The current talent struggles of U.S. companies are hardly a new trend. A PwC survey dating 15 years back cited that 93% of CEOs recognized the need to change their strategy for attracting and retaining talent. If organizations have been trying to improve their hiring outcomes for so long, then why are so many still struggling? The short answer is that companies often spend too little time improving how they define and track performance.

A Lasting Problem

Recently, a number of executives have asked us if they still need to worry about recruiting as much given the signs of the economy softening. It’s true that economists expect the Federal Reserve to increase interest rates in an attempt to curb inflation, which is expected to increase unemployment. However, as Covid-19 has taught us, not every downturn is the same, and there are strong indications that hiring will continue to be a large obstacle for many companies.

In 2017 the U.S. Bureau of Labor Statistics issued a press release, stating that the number of unfilled jobs had reached 6.2 million, a historical high. That record was then surpassed in 2018 and then again in 2019 when the number of unfilled jobs reached 7.5 million. That number is now at 10.7 million, 43% higher than the prior record. As a result, there are currently two job openings for every person who is unemployed.

It seems unlikely that such a vast imbalance in the labor market will be resolved by even a recession. This is especially true for certain pockets of the economy that have a backlog of open roles due to Covid-19, and also for parts of the labor force, such as college graduates and other highly skilled professions, that have historically experienced relatively low unemployment even during economic downturns.

Companies have no choice — they must learn to hire better. So, how?

Emulate Moneyball, Not Frankenstein

In a knowledge-based economy individuals can contribute to organizations in an increasing number of ways. Envision a tech company with three successful product managers; Kate, John, and Aditi. Kate’s key to success is her data-driven approach to understanding customer needs, while John’s strength is an intuitive approach to product design and Aditi’s is her ability to empower her teams. As long as all three are successful, their employer is happy and gives them the freedom to do their work as they please.

The problem arises when their employer wants to hire a fourth product manager. Recognizing that all three product managers bring valuable skills to the organization, the tech firm writes the Kate+John+Aditi job description. This results in a Frankenstein talent strategy, focused on candidates who check the box on all dimensions as opposed to those with one clear superpower.

Compare this to the Moneyball approach to recruiting. While baseball players could contribute to the team in a number of ways, Billy Beane questioned the age-old quest for players who contributed to all of them. Instead Beane sought a portfolio of players, each making unique contributions. In other words, he reduced the number of criteria he expected his recruits to excel at. He did this by giving a lot of thought to what constituted success in each role. Note that he did not go with the broad definition of success, such as “helping us win the game in a variety of ways,” but instead focused on how each player could contribute to the team in a narrower dimension, such as how good their on-base percentage was. He then applied a razor-sharp focus to finding players who were net-positive contributors by outperforming on one or two criteria, even if it meant lacking in other dimensions.

A Case Study from Graduate School Admissions

We recently collaborated with a large U.S. university to reengineer its MBA admissions process. There was a long-standing belief in this school that the best predictor of a “good student” was the quantitative component of the GMAT. It’s a business school, after all, with rigorous requirements in courses like statistics, economics, and finance. Indeed, some faculty believed everything in the admissions process but quant GMAT was a waste of time. But we followed Billy Beane’s example and, instead of relying on this conventional wisdom, turned to historical data.

The first challenge was to articulate how the school defined performance. For example, should we define good performance as a student with stellar academic achievement or a good career outcome? Should we use starting salary as a proxy for a good career outcome or try to collect their compensation after a few years? How about students that go into meaningful jobs in sectors that don’t pay as well? Discussing these questions made us realize that desirable performance is multi-dimensional, with some dimensions easier to measure than others. We ended up using multiple proxies for even seemingly simple dimensions like academic performance.

In the end our team’s analysis found that quantitative GMAT scores are indeed a reliable predictor of applicants’ academic performance, but it also showed that verbal GMAT scores are as good if not better! Putting more weight on verbal tests scores was a simple shift in the admissions process, but one that lead to admitting a somewhat different student body. And doing things differently provides a competitive advantage relative to schools blindly following conventional wisdom.

