportunity piloted mentoring circles for unemployed people at Brixton Job Centre Plus. The results demonstrate the impact of providing pre-application support to candidates: 70 out of 91 participants in the mentoring circles pilot were successfully recruited 8. Evidence 7: Methods of attraction race focus External recruitment partners "Equality proof" job descriptions to ensure BAME candidates not disadvantaged Use a variety of recruitment resources and methods to attract BAME candidates 81% 86% 83% 64% 66% 72% The Voluntary Code of Conduct for Executive Search Firms published in April 2013 impacted how organisations work with external recruitment agencies or partners to ensure shortlists are gender diverse 9. The proportion of benchmarking organisations that are engaging their external agencies on gender increased significantly between 2012 and This demonstrates how government leadership can have a positive impact on employer actions, and we would like to see similar actions for race (Evidence 10). Evidence 8: Methods of attraction gender focus Evidence 9 Gender recruitment approach with Agencies / Recruitment Partners: "Equality proof" job descriptions to ensure women not disadvantaged 24% 86% 86% Have targets for sourcing and providing female candidates 24% 35% 38% Use a variety of recruitment resources and methods to attract women 24% 72% 78% Retained in part based on ability to support us recruit women 24% 71% 83% Target recruitment of women into roles which high occupational segregation 55% 71% 67% Aware of policies / objectives on Gender diversity 24% 83% 85% This organisational approach is working for women; benchmarking organisations have been hiring more female talent year on year since The percentage of overall female hires by benchmarking organisations in 2012 was 38.5%, 42.1% in 2013, and 44.4% in Page 4 of 9

6 Evidence 10: Ethnic minority recruitment approach with Agencies / Recruitment Partners: stagnated at 75% between 2012 and Have targets for sourcing and providing BAME candidates Retained in part based on ability to support us recruit Ethnic Minorities Aware of policies / objectives on BAME diversity 25% 29% 30% Reducing bias in recruitment 62% 68% 77% 85% 80% 83% Measurement and target setting The importance of setting KPIs for recruitment and the monitoring of these processes by gender and race cannot be underestimated. The 2012 and 2013 Benchmark analyses consistently found correlations between using and monitoring KPIs, and higher rates of BAME and gender recruitment. There has been a steady and welcome increase in the proportion of benchmarking organisations that are setting objectives for gender recruitment and monitoring this progress (Evidence 11). Earlier we highlighted that women are faring well during the recruitment process in these organisations; an indication that these interventions are having a positive impact. Between 2012 and 2014 there has been some progress in the steps organisations are taking to reduce bias in their recruitment processes: Selection and interview training that addresses the role of unconscious biases towards race and gender in recruitment increased from 38% to 57%. Ethnic minority representation on interview panels (where possible) increased from 28% to 47%. Gender balanced interview panels (where possible) increased from 40% to 57%. It is rewarding to see organisations acknowledge the value of diverse recruitment panels during selection processes. These were recommended in our 2013 Benchmark analysis as an effective part of eliminating bias and preventing recruitment of mirror-image candidates. Despite these improvements, progress isn t comprehensive: Fewer organisations are making unconscious bias training mandatory for those involved in recruitment - this dropped from 57% in 2012 to 49% in Evidence 11: Gender monitoring during recruitment Have a set of KPIs for attraction and recruitment of Women Clear and current objectives for recruitment of female talent Track the progress of all job applicants and report by gender Monitor the gender of our job applicants 34% 45% 51% 45% 52% 58% 67% 69% 74% 79% 77% 88% When it comes to race, employers have made considerable progress in ensuring recruitment processes are monitored by ethnicity (Evidence 12). However, these must now be reinforced by more extensive use of KPI s, which have not increased at the same rate. The implementation of policies designed to remove gender and race bias in the selection stages of recruitment has Page 5 of 9

