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You Prioritized Growth Over Diversity. Now What? How to Build Diverse Teams Without Biasing Hiring Decisions

You Prioritized Growth Over Diversity. Now What? How to Build Diverse Teams Without Biasing Hiring Decisions

Free Resource

Natalie Ledbetter is the VP of People Operations at Stash Invest, a financial services startup making saving and investing easier for people of all income levels. She previously held leadership roles at Curalate and Shapeways, spoke at TedX Walnut St. in 2015, and is a graduate of the University of Texas at Austin.

Early-stage companies have one goal in mind: survival. Whether that’s achieving profitability or showing enough encouraging growth to raise a round, that singular, united mission can be the difference between success and failure.

In the frenzy of scaling teams and products, actions and discussions about culture, diversity, and inclusion are often shelved. Unfortunately, these imbalances are compounded by growth, and correcting distorted workforce numbers is much easier with dozens of employees than thousands. That’s why the co-founders at Stash Invest, a 2-year old financial services startup, brought in talent acquisition and employee experience veteran Natalie Ledbetter when their company had fewer than 25 employees.

Ledbetter started her career in sales and communications, but has spent the better part of the past decade building diverse companies while leading talent acquisition and human capital strategy, often as the first HR hire at early-stage startups.

Conversations about workplace diversity are among the most contentious, uncomfortable, and important a company can have. Cognitive dissonance is a powerful driver of behavior, and nobody wants to be accused of sexism, racism, or other implicit biases. But the truth is that implicit bias is subconscious, built and reinforced with decades of cultural conditioning. These biases also hurt companies’ abilities to innovate and build products for diverse customers and audiences.

Leaders seeking to address bias and diversity need more than good intentions and a revamped mission statement. In this exclusive interview, Ledbetter addresses common misconceptions about diversity initiatives, identifies tactics to fix pipeline problems, explains how to build a diverse recruiting process without biasing hiring decisions, and tells why attracting diverse candidates is only part of the challenge.

Why diversity matters

We intuitively know that creating equitable and diverse companies is important, and new research has made it increasingly clear that it also makes sense in strictly business terms. Companies that commit to diverse leadership and hiring tend to financially outperform industry medians and homogeneous competitors. “This is not a checking-the-boxes exercise,” says Ledbetter. “This is legitimately something that we believe in because we know that the best products are built by diverse teams, and we are looking to win. Additionally, we believe that in order to build a dynamic product for our customers, we have to resemble them.”

“We want to build financial products that are inclusive and accessible, and need a diverse company to build products and experiences with empathy and consideration for all different types of people.”

There’s more to a successful, diverse company than hitting a target ratio of individuals with distinct biological characteristics. Many companies limit discussions of diversity to race and gender, but Ledbetter implores taking a much broader view that includes socioeconomic background, age, sexual identity, and education.

Communication and transparency are critical to the success of any diversity and inclusion initiative. Teams thrive on trust, and employees need to know you aren’t hiring less qualified candidates for optics’ sake. A well-defined hiring process covers most of this, but you must also avoid dismissing reasonable questions about diversity policies as yearning for a return to the good old days.

Building a better hiring process

After growing employee headcount by more than 300% in 2017, Stash Invest experienced periods where it particularly struggled to correct gender ratios. While they ended the year at 40% women, Ledbetter believes there is still work to do. Given their aggressive plans to add approximately 70-100 hires in 2018, a lack of process and strategy snowball a small realignment into a multi-year effort. “If diversity is important to you, you have to be laser-focused  on the representation and ratios of different groups as you scale,” says Ledbetter. “If you do not address the issue in the early stages of growth, the ability to remediate the situation becomes more challenging. The math simply gets harder the more you let it get away from you.” 

So how does Stash Invest deliberately increase the number of women or people of color they hire without making hiring decisions that favor candidates based on gender or race? Ledbetter breaks down the process with several key takeaways:

1. Formalize hiring criteria

Before starting a search, Ledbetter makes sure her team has a strong understanding of the role. This consists of an hour long meeting with the hiring manager and a standard set of questions to gain clarity around responsibilities, competencies and non-negotiables. Additionally goals are established for each interview, and interview questions are crafted around said goals. The objective is to prevent redundancies and ensure that new information is uncovered from meeting to meeting, resulting in a more holistic view of each candidates. She recommends a formulaic approach to each interview in order to discourage decisions based on "gut" or subjective concepts like "culture fit."