How to Get There

Some business leaders we’ve spoken to recognize the need for a more analytical approach to hiring but are intimidated by how to get there. Defining and tracking performance doesn’t need to be a complicated, multi-year project where you start producing troves of new performance data. You often have the data you need; it just requires some hard thinking around how to utilize it.

Start by defining the outcomes you want to see for your team or organization. Then work creatively to measure those results and how to attribute those outcomes to the work of various individuals. The initial reaction from many executives, particularly in white collar industries, is that attributing such results to any single individual will be nearly impossible in their profession. However, more often than not we’ve been able to find ways to do this. A digital news site we worked with, for example, argued that a good news piece could come in many shapes and forms and therefore only relied on the instincts of their senior team to identify and try to recruit up-and-coming talent. We collaboratively came up with a few hypotheses on how to better identify future stars, and after testing these were able to show that the number of social media comments on previously published articles was a strong predictor of future success.

Where output data on desirable organizational results is truly not possible to define, input data on employee activities can be useful. A chair manufacturer we worked with was giving up revenues as it could not hire enough people to fulfill their orders. They also struggled with high employee attrition and high absence rates. Using their internal data, we were able to show that female workers — a heavily underrepresented group in the factory — had the least absences and were the most loyal workers. This helped them realize the root of their problem was that their recruitment process overlooked women and other qualified candidates, while favoring less productive men.

Yes, implementing the steps above will require your organization to set aside time to tackle complex topics that don’t have obvious answers. For example, should you define financial success for your company as revenue growth, margin growth or an increase in your share price? But in our experience these are conversations you should be having anyway. Because it’s work, not enough organizations do it. As in Moneyball, if you want significantly different results, you have to apply a significantly different approach to looking for talent. This seems obvious but it is in fact rare. To find better talent, begin at the end.

Most organizations don’t feel the need to explain why they care about core values such as innovation, resilience, or integrity. And yet when it comes to diversity, lengthy justifications of the value of hiring a diverse workforce have become the norm in corporate America and beyond. AstraZeneca’s website, for example, makes a business case for diversity, arguing that “innovation requires breakthrough ideas that only come from a diverse workforce.” Conversely, Tenet Healthcare makes a moral case, noting in its Code of Conduct that “We embrace diversity because it is our culture, and it is the right thing to do.”

These statements may seem innocuous — but our forthcoming research suggests that how an organization talks about diversity can have a major impact on its ability to actually achieve its diversity goals. Through a series of six studies, we explored both the prevalence of different types of diversity rhetoric in corporate communications, and how effective these narratives are when it comes to attracting underrepresented job candidates.

In our first study, we gathered publicly available text from all Fortune 500 companies’ websites, diversity reports, and blogs, and then used a machine learning algorithm to classify the data into one of two categories:

• The “business case” for diversity: a rhetoric that justifies diversity in the workplace on the grounds that it benefits companies’ bottom line
• The “fairness case” for diversity: a rhetoric that justifies diversity on moral grounds of fairness and equal opportunity

We found that the vast majority of organizations — approximately 80% — used the business case to justify the importance of diversity. In contrast, less than 5% used the fairness case. The remainder either did not list diversity as a value, or did so without providing any justification for why it mattered to the organization.

Given its popularity, one might hope that underrepresented candidates would find the business case compelling, and that reading this type of justification for diversity would increase their interest in working with a company. Unfortunately, our next five studies demonstrated the opposite. In these studies, we asked more than 2,500 individuals — including LGBTQ+ professionals, women in STEM fields, and Black American college students — to read messages from a prospective employer’s webpage which made either the business case, the fairness case, or offered no justification for valuing diversity. We then had them report how much they felt like they would belong at the organization, how concerned they were that they would be judged based on stereotypes, and how interested they would be in taking a job there.

