The Fed made one key recruitment change to hire more women and minorities, and it's a model for any company struggling to diversify
- The New York Times details a hiring change the Fed used to increase its hiring of women and minority research assistants.
- Instead of prioritizing resumes from Ivy League grads, recruiters began taking work experience and soft skills into greater consideration.
- Making hiring changes similar to the Fed's can boost diversity numbers, HR experts say.
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The Fed, much like other elite institutions, has a diversity problem.
Of the 776 PhD economists in the Federal Reserve System, just 194 identified as a racial minority (Asian, black, Hispanic, and Native American), according to a new report from the Brookings think tank.
Women, too, made up roughly a quarter of Fed economists, a number that hasn't budged since 2013.
Yet a few years ago, the country's central bank made one key change to its hiring process - which resulted in a significant increase in diversity that could be a model for other institutions.
Here's what they did
The Fed - like many top companies - would prioritize resumes of Ivy League graduates and those who took high-level math courses. This hiring criteria would favor white men from privileged backgrounds and wouldn't necessarily pick the best-performing candidate, David Wilcox, a senior fellow at the Peterson Institute, told The New York Times.
So the Fed made a change: it began prioritizing soft skills like collaboration and teamwork; it considered work experience and extracurricular activities; and it standardized interview questions for each applicant.
The aim was to consider a more diverse range of applicants, without explicitly selecting based on race or gender.
The new hiring process resulted in 5% more women and 6% more men in research assistant positions between 2014 and 2017, according to Brookings.
What other companies can learn from the Fed
Many hiring experts have adopted similar strategies as the Fed to increase their diversity numbers.
Joanna Coles, chief content officer of Hearst Magazines, broadened her applicant pool by tapping into new, diverse professional networks. Google encourages the use of standardized, quantitative measurements to hire candidates, rather than it just "feeling right."
Patty McCord of Netflix said her best hires had been people that gave awful interviews but had great technical understanding, or had a creative interest that demonstrates they could "toggle between their left and right brains."
"Making great hires is about recognizing great matches-and often they're not what you'd expect," McCord wrote in the Harvard Business Review.
In the long run, having a diverse team only helps an organization: research suggests diverse teams come up with more ideas, and make fewer errors.
"Beyond fairness, the lack of diversity harms the field because it wastes talent," former Fed chairwoman Janet Yellen said at a recent Brookings Institution, according to The New York Times. "It also skews the field's viewpoint and diminishes its breadth."