Unconscious bias-whitepaper final

Why the need to identify
unconscious bias has
never been stronger
David Reynolds
National Director, Client Services
Davidson Executive & Boards
October 2017

2DAVIDSON | Why the need to identify unconscious bias has never been stronger
Companies which have an ethnically, culturally
and gender diverse workforce are more likely
to enjoy financial returns 35 per cent higher
than companies which do not.
If ever there was a reason to stop and audit how culturally, ethnically and
gender diverse your workforce is, this is it.
However, unconscious biases – both explicit and implicit – continue to
hamper the way organisations do business, reducing their potential for
profits and increasing their staff turnover.
A report by McKinsey & Company, Why Diversity Matters, 2015, says that
their research found that companies in the top quarter percentile for
gender and racial and ethnic diversity are more likely to have financial
returns above their national industry medians.
“Companies in the bottom quartile in these dimensions are statistically
less likely to achieve above-average returns,” the report said.
“And diversity is probably a competitive differentiator that shifts market
share toward more diverse companies over time.
“Companies in the top quartile for racial and ethnic diversity are
35 per cent more likely to have financial returns above their respective
national industry medians.
“Companies in the top quartile for gender diversity are 15 per cent
more likely to have financial returns above their respective national
industry medians.”
The report also stated that companies in the bottom quartile for gender
and ethnic diversity are “less likely to achieve above-average financial
returns” than other companies in the bottom quartile.
To further investigate what unconscious bias really is, how it impacts the
bottom-line and Australia’s workforce, and what can be done now and in
the future, I sat down with several thought leaders to discuss. Below are
my findings from the discussions combined with information from several
recent research papers.
So what really is unconscious bias?
The University of California defines bias as beliefs held by individuals, groups
and organisations which ‘can have negative or positive consequences.’
It defines conscious bias as ‘explicit’ and unconscious bias as ‘implicit.’
In other words, the way we think about individuals, their ethnic or cultural
backgrounds, sexual orientation, gender identity and even their beliefs, is
likely to be affected by biases we may not always be aware of.
In Australia, the Anti-Discrimination Act (1991) was designed to promote
equality for every person by protecting them from unfair discrimination in
certain areas of activity including employment and workplace behaviour.
Examples of explicit bias may be overt racism or sexism and these can be
easy to spot.
The problem however, is managing bias you don’t even know exists. It is
important to realise that we all have unconscious associations we need to
become more aware of and learn how to reduce the impact in the workplace.
Research found that
companies in the top quarter
percentile for gender and
ethnic diversity are more
likely to have financial returns
above their national industry
medians.

Examples of implicit bias may be an unconscious belief that people of a
particular ethnicity are not good at certain jobs – or that they are only
good for certain jobs!
Implicit bias is frequently made up of beliefs (and stereotypes) which lie
just under our consciousness and are, therefore, often beyond our control
because of a lack of awareness about their existence.
These implicit biases may result in managers and employers leaning
towards – or away from – interviewing and employing a particular race or
gender without realising it.
An example of how unconscious bias may be playing a part in decision-
making was identified in an Australian National University study Does
Racial and Ethnic Discrimination Vary Across Minority Groups? Evidence from
a Field Experiment, Booth, Leigh & Vargonova (2010).
The study involved sending 4,000 fictitious job applications to employers
who had advertised positions over a cross-section of roles from entry-
level positions to administrative and sales jobs.
The study revealed that people who had foreign or indigenous sounding
names, had a significantly lower chance of securing an interview against
those who had names which were more Anglo-centric sounding.
Applicants with Chinese names had only a 20 per cent chance of securing
an interview, while those with English-sounding names had a one-in-three
chance of securing an interview.
“Some academic research does indicate that having an English-sounding
name appears to provide job applicants with a discernible advantage,” the
Australian Human Rights Commission said of the ANU study’s findings.
“Arguably, this is a symptom of unconscious bias as much as conscious
discrimination against those of non-English speaking backgrounds.”
Benefits of having a diverse workforce
The Diversity Council of Australia happily espouses the benefits of
diversity in the workplace saying ‘diversity makes good business sense.’
“Effective management of workplace diversity is clearly linked to
improvements in organisational performance, effectiveness, profitability
and revenue generation,” the Diversity Council of Australia said in its
Business Case for Diversity & Inclusion report.
It listed the following benefits of cultural diversity:
Diverse workplaces which are free of discrimination
are more productive
Higher levels of employee satisfaction leading to
improved productivity and profitability
Reduced employee turnover also reduces
recruitment costs for new staff
When employee skills and perspectives are
harnessed, creativity and innovation increases.
These implicit biases may
result in managers and
employers leaning towards –
or away from – interviewing
and employing a particular
race or gender without
realising it.

