If your company must comply with the Office of Federal Contract Compliance Programs (OFCCP) regulations, you will need to invest in its implementation or face the cost of noncompliance. Most companies know this. However, being compliant will not only safeguard your company against OFCCP audits, but offer financial benefits that come with a more diverse workforce. New technology in the form of talent intelligence software can provide a much-needed layer of protection, as well as bring additional benefits in the form of time and cost-savings.
Basics of OFCCP Compliance
The Office of Federal Contract Compliance Programs (OFCCP) holds those who do business with the federal government, such as contractors and subcontractors, responsible for complying with legal requirements to not discriminate against job applicants on the basis of race, color, sex, sexual orientation, gender identity, religion, national origin, disability, or status as a protected veteran.
Compliance requirements may already be a part of your checklist, though you may need to check if any changes have been made. As of January of 2020, the OFCCP updated its Federal Contract Compliance Manual, and you can find their updates here.
The Added Benefits of OFCCP Compliance
Understandably, the regulations offered by the Office of Federal Contract Compliance Programs (OFCCP) can introduce undue complexity to the hiring process at your company. There is a significant silver lining, though: Compliance creates a more diverse workforce, which can correlate with higher profits, greater efficiency, and improve the company’s image.
A 2015 report by McKinsey & Company examined data from 366 companies across Canada, the United States, Latin America, and the United Kingdom. The results showed that companies in the top quartile for racial and ethnic diversity were 35% more likely to have financial returns above their industry’s national median.
Additionally, companies in the top quartile for gender diversity were 15% more likely to have financial returns above the industry’s national median, according to the McKinsey report. In the U.S., companies with a 10 percent greater level of gender and ethnic/racial diversity on management teams and boards, reported an average number of earnings before interest and tax (EBIT) that was 1.1% higher.
In addition to better financial outcomes, increased diversity may correlate with greater efficiency and contribute to the company’s image. The more diverse your company, the better it can attract top talent and improve customer and employee satisfaction. As our world becomes more interconnected, it is not a surprise that more diverse companies have a competitive advantage.
The added benefits of compliance cannot be realized, however, unless your team addresses one of the biggest plagues in the recruiting world: unconscious bias.
How Unconscious Bias Can Impact Compliance
Unconscious affinity bias is when a recruiter is more likely to choose a candidate who looks, acts, or operates like the recruiter. This bias would naturally result in discrimination against a potential candidate–a violation of OFCCP compliance requirements.
According to LinkedIn, this affinity bias can include gender bias, racial bias or school bias (prejudice based on where the candidate went to school). Unconscious affinity bias has been well-documented in the research literature. The National Bureau of Economic Research found a striking difference in callbacks between fictitious resumes of candidates with a very African American sounding name and a very White sounding name. White names received 50% more callbacks than the African American names.
Gender bias is also well-documented. The famous Heidi/Howard example illustrated that similar behavior between genders is interpreted differently: When students thought that the subject of a Harvard Business School Case study was a female venture capitalist, they were more likely to label her as “power-hungry” and less humble than if the same subject were thought to be a man.
Because these biases are the result of societal norms and often come naturally, it is important to offset them. One of the best ways is to use talent intelligence, which is the use of artificial intelligence to find and evaluate job candidates fairly.
Role of Talent Intelligence in Improving Compliance
One of the clearest examples of how talent intelligence can improve compliance is its ability to eliminate unconscious bias when the recruiter is most vulnerable to it. Talent intelligence software can predict which candidates will do the best in a position by building sophisticated multi-dimensional models and applying them to the candidate pool. The software creates these models using clusters of information on skills, career trajectory and more, while avoiding human-created biases related to OFCCP protected statuses.
Ultimately, talent intelligence software can automate the modeling and sourcing of candidates, delivering a ranking of candidates to recruiters through a process that is compliant with OFCCP regulation.
Not only can talent intelligence safeguard against unconscious bias, but it can ultimately lead to the following:
- Eliminating unconscious bias in the early hiring stages
- Increasing diversity in the sourcing of candidates
- Expanding the talent pool through passive sourcing and screening, saving an average of 20-30 hours per role
- Rediscovering suitable candidates by comparing present, past and internal applications
The road to OFCCP compliance can be rocky, but talent intelligence software can add a protective layer of security by eliminating bias, as well as finding the best talent.
For more information, download our Whitepaper: Use AI & Talent Intelligence to Improve OFCCP Compliance