7 Evidence 12: Ethnicity monitoring during recruitment Future challenges Have a set of KPIs for attraction and recruitment of BAME candidates Have clear and current objectives for recruitment of BAME talent Track the progress of all job applicants and report by ethnicity Compare workforce composition with the local community Monitor the ethnicity of our job applicants 38% 36% 35% 40% 38% 43% 74% 63% 78% 58% 50% 67% 77% 71% 87% Looking at the ratio of women shortlisted to hired, we see that in the majority of organisations women are more likely than men to be hired after shortlisting. The fundamental challenge facing benchmarking organisations is attracting women into roles where they are traditionally underrepresented (such as STEM sectors) rather than in reducing bias in the overall recruitment process. The challenge for greater representation of BAME talent in their workforces is twofold: first, it is to increase the number of applications from BAME candidates; second, it is to ensure similar proportions of BAME candidates are progressing through all stages of recruitment. Best practice highlights Correlations The following interventions are undertaken by those benchmarking organisations that had a nearly equal ratio of hire between BAME and white candidates 10 : Target diverse candidates at recruitment fairs Use a variety of recruitment sources to attract a wider pool of candidates Mandate training for race bias for people involved with recruitment Compare current workforce demographics with the local community Run pre-application events to support diverse candidates Provide unconscious bias training for people involved in recruitment Interview panels have ethnic minority representation on them where possible Set targets for agencies CASE STUDY: RWE Power RWE npower has almost the same number of male and female graduates and has proven successful at attracting diverse candidates from a wider range of universities. RWE npower continually reviews its recruitment activity to ensure that it delivers best value to the business. Cost, governance and the ability to clearly report on activity are key drivers, as is its ability to attract the right talent from diverse backgrounds. To ensure inclusivity, the recruitment process is as transparent and fair as possible. By using a variety of sourcing channels RWE npower is able to attract and recruit a diverse workforce across race and gender. This is highlighted by its recent graduate recruitment campaign, resulting in the recruitment of 12 female and 15 male candidates for the September 2014 intake. This is an achievement for the organisation as it typically finds that more males apply to for graduate and non-graduate roles (reflected in the fact that two out of three of applicants were male). Three of the 27 graduates were of a BAME background, which demonstrates to us that we are heading in the right direction in our diversity initiatives. We don't have any stats from before 2013 to highlight diversity but we are now measuring this annually which is helping us to Page 6 of 9

8 ensure we are receiving BAME applications and making hires. RWE npower has improved the diversity of applications to its graduate scheme by approaching a wide range of universities, moving away from the typical pool of Russell Group Universities. For the 2014 intake RWE npower had large numbers of applications from Aston University, Northumbria University and Nottingham Trent University, all of which are non- Russell group and are focused on supporting social mobility. The channels used to engage with these universities and their students are varied, ranging from print to online digital media. RWE npower also undertakes many campus activities, such as careers fairs and networking events, which are supplemented by graduate focused competitions. This activity has directly led to the diverse graduate population it has today. RWE npower closely monitors the channel and media used and the results each achieves to ensure it continues to improve. CASE STUDY: Enterprise Rent-A-Car Enterprise Rent-A-Car is one of the leading graduate and undergraduate recruiters in the UK. One of the founding values of the company is our doors are always open. It understands that diverse companies are the most successful and aims for its branches to mirror the communities it serves across the UK. Enterprise maintains a busy graduate engagement schedule with events at more than 100 universities throughout the country. These activities are tailored to engage with the female and BAME undergraduate populations at each university. Examples include: Sprint (female mentoring programme) partnership with RBS and Microsoft at 3 different universities reaching 110 women Enterprise/Sussex University women leadership event attendees Enterprise/Kingston University - skills session for entrepreneurs - 30 female attendees Enterprise sponsorship of Kingston University talent awards attendees of which 80% BAME leading to 74% hires Enterprise is reaping the rewards from the programme. Results from 2014 include: More than 350 student employability events held at over 100 universities Graduate intake - 25% BAME and 44% female More than 50% of 250 interns hired were female Recruitment needs like these dictate that Enterprise Rent-A-Car has to think creatively to meet its hiring demands. Last year, it hired from more than 100 universities prioritising leadership and entrepreneurial skills over degree class and subject. This helps to attract and recruit a wider pool of talent including female and BAME talent. Enterprise has specific recruitment targets at graduate level currently 45% women and 20% BAME. Three years ago, the organisation devised its Diversity Scorecard to improve recruiting percentages of women and BAME employees, focusing on management positions. Since then, the talent pipeline and promotions at management level are monitored on a monthly basis for gender and race. To reach as many graduates as possible, Page 7 of 9

