tl;dr: Discrimination in hiring is persistent, but not inevitable. Process and structure can reduce the likelihood that implicit bias creeps into important decisions like who companies hire. SimCase offers a game to hammer that point home by highlighting bias in decisions made by the students themselves.  

In 2022, an audit study (“A Discrimination Report Card”, Kline et al. 2024) was published that put discriminatory hiring back in headlines. Using made-up résumés with equivalent qualifications but different personal characteristics, researchers applied for jobs at nearly 100 of the largest US companies. The results, based on whether an employer attempted to contact a fictitious applicant within 30 days, demonstrated just how entrenched employment discrimination is in parts of the U.S. labor market, especially when you consider that these results are in line with similar experiments conducted over the last 30 years.

THE SILVER LINING

However, the results weren’t all bad. Some companies performed well in terms of race, gender, age, and sexual orientation. What’s more, the companies that performed well shared various characteristics that can be adopted by companies seeking to pursue a more equitable path forward.

This is not only just, but it makes business sense. Research popularized by Nobel Prize winner Gary Becker detailed that discrimination is bad for business since paying for any attribute beyond talent was wasteful spending and increased costs vis a vis competition that did not discriminate. Interestingly, in the recent audit study, more profitable companies tended to be less biased as well. This data only bolsters the business case for weeding out discriminatory practices in hiring, making it a true double-bottom line initiative.

MIND THE GAP

Given the economic benefits noted above, it stands to reason that it should only be a matter of time before discriminatory companies are driven from the marketplace. Yet these companies persist. In fact, more than 60 years after Becker published his theories, they persist.

It was this dissonance that drove a pair of researchers, Bill Rand and the late Ned Smith, to build a model demonstrating how bias within a market can actually alter the behavior of other companies in that market. Released in 2015, it demonstrated how instead of getting out-competed, these discriminatory firms actually ended up lowering the bar.

This research offered an intriguing hypothesis to explain the persistence of discriminatory companies, and through its transformation into a popular simulation, has actually helped shed light on the role implicit bias has in perpetuating this dynamic.

screenshot of a model

Figure 1: “Screenshot from discriminatory-firm model” NetLogo, undated. Author’s screenshot.

IMPLICIT BIAS

Together with the researchers who built the discriminatory-firm model, SimCase created a hiring game that asks players to determine the salary offer for a series of pre-vetted candidates. We won’t reveal too much to avoid spoiling the experience for future users, but suffice to say that when students follow fairly common hiring practices, they end up introducing bias into their decision making process. And these aren’t outliers. Entire classrooms consistently perpetuate the gender wage gap without realizing it, much to their surprise in the debrief.

This surprise is critical since a-ha moments tend to linger long after a course or diploma. By having students witness how their own decisions manifest a bias already present in the marketplace, the implicit bias theory they may have only heard about suddenly becomes real. This lesson sticks with them, and it also serves as the optimal moment to introduce potential solutions since students are typically keen to keep this from happening again.

Student interface in SimCase hiring exercise

Figure 2: “Screenshot from SimCase hiring game” SimCase Co., 2024. Author’s screenshot.

STRUCTURE & PROCESS

In the SimCase hiring game, players who avoid falling into “legacy hiring practices” decide in advance which data to weigh more heavily, and which sources to discount. Establishing a thoughtful process, and sticking to it, typically decreases the likelihood that a student unwittingly introduces bias into their salary offers.

Interestingly, the same benefits of process and structure proved true in the national audit survey. Companies that appeared to utilize a centralized H.R. function strongly predicted less discrimination, while decentralized hiring often led to more. Similarly, a formalized hiring process that follows established steps and gated approvals can help mitigate bias. Other benefits arose from having more regulatory scrutiny, having a diverse team doing the hiring, as well as diversifying the recruitment pool and hiring for skills instead of degrees.

HIRING IS JUST THE BEGINNING

What our game experience has shown, and what the findings of this audit survey seem to demonstrate, is that the key to ensuring that hiring reflects your values and interests is to build a clear structure and process. While the benefits of a diverse workforce may still be debated by some, the reduced waste in hiring is transparent and directly impacts a company’s bottom line. The added benefit is that the best practices cultivated through a conscious approach to hiring can have a multiplier effect if they can take root in other critical areas of the company. Ultimately, the lessons we learn about hiring can actually improve the way decisions are made throughout the organization, and that is something every manager should be able to get behind.