Impact Hiring: A Double Bottom-Line Solution to Today’s Entry-Level Talent Needs

Shanti Nayak, Principal, Incandescent and Kappie Farrington, Associate Director, Strategy and Planning, Co-Impact

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Shanti Nayak is a Principal at Incandescent, an advisory and venture firm, where her work with corporate and social impact clients focuses on the intersection of strategy and organization, and on complex systems change. 








Kappie Farrington is an associate director for strategy and planning at Co-Impact, a global philanthropic collaborative for systems change. She was recently a strategy associate at The Rockefeller Foundation, where she worked with corporations to expand economic opportunity for disadvantaged people. 



With the nation's unemployment rate, which dropped to 4.3% over the summer, at the lowest levels in 16 years, competition for entry-level talent has stiffened considerably. Target's recent announcement of the increase in its starting wage (to $11 this year, with a commitment to increase it to $15 by year-end 2020) is simply the latest evidence of the pressure U.S. employers increasingly feel to both stem turnover, which imposes high costs in the form of recruitment and training, and woo talent.

At the same time, as more companies are realizing how critical entry-level talent is to their customers and brands, and while overall unemployment is decreasing, economic opportunity remains stubbornly out of reach for some. Notably, the unemployment rate for workers between 16 and 24 years old remains well more than double the national average at 9.1%.1 The Rockefeller Foundation saw an opportunity to help companies target their frontline recruitment and retention efforts to reach untapped talent pools, like opportunity youth—disadvantaged young people who are out of school and out of work. In partnership with its grantees and some of the nation's largest employers, The Rockefeller Foundation has invested in tools and resources that support what we call "impact hiring"—scalable talent practices that create meaningful business advantage by hiring and retaining employees who face barriers to economic opportunity.

Initially, our work with employers was focused on hiring and retaining opportunity youth. However, it soon became clear that the insights gained, and the strategies we discovered, are relevant to many pools of talent that face barriers both to finding the right job fit and to staying long enough to add meaningful value to their employers. The outcomes of our research have convinced us that companies can evolve their talent practices to significantly improve business outcomes while creating economic opportunity for disadvantaged workers.

Challenging times inevitably present opportunities for innovation—and, through our work, we are excited about the range of innovation we see employers undertaking to find and keep talent from disadvantaged backgrounds. More often than not, this work is being driven by passionate, visionary talent acquisition leaders who recognize both the urgency and the potential power inherent in experimenting with, and improving upon, their organization's traditional talent equation. We'd like to highlight a few of these innovations here.

Broadening the Funnel

Greyston Bakery, a key Ben & Jerry's and Whole Foods supplier, pioneered the practice of "open hiring." Greyston's open hiring approach means that anyone who applies for a job at its manufacturing facility is considered employable, no questions asked—regardless of education, credentials, prior work history, criminal background, etc. In addition to intensive training via an initial apprenticeship, employees are offered support to succeed both at work and in their communities, for instance, building financial and other life management skills. The Greyston model is revolutionary for many reasons, not the least of which is the extraordinarily low turnover the organization experiences among full-time employees who complete the apprenticeship period.

Recognizing the value inherent in widening the aperture on work-ready talent, it is not surprising to see larger employers beginning to thoughtfully experiment with the principles embedded in Greyston's open hiring approach. 

Recently, we worked with Manpower (as a key talent supplier) and Unilever (as its client) to pilot putting these principles into action, in a well-supported way, in two Unilever production facilities. It's still too early to comment on the long-term business value recognized from this early effort, but we believe that Greyston's model has relevance and promise across a range of employers.

Assessment: From Intuition to Evidence

As has happened in so many fields, entry-level hiring is transitioning from relying largely on intuition to leveraging the power of scientific, evidence-based processes.

To demonstrate the power of using talent analytics tools to understand the potential of opportunity youth as a talent pool, in 2015 The Rockefeller Foundation funded Incandescent and one of the leading gamified assessment companies, Knack, to apply game-based assessment to more than 600 opportunity youth enrolled in programs with community-based organizations. Game-based talent analytics can do what is all too rare in the recruiting field—establish a quantifiable predictor of workplace performance that can substitute for the use of traditional qualifications, which often introduce bias. In the study, the youth were scored based on predictive performance models in four distinct jobs: an entry-level customer service role at a financial institution, a claims processing role, a restaurant service role, and a highly skilled financial analyst role in a large insurance firm.

Among the 600 youth, 83% scored at or above the level of the company's average for current employees in these jobs. As explained in more detail in the white paper, "Impact Hiring: How Data Will Transform Youth Employment," we learned that different young people excel on the dimensions that matter for different kinds of roles. 

A prevalent myth is that some youth are simply more "employable" than others and have greater aptitude across the spectrum of entry-level roles. This view is at odds with the data from our study.

These data mean that employers aren't competing for the small group of "super-athletes" who could excel in any job. They are on the hunt for the larger group of youth who are a great fit for their particular needs—and can tune assessment tools to the specific capabilities they require. This strategy ensures a better fit for employers, casts a wider net for potential candidates, and eliminates bias that can creep into traditional methods of assessment.

