Consider a large-sized tech firm with a robust diversity and inclusion policy. It has identified that the majority of its programmers are men, which goes against its stated diversity goals. It has a comprehensive mentorship and career advancement program specifically for women; internal networking and peer support groups; and ambitious hiring targets to encourage a change in its historically male workforce. It has worked hard to ensure that it always chooses the most meritorious applicant.

Yet despite an investment in changing its internal culture, the company struggles to build a staff that’s reflective of the broader community — women simply aren’t applying, which leads the company executives to (erroneously) believe that the talent must largely be male.

“In much of the academic and policy work, we assume that all of the capable and eligible people enter the field,” says to Tanjim Hossain, professor of marketing at Rotman School of Management. “Companies don’t think that much about who we might be missing out on because the candidate believes that entering the field is too costly, relative to the perceived returns from the job.”

A recent paper entitled “Maybe I should just stay home” showcases new modeling from Hossain and John Morgan (an economics professor from the University of California who passed away in 2021), demonstrating that even small perceived barriers of entry have a greater impact on a person’s decisions to apply or not to apply for a position.

At the heart of most decisions to apply for a job — or in the parlance of the study, enter the contest — is the perceived payoff from applying (i.e., being the successful applicant), which is influenced by two factors: a candidate’s abilities (their life-long accumulation of skills that make them capable of doing a job), and the entry cost.

Entry cost in this case isn’t just financial, though it could be seen as the cost of obtaining a university education, travelling to and from an interview, or arranging for childcare for the process. It can also mean mental cost, such as time and effort required to study for a technical exam, or even spending time researching a company’s initiatives ahead of an interview.

Based on Hossain and Morgan’s model, just because two candidates are equally qualified, it does not mean that they are equally likely to apply. Indeed, those from more advantaged backgrounds — in the case of our hypothetical tech firm, that would be men — are likely to throw their hat in the ring, even if their ability or skills don’t fully line up with the job description. In comparison, those from more disadvantaged backgrounds (women, who’ve historically been under-represented from the software development field, for example), are likely to apply only when their abilities far exceed the posted requirements. Ultimately, for disadvantaged candidates, unless there’s a high likelihood of success, it’s often not worth the effort to apply. 

This has big implications for any organization trying to build out its diversity efforts as disadvantaged groups traditionally include candidates from low-income backgrounds; Black, Indigenous and other racialized and historically excluded groups; and women.

“What we’ve found is that explicit exclusionary bias isn’t even needed,” says Hossain. “A small perception of bias will have a big impact on people from that group’s decision to apply to a job/enter a field in the first place.”

The result is a smaller candidate pool, where businesses aren’t necessarily evaluating all the best candidates; they’re simply looking at the limited pool that applied.

There are two potential solutions that can increase the overall candidate pool without necessarily making it less attractive for advantaged players to apply, Hossain found.

First, it might be worth placing candidates from traditionally advantaged background at a slight disadvantage, such as providing less weight to a candidate’s Ivy League education in an evaluation matrix. The proposed model finds that this does not result in the likelihood of advantaged players opting out, and provides a leg up for those disadvantaged candidates who did apply.

However, potentially more effective is providing a bump or incentive to disadvantaged candidates. This can take the form of financial incentives (such as lowering the cost of an entrance exam for candidates of colour) or in providing a slight numerical advantage when evaluating candidates on a scoring matrix. Importantly, providing an incentive not only increases the likelihood of candidates from historically disadvantaged communities, it does not discourage candidates from the traditionally advantaged group from also entering the ring.

Ultimately, having a more inclusive pool of candidates — where advantaged and disadvantaged candidates are equally likely to apply — results in more choice for businesses, which can ultimately lead to higher-caliber employees.

“Even if you don’t care about diversity at all, and just care about your profits, this still affects your company,” Hossain says. “Being more inclusive is, from a business sense, more profitable.”