Race and customer facing versus internal jobs

Two interesting things in this article, In hiring, racial bias is still a problem. But not always for reasons you think by Brett Arends. Arends is reporting on research showing the results of a simulation experiment.

Last year, four researchers—John Nunley, economics professor at the University of Wisconsin-La Crosse, Adam Pugh at CUNA Mutual Group in Madison, Wisconsin, Nicholas Romero, an economics professor at the University of Pennsylvania, and Richard Seals, an economics professor at Auburn University in Alabama—conducted an experiment to understand the job market for recent college graduates in the wake of the Great Recession.

They submitted 9,400 fake resumes of nonexistent recent college graduates through online job applications for positions based in Atlanta, Baltimore, Portland, Oregon, Los Angeles, Boston, and Minneapolis. They sent four resumes per job and randomly changed certain variables in the applications, such as college major, work experience, gender, and race.

To signal ethnicity, the researchers gave half the candidates the “typically white” names of Cody Baker, Jake Kelly, Claire Kruger, and Amy Rasmussen. They gave the other half “typically black” names of DeShawn Jefferson, DeAndre Washington, Ebony Booker, and Aaliyah Jackson. (The choice of these names was based on statistical data about name popularity among different ethnic groups.)

No such experiment is perfect, but this is about as good as you can get. It allowed researchers to look at the importance of each variable in isolation.

The results? Young African-Americans still face persistent discrimination in the job market, and it is not tied to socioeconomic status, a lack of a degree, or other factors. Overall, black applicants were invited in for interviews 15.2% of the time, while white applicants received invitations 18% of the time. To put it another way, African-Americans were 16% less likely to get called in for an interview.

[snip]

But there’s a twist.

Black applicants faced major discrimination when applying for jobs with a customer focus. Researchers looked for jobs with words like “customer,” “sales,” “advisor,” “representative,” “agent,” and “loan officer” in the description. For jobs such as these, the discrimination gap soared. Instead of facing a 2.8 percentage-point gap between callback rates for whites and blacks, they faced a 4.4-point gap.

For jobs with descriptions that lacked those terms and were instead focused on interaction with coworkers, the level of discrimination collapsed. Descriptions with terms such as “manager,” “administrator,” “coordinator,” “operations,” and so forth, the difference in callback rates was 0.1 to 0.3 percentage points.

In other words, the problem isn’t that Joe Smith doesn’t want to hire young African-Americans, but that he is worried that if he hires a black sales associate, old Mrs. Jones may take her business elsewhere.

One, I am surprised at how close the differential is in response rates. African-Americans are called back at a rate of 15.2% and whites at a rate of 18%. Yes, that does still represent a 16% discounting of nominally identical candidates simply based on race and that remains a hurdle yet to be mounted. But in absolute terms, two buddies living in a house each sending out 100 resumes and one getting 15 responses and one getting 18, they're not going to attribute all that much to a difference in three responses.

This similarity in response rates is especially surprising given the statistically valid but unhelpfully negative measures which commonly get associated with African-Americans.

The second item of interest is the alternate explanation that seems not to have been explored. The researchers attribute the three resume response differential as being a consequence of the recruiters' concern about possible customer reaction. I wonder if that is the only hypothesis they explored. I think they are right to highlight the distinct difference between customer facing roles and internal roles. Perhaps it is concern about customer receptivity. But what if it is a risk discounted concern about communication (verbal and cultural) effectiveness?

What do I mean by that? It goes to the difference between internal and external roles. In a competitive marketplace it is not entirely inaccurate to say that, when dealing with customers, you only have one chance to get it right. There is a high premium on getting it right the first time.

When looking at internal roles, there is a lot greater potential for risk mitigation. It is just as desirable to get it right the first time but the consequences to not getting it right are more substantially mitigated. If you are person X and use a phrase intended to be wryly amusing, but which person Y interprets as disrespectful or inappropriate, it matters whether person Y is a colleague or a customer. The consequences are usually much more grave if they are a customer than if they are a colleague.

This goes to the issue that having everyone from a common education and cultural background is tactically efficient from a communications perspective while potentially being strategically risky (too little variance in the system makes it hard to evolve).

So what if recruiters are imputing a greater danger of communication missteps to African-American candidates when dealing with customers but discounting that danger when dealing with colleagues? That seems a reasonable alternative interpretation. It is important to get to the real root cause because in some ways, addressing communication concerns might be easier than dealing with customer concerns.

This alternate interpretation is quite testable. If it is true, then you would expect that the response rate for customer oriented jobs would go up where the position is in some fashion identifiable as being in a minority majority market or location. In other words, if recruiters are concerned about culture and communication when interacting with customers, then you should see higher response rates for African-Americans for positions that are in some way identifiably related to an African American customer base, and lower for a white customer base AND you should see the inverse for white candidates.

Granted that this is all a hypothetical construct and therefore may not reflect actual employment opportunities, still it is a reassuring line of evidence that there may be less material discrimination correlated with race than I would have thought plausible.