9 Calls to Action The Financial Reporting Council (FRC) now clearly defines diversity as gender and race in the preface of the Corporate Governance Code for The FRC has indicated that the inclusion of and race will be consulted on for the 2016 UK Corporate Governance Code 11. It is likely that the Code will soon require organisations to report on gender and race workforce data and we recommend that employers ensure they are setting and publishing recruitment targets now, to ensure they are prepared for this likely future reporting requirement. Below are our recommendations to organisations to ensure equal and diverse recruitment. Set and publish recruitment targets: Ensure division heads, directors and senior leaders are held accountable. Consider publically reporting targets and progression against them. Tackle unconscious bias in recruitment: Mandate unconscious bias training with a focus on race and on gender for anyone involved during recruitment from job specification writing, job advertisement, shortlist sifting, interview and hire. Training is undertaken by external agencies as well as internal employees. Ensure regular refresher modules and training. Measure and monitor recruitment: Track recruitment of women and ethnic minorities at each stage of the process. Continue to monitor trends to identify and track changes to the hiring process that are most effective. Review all recruitment processes to ensure they are equality proofed: Check assessment centre processes are accessible and fair and not biased against any particular ethnic group, men or women. Ensure recruitment processes and panels are diverse. Include or engage with BAME employees to assess the different stages of the recruitment process (such as application, sifting and interview) are accessible to minority groups. Take steps to attract diverse talent: Use a variety of recruitment sources to reach a wider pool of talent. Offer pre-application support and prepipeline development work (such as orientation opportunities) to help potential candidates understand the opportunities and culture of the sector and the organisation. Manage external recruiters: Resources Set targets for agencies. Review and manage recruitment agency performance to ensure targets and KPIs on diversity and inclusion are met. Hold all external recruiters to the same standards as internal recruiters. All of these resources are relevant to senior leadership, recruitment and HR practitioners: Where possible, segment the BAME category by different ethnicities. Use census data on race diversity of local talent pool to help set KPI s. Accurate and complete diversity data will help identify diversity gaps in your organisation and to action plan to address them. The Monitoring Ethnicity handbook helps employers to design, collect and manage the process and inform targeted recruitment action plans. Pragmatic and practical guidance on How to Conduct Diverse Recruitment. Race and Recruitment: exposing the barriers has invaluable insights into the challenges BAME job seekers experience. Page 8 of 9

10 Understand the workforce demographic of the local community with the Regional Fact Sheets: Ethnic Minorities in England and Wales. Women are still under-represented on Executive Committees. Getting women on board has recommendations for senior leaders to ensure sustainable balanced boards. Significant under-representation of BAME and female talent remains a challenge for many sectors: - Ethnic Minority Sector Fact Sheets are a useful resource for employers in Science, Technology, Engineering and Mathematics (STEM), Media, Retail, Legal and Business, Finance Administration and Mathematics sectors to understand the BAME demographics and trends specific to their sector. - The Project Sector Insight papers help senior leaders to understand the experience of work for women working in STEM, Finance, Legal and the uniformed and armed services sectors. Use this knowledge to inform change. - Work to reduce occupational segregation with these Best Practice Recommendations for Reducing Occupational Segregation that can be applied to female and BAME talent strategies. 1 Census 2011, Office for National Statistics, Annual Population Survey April 2013 March 2014, Office for National Statistics 3 Fact File - UK Labour Market Status by Ethnicity (April-June 2014), Race for Opportunity, Race to Progress: Breaking down barriers, Race for Opportunity, June 2011 and Race and Recruitment: Exposing the barriers, Race for Opportunity, Gender and Race Benchmarking Trends Analysis Report, Opportunity Now and Race for Opportunity, December Gender and Race Benchmark Trends: Fair Pay, Opportunity Now and Race for Opportunity, November Gender and Race Benchmarking Trends Analysis Report, p9-10, Opportunity Now and Race for Opportunity, December Mentoring for Unemployed People Brixton Job Centre Plus, Race for Opportunity, April November Voluntary Code of Conduct for Executive Search Firms, Department for Business, Innovation & Skills, July A ratio of 1:1 would mean that on average, a BAME candidate would be as likely as a white candidate to be hired after shortlisting. None of the benchmarking organisations had this ration, and only nine had ratio of BAME hired to shortlisted that was greater than FRC updates UK Corporate Governance Code, Financial Reporting Council, 17 September 2014 Page 9 of 9

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