Since 2015, more and more game-based talent analytics companies have entered the market, targeting employers' entry-level talent needs. The Rockefeller Foundation is currently working with one of the emerging leaders in this field, pymetrics, to pilot its use across industries with under-tapped talent. Pymetrics offers candidates a chance to play games that assess intrinsics like memory, risk-taking and focus—and then compares candidates' scores with the scores of high-performers already in the role. While relatively new to the entry-level hiring space, pymetrics has impressive data to back up its AI technology. Most notably, its assessments have proven a 6x improvement in applicant-to-offer yield (e.g., employers can go from reviewing 150 resumes to fill one seat to reviewing 25 resumes) and a 60% reduction in attrition rates once those applicants are hired. We see the growth of tools like pymetrics as a positive indication that new ways of assessing talent are effective at meeting employers' needs, and they hold promise for cutting through the bias that can exist in more traditional candidate review processes, like a resume-based screen.

Using Frontline Managers to Drive Engagement—and Retention

Recently, we worked with the senior leaders of HMSHost, a leading food operator, to explore which front-line manager behaviors most positively impact front-line engagement and retention and to see whether we could support managers to successfully adopt those few, critical behaviors. With an 11-week pilot in two HMSHost locations (at their busiest time of year no less!), we focused on building managers' skills to practice the three critical behaviors we uncovered among existing exemplary HMSHost front-line managers who achieve distinctively better retention outcomes:

  • Authentically recognizing their team.

  • Listening to and solving business challenges with their team.

  • Creating feedback touchpoints.

Through the pilot focused on front-line manager behavior, we improved every targeted front-line employee engagement metric by an average of 17% and began to see evidence of reduced attrition.

Reducing attrition is a clear win-win. Research suggests that people who experience unemployment between ages 16 and 24 earn $400,0002 less over the course of their careers. A job that lasts only a few months limits growth opportunities and jeopardizes future prospects. With studies showing the cost of turnover ranging from $3,0003 to $8,0004 per front-line associate—which doesn't factor in the high "hidden" costs of turnover such as paid overtime, lost productivity and weaker customer service—it is evident finding more ways to positively impact attrition matters a great deal indeed to the bottom line.

Weaving Impact Hiring Through Your People System—From Acquisition to Retention

Impact hiring, though an increasingly popular practice, is not entirely new. Some companies, like Chipotle, have been putting people practices like this at the core of their business strategy for years. Incandescent studied Chipotle for over a year to learn what it looks like for a leading employer to embed a range of impact hiring practices into its operations at scale—for primarily business, rather than CSR, reasons. With an industry business model that requires a high volume of entry-level workers and a brand differentiator that relies on the quality of front-line workers to impress customers and deliver high-quality food, Chipotle holds talent development as a central business objective. From the way it recruits talent (e.g., a recent pilot effort to build recruiting partnerships with community-based organizations—like Covenant House and YouthBuild—that will help it source talent) to the way it assesses talent (e.g., using the "13Cs," offering back-of-house tours for candidates and giving the full team weigh-in on hiring decisions), Chipotle has been a pioneer. Recently, Chipotle partnered with Guild Education to provide GED assistance, tuition reimbursement, and course credit to employees. Chipotle is already seeing a remarkable positive retention lift as a result of this investment in educational benefits. Recent analysis showed that 95% of employees who simply contacted Guild early in their tenure at Chipotle were retained at the 30-day mark versus 75% of crew members who weren't in contact with Guild. Four months into their tenure, Guild-enrolled crew members are retained at rates that are 19% higher than non-enrolled crew members—a striking difference.

These are just a few of the compelling impact-hiring innovations we've seen—there are many more innovators whose powerful stories and compelling results we don't have the space to share here, but whose collective efforts are making a meaningful business and social difference.

As talent leaders, you are charged with navigating a challenging and rapidly evolving talent landscape. If finding and retaining entry-level talent is critical to your business' future success, The Rockefeller Foundation's work with entrepreneurially minded talent executives demonstrates that impact hiring can offer tools and strategies to create positive change—for your business and for the communities in which you operate. 

When employers succeed in moving the needle on how they recruit, retain and develop employees, a virtuous cycle develops in which standards rise and "net promoter" dynamics lead to better employee and customer referrals. An environment develops in which it is all the easier to retain and develop others. 

We see tremendous potential for employers to tap into the array of innovative tools and practices now available in the market, and to pool data and insights that improve best practices. The benefits are far-reaching—for employers, for the underleveraged talent that could be tomorrow's powerful front-line leaders and for society as a whole.


Endnotes

1 Bureau of Labor Statistics, U.S. Department of Labor. (2017, August 16). Employment and unemployment among youth summary [economic news release]. Retrieved from https://www.bls.gov/news.release/youth.nr0.htm

2 Burke, R., & Hsu, I. (2016, Dec. 23). Scoop this! Companies tap into new talent by providing #firstjob opportunities [blog post]. Retrieved from https://obamawhitehouse.archives.gov/blog/2016/12/23/scoop-companies-tap-new-talent-providing-firstjob-opportunities

3 U.S. Chamber of Commerce. (2006, June). Recruitment and retention of the frontline and hourly wage worker: A business perspective. Retrieved from https://www.uschamber.com/recruitment-and-retention-frontline-and-hourly-wage-worker-business-perspective

4 Workforce Institute. (2008, February). Retaining your best hourly workers.


Resources

Impact Hiring: How Data Will Transform Youth Employment (The Rockefeller Foundation, 2015). https://www.rockefellerfoundation.org/report/impact-hiring-how-data-will-transform-youth-employment/

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