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Risk & Behavior

How to Reduce Bias in Hiring and Human Resource Decisions

Techniques to help financial professionals combat their own behavioral biases

Most financial professionals know that investors suffer from behavioral biases when making financial decisions, and some may even catch themselves making the same mistakes from time to time. But when it comes to their job, professionals must also be on the lookout for other behavioral biases that can impact a company’s greatest asset: their people.  

Just like with investing, behavioral biases can lead people—and companies—to underperform. For example, companies might fail to hire the best candidate for the job or lose a highly skilled employee to a competitor. Though everyone wants the best people on their team, many don’t realize how the language in a job advertisement affects the candidate pool or how some diversity trainings have adverse effects.  

Based on existing behavioral research, we created a guide and checklist that highlights techniques and lessons people can leverage to avoid behavioral bias in hiring and human resource decisions. 

Creating effective job postings to reduce bias in hiring

Behavioral research finds that human behavior is highly variable, and small details of presentation can have unexpected influence. For example, having too many job requirements can impact your candidate pool, especially since men are more likely to apply if they fit at least 60% of the requirements, whereas women are more likely to feel that they need to fill all of them before applying. 

Mitigating bias in hiring starts with the job advertisement: how it looks, what it says, and where it’s placed. Here are a few quick tips to optimize your job advertisement: 

  • Only include the most essential details in job-posting requirements. The quantity of job requirements, and amount of detail provided for each, can influence who applies to a position. 
  • Show the number of people who have applied for a position—after a good amount have applied. Research shows that this can have a positive effect on submission rates.  
  • Experiment with ad placement. Varying how and where candidates are reached may help bring in diverse talent with varying skills and backgrounds. 

Evaluating candidates by the numbers

Almost everyone has been guilty of this: talking to a job candidate in their interview, connecting about a random topic that has nothing to do with the job they applied for, and then, almost subconsciously, giving them a good review. This is just one way that biases make their way into people’s decisions when it comes to reviewing job candidates or current employees.  

Everyone can be unintentionally swayed by a person’s gender, ethnicity, age, or personality when evaluating an individual for a job or a raise. Plus, hiring professionals can be subject to their own environment—for example, maybe it’s been a crazy week and making hiring decisions at 4 p.m. on a Friday is not a good idea.

To combat the impact of bias in hiring and compensation decisions, research has a identified a few techniques: 

  • Before looking at any candidates, write down the characteristics that are necessary for the job. 
  • Create a rating system for each characteristic to record how well the candidate embodies it. 
  • Structure interviews so that they look more like data-gathering exercises. Create a list of questions to ask every candidate based on the necessary characteristics for the position, and only ask and record the answers to these questions. 
  • Set a standard day, time, and location for reviewing applications. 
  • Depend on objective data when judging an employee’s performance, such as their productivity numbers or company impact.  

How we can do better at managing bias in hiring

Even though we are all prone to behavioral biases, it doesn’t mean we have to be subject to them. By implementing a few research-based techniques and processes, you can learn to make more logical decisions.  

In the full paper, we discuss more ways in which biases can be problematic when making human resource decisions and how to avoid them. We also include a checklist to help professionals begin implementing behavioral techniques when it comes to finding, vetting, and hiring job candidates. 

To learn more, download the full guide to managing behavioral bias in human resource decisions.
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