To Fix Diversity Silicon Valley should start with Contract Workers

Apr 14th, 2017
To Fix Diversity Silicon Valley should start with Contract Workers

The most commonly stated reason for the lack of diversity and inclusion in Silicon Valley high tech companies is the low ratio of diverse workers that go into Computer Science and Engineering. This requires a long term solution and many schools, companies and organizations are focused on solving this problem and props to them. However, there is a large hidden workforce of contract workers at these companies in Silicon Valley which also lacks diversity and where the above argument doesn’t hold. Silicon Valley companies can start fixing their diversity numbers by addressing and changing their age-old hiring practices for contract worker hiring.

At most large companies like Apple, Google or Facebook, 25-40% of their workforce are contractors who work through staffing agencies (these are unofficial as no company discloses this). Most of these contract jobs are not in core competency areas for the company, which is why they use contractors. They are therefore the most amenable to hire people that may not be an exact match to the requirements. They include roles like administrative assistants, recruiters, accounting, sales, customer service, software testers, content creation and curation, ad quality testing. However, companies have historically been hush-hush about their use of these workers at these companies for Brand, PR, Employment laws and Legal reasons. This makes it hard to measure and improve how Diverse or Inclusive they are in contractor hiring.

Diverse candidates that don’t qualify for fulltime jobs because of their lack of experience or educational credentials, would benefit greatly from working as contractors at these blue-chip companies to gain experience and to get their foot in the door. The problem is most don’t know how. Unlike fulltime jobs, these jobs are not found on career sites and most candidates that get such jobs are referred by friends or other contractors at these companies, inside connections at staffing agencies or if you have a stellar resume. If you don’t have these connections or resume, you are out of luck.

How Companies currently address Diversity in their contractor hiring

In the staffing (contingent labor) space, large companies measure their diversity performance by how much of their Spend $ (the amount they spend on hiring contractors) is with Minority or Women owned businesses and how they can increase it every year. So for example if Google spends $1B/year on hiring contract workers and $100M of that went to minority or women owned businesses, they would say we spend 10% of our Labor Spend with diverse companies and next year we will increase it to 15%, a 50% improvement. To meet their target next year, they can divert $50M more of their contractor hiring spend to a minority owned business and meet their target, even if that minority owned business didn’t hire a single extra diverse worker.

This falsely leads the company’s management to believe that they are on the right path. After all, the numbers look impressive, they get awards at Diversity Conferences and bag Federal contracts because this is how the Government measures these companies. The problem with this metric is that spending with a minority or diverse business does not translate into more minority or diverse hiring.

Not that it is the Diverse company’s fault. Diverse staffing agencies can’t really give preference to diverse candidates because they still have to compete with the Adeccos and Randstads of the world to get their candidates placed. Adding to the problem is that most large companies have now outsourced their contingent labor hiring to MSPs (Managed Services Programs) where the 10-20 staffing vendors submit candidates against open requisitions within 24-48 hours and the most qualified candidate from the 20 or more submissions gets hired without the staffing company even speaking with, let alone making a case for a candidate with the hiring manager.

The other assumption is that Diverse businesses will developing Diverse subcontractors or run training programs or recruiting events for diverse candidates. While some businesses may be attempting to do this, it is hard to be successful at scale because the thin margins in staffing won’t allow them to spend any more than their competitors on sourcing. And since they can’t control whether a Manager will hire their candidates, they can’t afford to spend money training people in the hopes of being able to place them in the future.

So what can be done?

The onus and responsibility for increasing Diversity hiring rests on the shoulders of the large companies, especially their Contingent Labor Category Managers, and it won't be achievable without the full support of the Chief Procurement Officer, The Chief HR Officer, the Business Head and the CEO. If companies are serious about it, they have to stop hiding behind excuses about their hiring manager’s high bar, their employment lawyer’s co-employment worries or behind their staffing suppliers. If the company has publicly committed to increase Diversity and Inclusion, then Procurement should take charge and build a new contingent labor hiring process to meet the company’s objective rather than find plentiful excuses for why it can’t be done. Here are our suggestions for the bold and willing companies.

When talking Diversity and Inclusion, include contract workers

Most companies only talk about the diversity of their fulltime employees, even though a large portion of their workforce are short term and long term contract workers. Companies need to stop being shy about their use of contractors. People are increasingly comfortable with contract jobs and many prefer them over gig economy jobs as they provide benefits. So be open to talk about how many contractors you hire- and how diverse that workforce is.

Create Diversity metrics that your company really cares about

If the company’s aim is to hire more diverse people, measure the percentage of contractors that are diverse, not what percent of Spend goes to diverse owned companies. Check your current contract worker diversity by functional area, region, job type or project and talk to your staffing vendors and to the hiring managers to come up with good targets to achieve. For example- If you have 100 software testers working as contractors in a certain group, check the diversity breakup of that group. If it needs more women or African American or Latino representation, let the hiring manager or the staffing vendor decide how they can achieve it. Maybe it involves them running a tester training ramp up program, maybe it requires hiring from another vendor, etc.

Be flexible with your hiring bar so more candidates can qualify- after all it is a temp job

When companies hire for contract jobs, it’s where they can be most flexible with their requirements. Ask your Hiring managers to help. Unless hiring managers are told it is a company priority and is very important, they don’t know. Many automatically go with the most qualified candidate even if it means relocating that person from a different part of the country, or having a vendor sponsor that contractor’s H1b visa instead of a being a little flexible for a local hire.  

Make your contract jobs easy to find

Most companies avoid displaying their contract jobs. They feel it distracts from their fulltime jobs. This is mostly baseless because people today are comfortable and choose what’s right for them. As an example- It is impossible to find a contract job listing for any leading company on any job board. Other than people that have inside connections or very strong resumes, it is hard to know how to get considered for it. You already have a consolidated list of all your open contract positions in your Vendor Management System (VMS). Post these jobs on your career site and direct applicant resumes to your preferred staffing vendors to consider them. At the very least you’ll know how many diverse candidates applied to your jobs.

Don’t rely too much on staffing vendors that supply H1b visa candidates

Especially in hi-tech, IT and software, many companies push their suppliers to get highly qualified candidates at the lowest prices. This often leads to staffing vendors and offshore IT services companies hiring visa sponsored candidates (H1b/L1) candidates, as they have leverage to negotiate low rates with the contractors. However, companies must realize, H1b visas were not meant for such contracting work and must be something they must use as a last resort or they’ll face bad PR like UCSF and Disney did recently. Be more accepting of almost ready diverse candidates in your city instead. Partner with training schools, boot camps and Universities to identify the skills and candidates that will work for you.

Tell job seekers who your preferred staffing agencies are

The simplest problem to solve though is where companies don't disclose which staffing agencies they use. A qualified job-seeker looking for a contract jobs today doesn’t know which agency to approach to get a job with your company. It is sad that on one hand companies claim it is hard to find talent and on the other they send a software engineer to call hundreds of staffing agencies to figure out how to find work with them.

Use us- At OnContracting, we're bringing transparency into contract staffing. We crowd source information from contractors to build a staffing directory for your company. Job seekers can then tell which staffing agencies to go to for what skills and what companies.

We're hoping progressive companies will realize there are better ways for them to leverage contingent workers and be more inclusive at the same time. If your company is serious about diversity and inclusion- be bold. Let us find and point diverse candidates to your diverse staffing agencies so you can actually increase the number of diverse workers at your company.

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