A new study has indicated that the old saying may hold significantly more sway than previously thought, and HR may well be excluding excellent candidates in favour of someone recommended to them via their social networks.
According to a new report out of Melbourne University, The Ethnic Penalty: Immigration, Education and the Labour Market, diversity in the workplace has not necessarily been hampered by racism or insufficient qualifications, but a sheer lack of social networks held by migrant job seekers. Dr Reza Hasmath examined why ethnic minorities and their children struggle to obtain high-paying employment, despite often having a more advanced formal education than the wider Australian population. The cause of low participation may be due to many people learning about work opportunities through ‘word of mouth’. “Two-thirds of all job openings are found through social networks,” Dr Hasmath said.
It was found that a person’s ability to obtain job information is tied to the diversity of their acquaintances and friends more closely than previously thought, and ethnic minorities’ personal contacts tend to come from a narrower range of occupations. As such, they receive less job opening information and are steered towards a smaller group of job opportunities, the study found. “This sets the stage for a continued ethnic penalty,” Dr Hasmath commented.
The contacts brought by workers already firmly established in Australia count for so-called “network capital”, which many migrants lack. “Minorities tend to have very little network capital, so employers aren't accessing them as much. When they do interact, there's a lack of trust. It's not a race issue, but it takes time to get to know a particular group,” Dr Hasmath said.
The lack of diversity is often firstly attacked for equity reasons, but the research found that from an investment perspective, the problem also doesn’t bode well for future economic success. According to Glen Cathey from Randstad Sourceright in the US, the future belongs to those companies who strike the right balance in recruiting. “How many brilliant, high-potential people could be given the right opportunity to fully realise their potential, regardless of whether or not they were born into the right family, [or were] in the right place, at the right time?” Cathey said.
Cathey said the companies that consistently hire great people by basing hiring decisions on data – and not intuition and conventional wisdom – are more likely to develop the best teams.