Research from Australia’s Centre for Ethical Leadership (CEL) also reveals
that companies with a level of diversity among its executive staff and
board members, had an average 53 per cent higher average return on
equity and 14 per cent higher EBITDA (earnings before interest and tax),
than organisations with lower levels of diversity.
Further research conducted for the Victorian Human Rights and Equal
Opportunity Commission by Deloitte Australia (https://goo.gl/tdqb3E)
concluded that ‘the more included an employee feels, the more likely they
are to be at work’ thereby reducing the cost of absenteeism and improving
staff satisfaction and employee engagement.
Belinda Clark, the former Chief Executive of the Victorian Public Service
Commission, said the challenging thing about unconscious bias in the
workplace is that it can lead to an unwarranted disregard of the value that
an individual is able to contribute.
“Such discrimination can have a broad-reaching influence on workplace’s
hiring practices by overlooking an individual’s unique capabilities and
placing some candidates at a disadvantage,” Ms Clark said.
“The rationale for eliminating unconscious bias from our workplaces is
obvious; it clearly is a pervasive barrier to diversity which can hinder team
and organisational effectiveness.”
What is being done to reduce unconscious bias?
There are significant benefits to any organisations taking a proactive
approach to minimising the effects of unconscious bias, including the
development of a more inclusive and diverse workforce.
The challenge facing businesses and employers wanting to reduce the impact
of implicit biases is first identifying which implicit biases you may have which
may be inappropriately affecting your decision-making processes.
This may mean looking closely at the workforce you have and being rigidly
honest with yourself about why those candidates stood out from the
others. Is there a disproportionate number of men or women working for
your organisation? Is your workplace multicultural? If not, why not?
Given the clear financial benefits of a happy, diverse workforce, you would
be doing your business a dis-service if you don’t look for answers to
these questions.
The Victorian Government is leading by example when it comes to
addressing unconscious bias and diverse staffing in the workforce, through
the Recruit Smarter pilot program which is led by the Centre for Ethical
Leadership (CEL) and is driven by the Department of Premier & Cabinet.
The pilot program is Australia’s first multi-sector approach to addressing
unconscious bias in workplace recruitment and selection.
“Previous research on unconscious bias has shown both the challenges
faced by people from culturally diverse backgrounds, who with
equivalent qualifications and experience often have to submit many more
applications before they are offered an interview,” according to CEL.
Ms Clark said the pilot program is trialling a series of approaches to
tackling unconscious bias in the recruitment process to allow employers
to ‘take advantage of the full breadth of capabilities, experience and talent
that exists across the potential workforce.’
“The rationale for eliminating
unconscious bias from
our workplaces is obvious;
it clearly is a pervasive barrier
to diversity which can hinder
team and organisational
effectiveness.”

The pilot program aims to level the playing field in the recruitment process
and has adopted the following approaches:
1. De-identification of personal details such as name, gender and location
on resumes and application letters
2. Structured job interviews
3. On-boarding and induction processes
4. Language in job advertisements
5. The use of bias mitigation prompters throughout the recruitment and
selection process.
As well as government bodies, the Recruit Smarter program also
has a number of private sector participants including Westpac,
PriceWaterhouseCoopers, Transurban Group and Australia Post. A full list
of participants can be found at www.vic.gov.au/recruit-smarter.html.
While the pilot program is still in its early days, it is expected that a report
detailing best practice guidelines and recommendations will be available
next year.
In Queensland, the Public Service Commission is looking at a range of
measures to address the issue of a lack of diversity in our workplaces
and opening up vocational opportunities for people of all genders and
ethnic backgrounds.
The CEO of the Queensland Commission, Rob Setter, said it was clear the
approach to this issue ‘needed to avoid a sheep dip process’ where one
solution was applied to individual organisations.
While he states he is not a fan of the de-identification process of job
applicants, Mr Setter said there needed to be more diverse interview panels,
robust selection and assessment processes which are ‘clearly objective and
measureable’ and equity targets should be introduced to promote greater
awareness of the constraints around diversity and inclusion.
The Queensland Government is also re-visiting the way it is advertising
positions and moving away from the full-time/part-time paradigm to
allowing all positions to be flexible.
The objective, Mr Setter said, was to develop workplaces which are more
flexible and address diversity equitably and effectively to ensure untapped
potential can be identified and employee satisfaction improved leading to
better performing and positive work cultures.
“We are also doing a lot of work around talent pool identification
for succession planning purposes,” Mr Setter said. “This includes
identifying methods that are more objective and exclude any element of
unconscious bias.”
The Queensland Government
is also re-visiting the way it
is advertising positions and
moving away from the full-
time/part-time paradigm to
allowing all positions to be
flexible.

