Sheryl Sandberg and Rachel Thomas write:

Women continue to be vastly underrepresented at every level. For women of color, it’s even worse. Only about one in five senior leaders is a woman, and just one in twenty-five is a woman of color. Progress isn’t just slow—it’s stalled.

Women are doing their part. They’ve been earning more bachelor’s degrees than men for over 30 years. They’re asking for promotions and negotiating salaries as often as men. And contrary to conventional wisdom, women are not leaving the workforce at noticeably higher rates to care for children—or for any other reason. …

At the entry level, when one might expect an equal number of men and women to be hired, men get 54% of jobs, while women get 46%. At the next step, the gap widens. Women are less likely to be hired and promoted into manager-level jobs; for every 100 men promoted to manager, only 79 women are. As a result, men end up holding 62% of manager positions, while women hold only 38%.

The fact that men are far more likely than women to get that first promotion to manager is a red flag. It’s highly doubtful that there are significant enough differences in the qualifications of entry-level men and women to explain this degree of disparity. More probably, it’s because of performance bias. Research shows that both men and women overestimate men’s performance and underestimate women’s. …

By the manager level, women are too far behind to ever catch up. … Even if companies want to hire more women into senior leadership—and many do—there are simply far fewer of them with the necessary qualifications. The entire race has become rigged because of those unfair advantages at the start. …

Companies need to take bold steps to make the race fair. This begins with establishing clear, consistent criteria for hiring and reviews, because when they are based on subjective impressions or preferences, bias creeps in. Companies should train employees so they understand how unconscious bias can affect who’s hired and promoted—and who’s not. (more)

I can’t hold much hope for cutting all subjective judgements from hiring. Most jobs are just too complicated to reduce all useful candidate quality signals to objective measures. But I do have hopes of creating less biased subjective judgements, via (you guessed it) prediction markets. In the rest of this post, I’ll outline a vision for how that could work.

If the biggest problem is that not enough women are promoted to their first-level (bottom boss) management position, then let’s make prediction markets focused on that problem. For whatever consortium of firms join my proposed new system, let them post to that consortium a brief description of all candidates being considered for each of their open first-level management jobs. Include gender and color as two of the descriptors.

Then let all employees within that consortium bet, for any job candidate X, on the chance that if candidate X is put into a particular management job, then that candidate will be promoted to a one-level-higher management job within Y (five?) years. (Each firm decides what higher level jobs count, at that firm or another firm. And perhaps the few employees likely to actually hire those higher-level managers should not be allowed to bet anyone who they might hire.)

Firms give each consortium employee say $100 to bet in these markets, and let them keep any winnings. (Firms perhaps also create a few specialist traders with much larger stakes and access to deep firm statistics on hiring and performance.) Giving participants their stake avoids anti-gambling law problems, and focusing on first level managers avoids insider trading law problems.

It would also help to give participants easy ways to bet on all pools of job candidates with particular descriptors. Say all women, or all women older than thirty years old. Then participants who thought market odds to be biased against identifiable classes of people could easily bet on such beliefs, and correct for such biases. Our long experience with prediction markets suggests that such biases would likely be eliminated; but if not at least participants would be financially rewarded and punished for seeing versus not seeing the light.

It seems reasonable for these firms to apply modest pressure on those filling these positions to put substantial weight on these market price estimates about candidates. Yes, there may be hiring biases at higher levels, but if the biggest problem is at the bottom boss level then these markets should at least help. Yes, suitability for further promotions is not the only consideration in picking a manager, but it is an important one, and it subsumes many other important considerations. And it is a nice clearly visible indicator that is common across many divisions and firms. It is hard to see firms going very wrong because they hired managers a bit more likely to be promoted if hired.

In sum: if the hiring of bottom bosses is now biased against women, but a prediction market on promotion-if-hired would be less biased, then pushing hirers to put more weight on these market estimates should result in less bias against women. Compared to simply pushing hirers to hire more women, this approach should be easier for hirers to accept, as they’d more acknowledge the info value of the market estimates.