So, what did we find? Translated into percentages, our statistically robust findings show that underrepresented participants who read a business case for diversity on average anticipated feeling 11% less sense of belonging to the company, were 16% more concerned that they would be stereotyped at the company, and were 10% more concerned that the company would view them as interchangeable with other members of their identity group, compared to those who read a fairness case. We further found that the detrimental effects of the business case were even starker relative to a neutral message: Compared to those who read neutral messaging, participants who read a business case reported being 27% more concerned about stereotyping and lack of belonging, and they were 21% more concerned they they would be seen as interchangeable. In addition, after seeing a company make a business case, our participants’ perceptions that its commitment to diversity was genuine fell by up to 6% — and all these factors, in turn, made the underrepresented participants less interested in working for the organization.

For completeness, we also looked at the impact of these different diversity cases on well-represented candidates, and found less consistent results. In one experiment, we found that men seeking jobs in STEM fields reported the same anticipated sense of belonging and interest in joining a firm regardless of which type of diversity rationale they read. But when we ran a similar experiment with white student job candidates, we found that as with underrepresented job candidates, those who read a business case also reported a greater fear of being stereotyped and lower anticipated sense of belonging to the firm than those who read a fairness or neutral case, which in turn led them to be less interested in joining it.

Clearly, despite ostensibly positive intentions, making the business case for diversity does not appear to be the best way to attract underrepresented job candidates — and it may even harm well-represented candidates’ perceptions of a prospective employer as well. Why might this be? To answer this question, it’s helpful to examine what the business case actually says.

The business case assumes that underrepresented candidates offer different skills, perspectives, experiences, working styles, etc., and that it is precisely these “unique contributions” that drive the success of diverse companies. This frames diversity not as a moral necessity, but as a business asset, useful only insofar as it bolsters a company’s bottom line. It also suggests that organizations may judge what candidates have to contribute on the basis of their race, gender, sexual orientation, or other identities, rather than based on their actual skills and experience — a stereotyping and depersonalizing approach that undermines candidates’ anticipated sense of belonging.

Ultimately, the business case for diversity backfires because it sends a subtle yet impactful signal that organizations view employees from underrepresented groups as a means to an end (an instrumental framing of diversity). This undermines organizations’ diversity efforts, before they’ve even had any direct interaction with these candidates.

So what should organizations do instead? Our research shows that the fairness case, which presents diversity as an end in itself (i.e., a non-instrumental framing of diversity), is a lot less harmful than the business case — in our studies, it halved the negative impact of the business case. But there’s another option that may be even better and simpler: Don’t justify your commitment to diversity at all. Across our studies, we found that people felt more positive about a prospective employer after reading a fairness case than after reading a business case — but they felt even better after reading a neutral case, in which diversity was simply stated as a value, without any explanation.

When we share this suggestion with executives, they sometimes worry about what to do if they’re asked “why” after they state a commitment to diversity with no justification. It’s an understandable question, especially in a world that has so normalized prioritizing the business case over all else — but it has a simple answer. If you don’t need an explanation for the presence of well-represented groups in the workplace beyond their expertise, then you don’t need a justification for the presence of underrepresented groups either.

It may seem counterintuitive, but making a case for diversity (even if it’s a case grounded in a moral argument) inherently implies that valuing diversity is up for discussion. You don’t have to explain why you value innovation, resilience, or integrity. So why treat diversity any differently?

As the Great Resignation persists, job seekers are looking for better wages, better benefits, and better remote work options. They’re also losing patience with cumbersome hiring processes. To make sure your hiring process is a positive experience for candidates, the author suggests asking yourself these four questions: 1) Is your time-to-decision fast enough? 2) Do you share information on company culture? 3) How is your correspondence? and 4) Are you providing value up front?

More than 20 million Americans quit their jobs in the latter half of 2021, leaving many companies struggling to find talent to refill their ranks. With 11.3 million job openings, which is about 5 million more than unemployed workers as of March 2022, job seekers certainly have the upper hand — and they’re demanding more from future employers.