CASE STUDY
Queensland Department of Energy and Water Supply
Queensland’s Department of Energy and Water Supply
has taken a very proactive approach to ensuring its
workforce is culturally diverse.
The Department’s Director-General Paul Simshauser
has spent the past 2 years working towards diversity
and inclusion and he is surveying his staff to make sure
it is working.
In fact, regular surveys are held at Queensland’s
Department of Energy and Water Supply to identify
any problem areas and to allow staff to provide
feedback and input.
One early survey identified two areas which needed
attention. The first was a desire to remove cultural
and system barriers which were impeding the uptake
of flexible working arrangements. The second was to
make sure that all staff felt included in the workplace.
The more flexible working arrangement was solved by
issuing staff with mobile devices that enabled them
to work remotely when required as well as numerous
communication initiatives, including male leaders
demonstrating flexible work practices and ‘leaving
loudly’. The need to get staff to walk in another’s
shoes (including LGBTIQ+ staff) was a different ball
game completely.
The organisation’s head of Diversity and Inclusion,
Teresa Brennan organised an emotionally charged
set of interviews with the Director-General and
other staff members called ‘My Story’, which helped
understanding that diversity and inclusion affects and
benefits all staff and gave them licence to express their
concerns and fears.
LGBTIQ+ inclusion and awareness has been achieved
by openly talking about topics and celebrating events,
where previously there had been silence. This included
putting the Director-General to the test in front of
staff on IDAHOT day, where the diversity within the
employee families was showcased and celebrated was
part of the fun.
Peer support, champions and resources for staff
were the outcome of employee networks such as an
LGBQTI+ Champions committee as well as a Parents
Carers Network, which had a particular focus on people
returning to the workforce or suddenly facing other
pressures in their lives.
The First Australians initiative was also introduced
through the Director-General’s Lockhart River
Champion’s role, as well as formally recognising and
regretting the use of stolen wages.
Going a step further, the Queensland Department
of Water and Energy Supply developed a cultural
Capability Statement setting out what it wanted to
achieve to connect hearts and minds vis-à-vis First
Australians. This was facilitated by indigenous leader,
Leann Wilson, who introduced staff to the history
of the Queensland Government’s treatment of First
Australians and now runs regular sessions with staff
and the executive team. Leann has also worked with
the Department to take 13 leaders to an on-country
‘gathering’ to drive momentum for change across
the sector.
The Department has also partnered with the Pride in
Diversity, Job Access and a domestic violence centre,
which staff have raised in excess of $50,000 for.
The benefits of these initiatives were evident from
the results of the second year of staff surveys, which
indicated that 92 per cent of staff felt included,
compared with 72 per cent of staff from the
previous survey.
The Department is well on its way to achieving the
State Government’s diversity targets with 45 per cent
of Senior Executive Staff being women - including two
executives who at one point were job sharing.
Three of the department’s six General Managers are
mothers with small children; 45 per cent of their part-
timers now use additional types of flexible ways of
working and the graduate intake program is focussing
on diversity with LGBTI and indigenous individuals.
There has been an unexpected consequence for the
Queensland Department of Energy and Water Supply’s
focus on gender equity for leaders. The number of
women in the tiers immediately below executive
management have fallen off as female executives
appear to have appointed more male candidates
than women.
Recognising that there is more work to be done to
reduce gendered roles and unconscious bias and
perceptions of a male ‘in-crowd’, the Department is
looking more closely at the issues which are impacting
on women in the Department. Highly valuable
information has been obtained through a survey of
women in the Department.
DEWS-Ability has also recently commenced to
overcome stigma and build capability around
reasonable adjustment.

Financial Services Sector Responses
So important is the issue of diversity to Westpac Group that the banking
giant has developed a Head of Inclusion Diversity role, who reports
regularly to the CEO and Executive team. Samantha Turner (Sam)
has taken up this role, having previously been the Business Manager
for Regional NSW branches, and volunteer Chair of the Westpac
LGBTI Action Group.
Sam is a strong advocate of using data to provide a foundation for change, in
addition to using employee engagement surveys. She also questions whether
being engaged makes us genuinely happy in a workplace environment. She
said people can be engaged, but not necessarily productive.
Sam said there is now a conscious effort to eliminate unconscious bias
from hiring decisions; in other words, ‘hiring in your own image only
reaffirms the bias you have.’
For Westpac Group, diversity of thought is as important as diversity of the
workforce. The challenge has been achieving an inclusive workforce with
more than 40,000 employees.
To ensure employees felt engaged and involved, Westpac has recently
completely revamped its inclusive leadership training and are in the
process of taking 3,000 people through the program.
Key elements of the drive to ensure inclusivity, Westpac focused on
looking at:
What is unconscious bias?
Recreating your own image
Inclusive language
Privilege
Creating an inclusive and safe team environment
Doing things differently and innovatively
Valuing the contribution of each team member and
encouraging diversity of thought