2. Don’t blame the pipeline. Fix it.

If the goal is to ensure that you are hiring a diverse pool of employees, companies cannot depend on their existing inbound and outbound pipelines. Given the lack of insight into user demographics on major job seeking websites, it’s important to consider where and how you’re promoting open positions. Adopting a “testing mentality” is absolutely essential according to Ledbetter. This means consistently evaluating sources based on data and ROI and moving funds into sources that are yielding the candidates that meet the bar. Ledbetter recommends testing sources that focus on diversity hiring in order to expand your talent pool, such as:

An important tactic for attracting more diverse applicants is reconsidering word choices in your job description. Gendered language can dissuade candidates or give the impression of an unaccommodating environment.

Stash has even seen success by inviting candidates or prospective candidates to their weekly happy hour,in order to experience the company and its culture in a more organic setting.

3. Set rigid top-of-funnel goals

Stash’s hiring funnels vary by role, but their standard process for engineering roles includes four stages:

  1. Resume review
  2. Phone screening
  3. Code test
  4. In-person rounds with 3-4 current engineers and an engineering leader

In each of the first three stages, Ledbetter pushes her team to ensure that there is equitable representation of strong candidates from underrepresented groups advancing to the next round.

“We want the best candidates, so I’m going to challenge you to expand your search, test new strategies and engage a host of organizations, meetup groups, and associations to unearth top-notch candidates from a variety of backgrounds.”

This can be challenging when trying to fill niche senior roles or when facing significant pressure to scale. “It’s hard, to be honest,” says Ledbetter. “We probably work more and harder than a lot of companies. But we have decided together that it’s important to our product, and we have that investment across the organization.”

4. No candidate fast tracks

Most companies have referral programs, and for good reason. Numerous studies have shown referrals cost less to hire, are quicker to onboard, and stay longer than candidates sourced through other channels.

Unfortunately, fast-tracking referrals can become a path toward a homogeneous culture. It gives a tremendous advantage to well-connected individuals over equally qualified candidates who may be looking to enter a new industry. Additionally, oftentimes people’s friends are similar in education, socioeconomic status, race, or ideology.

“As a talent acquisition manager in a hyper-growth organization, people often say ‘we have so many open roles, this is a quick win, let’s just get it done.’ It’s not lost on me that making quick, 'easy' hires helps close more jobs, but if diversity and inclusion are important to you, you have to get away from that sort of thinking. First and foremost it’s simply not scalable, and second, the larger you get, the harder it becomes to correct homogeneous environments and cultures.”

At Stash, Ledbetter accepts and encourages employee referrals (and pays referral bonuses), but requires those candidates to follow the same interviewing process as everyone else.

5. Utilize diverse interviewers

One thing that Ledbetter insists upon is an interview panel that includes people of different races, genders and backgrounds. A homogeneous interview panel can create the impression of a non-inclusive company. Additionally, diverse interview panels help internally reinforce that your company values diversity and creating an inclusive, equitable culture.

6. Choose the best candidate

Diversifying your hiring funnel does not mean choosing one candidate over another based on race, gender, or identity. It means getting your whole team--from the top to the bottom--on board with doing the heavy lifting to ensure that your that your talent pool is reflective of the world at large. If you’ve made a genuine, measurable effort to diversify your hiring funnel and build hiring processes that benchmark people equally, you can choose the best candidate — referral, white male, or otherwise — with confidence that there was nobody better.

Don’t stop at hiring

“While hiring a diverse pool of employees is important, you cannot forget about inclusion." Ledbetter says.  “Once you've hired people of color and people of different ages, genders, sexual orientations, and educational backgrounds how do you keep them happy and engaged? How do you ensure that they feel supported, safe and protected? As a People Ops leader, you should always be thinking about programs that you can develop, benefits offerings and L&D practices that are inclusive of your entire population. Inclusion is crucial to success.”

Embracing diversity and inclusion goes beyond the talent acquisition process. It means weaving these values into the fabric of your company, and making what may have started as a “diversity initiative” core to your culture, strategy, and daily actions. It will require getting comfortable with uncomfortable conversations, and providing the training, resources, exposure, and opportunities necessary to build a truly equitable company. Ledbetter recommends companies focus on the following processes:

  • Compensation, bonuses, benefits, and perks
  • Employee learning and development
  • Performance management
  • Career advancement
  • Manager training
  • On-boarding and new hire orientation

Stash Invest’s commitment to building diverse teams and an inclusive culture isn't about gaining popularity or drawing attention, it's about driving innovation. If you can’t find diverse applicants, consider how you’re describing the position and where you’re promoting it.

“While we love hearing from employees and interview candidates that we are very diverse, our goal isn’t to be known as 'the diverse company,' says Ledbetter. “We want to be known as a great company with high integrity and a passion for building the best products for our customers.”