Job seekers aren’t only looking for higher pay and better workplace benefits. They’ve also lost patience with ever-cumbersome hiring processes. They know that they are in demand, and they want to see that employers recognize their value.

Create a hiring process that is a positive experience for candidates to foster a good relationship from the start. By asking yourself the following four questions, you can make sure your hiring experience isn’t causing you to lose future talent.

1. Is your time-to-decision fast enough?

Finding out whether someone is a good fit for your company might take a little time, but you could lose candidates to companies with faster hiring times if you drag your feet too long. The average time-to-hire includes multiple interviews and lasts around 43 days. However, 62% of working professionals say they lose interest two weeks after an initial interview if they haven’t heard back.

To help prevent this, look for ways to speed up the hiring process and eliminate wasted time. For example, if you require candidates to complete assessments, try integrating them with your company’s application tracking system. Administer assessments aligned to the capabilities required for success in the target job when candidates submit applications instead of having a recruiter send them days after.

2. Do you share information on company culture?

The decision to work with a candidate is a two-way street; informing candidates about the company and the role is just as important as learning about their skills. Communicate to job seekers your company’s commitment to not only filling openings, but also to aligning people with jobs where they will thrive.

To help job seekers decide if your company is a good fit, ensure that each step of the hiring process reflects the culture. For example, use situational judgment tests to ask candidates to reflect on situations they might face on the job and indicate what they would do in response.

Another idea is to use behavioral role-plays, which enable candidates to demonstrate key job skills. A role-play for a customer service role, for example, might involve having the candidate engage in a simulated conversation with a dissatisfied customer.

You can also use a virtual assessment center — a three- to four-hour session that includes exercises in addressing business challenges and strategic decision making — to paint a realistic picture of the job. All these methodologies serve the dual purpose of assessing candidates’ capabilities to perform the job and teaching them about how life in the role and organization might look and feel. Although this is a beneficial method, it does bring up concerns about how much time you’re asking candidates to invest in your hiring process. Consider using these methods only for final candidates to help you make your hiring decision — after you and the candidate have invested the time to know both parties are interested in an employment relationship.

3. How is your correspondence?

Providing genuine feedback is a relatively easy way for employers to bring unique value to candidates in the interview process, and it will likely become a hiring norm in the near future. According to a survey conducted by the Talent Board, candidates who receive timely feedback are 52% more likely to engage with an employer again.

Conversely, unsuccessful candidates who never receive feedback are more than twice as likely to have an unpleasant image of the company. If employers can demonstrate investment in candidates’ success, it will go a long way toward building a future relationship.

For instance, you can provide neutral feedback to candidates that highlights their tendencies and capabilities and give helpful suggestions without mentioning scores or alignment with the target role. You can avoid legal challenges (e.g., “You told me I was a great fit for the role, but you didn’t hire me”) and provide positive and constructive feedback.

4. Are you providing value up front?

Many people no longer want a job simply to pay their bills. Instead, they want to work at a company that will help them learn and grow, personally or professionally. LinkedIn’s 2022 Workplace Learning Report found that companies that excel at internal mobility are able to keep employees around for an average of 5.4 years, which is nearly twice as long as companies that don’t. Given that ongoing growth is essential to candidates, make sure they know you will invest in their development up front.

One way you can signal this to candidates is to give them a chance to learn some new, relevant skills. For example, a hiring process designed to select sales representatives might include an opportunity for sales-interested candidates to access learning assets that teach about cold-calling techniques, how to best reach the C-suite, or strategies for overcoming call reluctance. The key here is giving candidates something for their time other than the possibility of a job offer. Give them value they can take wherever they go.

As the Great Resignation persists, job seekers are the ones in control. To fill openings, it’s critically important that companies make good impressions — and that starts with carefully mapped-out interview processes. Consider each question above to add more value to every candidate conversation.