Westpac has achieved its aim for gender equality in leadership roles, with
men and women accounting for around 50 per cent of each of these roles.
As a consequence, all shortlists must include at least 50 per cent women.
Westpac is partnering with schools and universities to promote STEM
subjects (science, technology, engineering and math) for female students
and has also started the Equilibrium Program around diversity of
background and attracting women from non-financial services backgrounds.
While Sam said a trial using ‘blind CVs’ did not find concrete solutions to
address imbalance in the candidates selected for interview, there is now
a push to hold a trial where all cultural references are removed from CVs,
including the university applicants attended.
Other organisations have trialled different methods to ensure a diverse
selection of candidates.
Another of Australia’s big four banks, the National Australian Bank
(NAB) is addressing unconscious bias by scrapping CVs and face-to-face
interviews for all entry level positions.
As is part of this change, NAB has been using online cognitive
assessments and digital interviews as well as utilising technology to
screen for keywords to develop a shortlist.
Financial services organisation, Investment Trends, which has 30
employees, consciously aims for ‘diversity of thought’ by recruiting people
with different academic qualifications.
Investment Trends CEO Michael Blomfield works hard to ensure women
hold leadership positions within the company.
Michael says that even in some parts of the industry that haven’t
traditionally had gender diversity, like stockbroking and traded markets,
he always managed to find ways to build diversity within his own direct
reports.
The reason for this, he said, is because gender diversity facilitates ‘more
intellectual paths into finding a solution to a problem.’
Investment Trends doesn’t stop at gender diversity, with a wide mix
of ethnicities among his current staff. The organisation celebrates all
holidays around ethnic traditions, not just Christmas for Christians. The
organisation has been constantly testing and updating its language and
visuals in their ads to ensure they attract female talent.
Is there a better approach to diversity?
In her highly regarded book What Works – Gender Equality by Design,
Iris Bohnet looks at ways of tackling institutionalised gender inequalities
by advocating for systemic interventions focussed on de-biasing
environments rather than individuals.
She suggests employing a behavioural design approach based on data
and research and proposes that by identifying behaviours and processes
that take root in organisations and explicating how they impede gender
inequality, it may be possible to intervene and design around the point at
which bias is most likely to take hold.
Ms Bohnet also argues that diversity training is not the solution despite
$7 billion being spent annually in the US on the subject.
Alarmingly, she says that it may even backfire due to the phenomenon
of ‘moral licensing,’ which is the tendency for individuals to act more
immorally following the completion of an act or set of behaviours they see

as being morally good.
Instead Ms Bohnet advocates for a capacity-building approach she terms as
‘unfreeze change freeze,’ which involves not only encouraging individuals to
confront their own biases, but more importantly, consider how an individual
organisation can mitigate them through adopting new processes.
With data revealing culturally and gender diverse workplaces are more
likely to produce financial returns 35 per cent higher than workplaces
which are not; the need for organisations to be aware of any unconscious
bias is compelling.
Is your organisation male-heavy? Do you have staff with different cultural
backgrounds? Is your team really inclusive?
The first step to addressing this issue is simply to be aware of it. The
second is to challenge your own thinking and that of your organisation.
Open up a discussion at work; let your staff have their say, open your eyes
to the possibilities of a diverse workforce.
What can you do?
Become conscious of your biases
Slow down your thinking
Build inclusive teams
Go beyond your normal circle of thinking
Discuss unconscious bias in the workplace
Develop and communicate clearly understood
practices and policies
Celebrate the benefits of diversity
Lead from the top
And for those who have already done so, congratulations on being a
step ahead.
The first step to addressing
this issue is simply to be
aware of it. The second is to
challenge your own thinking
and that of your organisation.
Acknowledgement Some of the material used is this paper has been derived from workshop material provided by the
Anti-Discrimination Commission Queensland

BRISBANE MELBOURNE SYDNEY AUCKLAND
www.davidsonwp.com
CORPORATE EXECUTIVE BOARDS PROJECTS OPERATIONS TECHNOLOGY HR CONSULTING
David Reynolds
National Director, Client Services
Davidson Executive Boards
E david.reynolds@davidsonwp.com
D +61 7 3023 1009
M +61 410 471 652

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