The bottom-line benefits of second chance hiring

At a time when labor shortages threaten critical industries like health services, manufacturing, and waste disposal, an able and loyal workforce with a high retention rate might sound improbable. But for companies embracing second chance hiring, that’s business as usual.

Second chance hiring is an employment practice whereby an employer hires someone with a criminal record. It isn’t a new concept, but with the U.S. labor market still reacting to the great resignation and great reshuffling, firms may want to explore it, following the lead of companies like American Airlines, General Motors, The Home Depot, Macy’s, and Walmart.

“Employers need workers,” said Paul Osterman, MIT Sloan professor emeritus of human resources and management. “Second chance programs are not charity: They are good business, and they work.”

Earlier this year, an MIT Sloan conference brought together academics, industry executives, and stakeholders to discuss second chance hiring and themes around employment, talent, and policy. Among the speakers was Peter Quigley, president and CEO of Kelly, a professional staffing organization that connects some 500,000 people with work every year.

In a follow-up interview, Quigley shared Kelly’s experience with second chance hiring and offered some tips for leaders who are interested in tapping the talent pipeline of 77 million U.S. adults with criminal records.

Second chance hiring, by the numbers

Under Quigley’s leadership, in 2021 Kelly launched Kelly 33, a second chance hiring program named in reference to the 1 in 3 U.S. adults who have a criminal record. Kelly 33 is part of the company’s overarching Equity@Work initiative, which includes practices such as hiring neurodivergent individuals and military veterans.

“The benefit of Equity@Work, particularly Kelly 33, is that it has a significant impact on the individual that we help find work, and on the community,” Quigley said. “Maybe the most surprising benefit has been to the employers and the community of people that have had their eyes opened to the extraordinary talent that exists among second chance employees.”

Consider the first iteration of Kelly 33: a second chance hiring pilot program tested at Toyota Motor Manufacturing in Georgetown, Kentucky. The idea for the pilot came from Keilon Ratliff — formerly Kelly’s vice president for automotive and now its first chief diversity officer — who had seen childhood friends and family members lose job opportunities, or even their lives, due to crime.

Ratliff proposed launching the pilot in Georgetown, where much of the population was African American or from other minority groups. The program screened 1,200 people with criminal records, and as long as the charge was not related to the job the person was looking to fill, their criminal record didn’t disqualify them from being hired.

According to Quigley, 92% of the pilot participants qualified for jobs and joined Toyota’s workforce. The plant’s talent pool increased by 20%, its overall diversity rate increased by 8%, and turnover dropped by 70% to an average monthly rate of 3%.

“Not one of those employees among the hundreds we hired was terminated from Toyota because of something related to whatever was on their criminal record,” Quigley said.

Since Kelly 33 launched in 2021, the staffing company has seen 26 of its clients put similar hiring practices in place, including clients in pharmaceuticals, automotive, logistics, and industrial equipment. These companies are also generally responsible for onboarding, training, and upskilling the second chance workers they hire, according to Kelly.

Currently there are 1,000 second chance workers on assignment, and according to 2023 figures from Kelly, clients with a second chance hiring practice in place had fill rates that were 25% higher and turnover that was 2.7% lower than clients without such a hiring practice.

The practical and philosophical benefits of second chance hiring

According to a 2021 U.S. Chamber of Commerce report on second chance hiring, 36 states, the District of Columbia, and more than 150 U.S. cities and counties have adopted “ban the box” policies, which remove questions about criminal history from early phases of the job application process.

“The reality is, most Americans want people who have a blemish on their criminal record to get another chance,” Quigley said. “They want to work with companies that have those programs, and they want to work for companies that have those opportunities.”

The federal government also offers programmatic and financial support to businesses that engage in the practice. This includes tax credits and fidelity bonds that protect employers against employee fraud.

Quigley suggested that leaders who still have questions or concerns about second chance hiring talk with other companies that have their own successful initiatives in place — including his own firm. He said that Kelly spent years reviewing its job descriptions to ensure that they didn’t include unnecessary requirements, such as four-year degrees (depending on the role), or include language that might discourage people from seeking work.

From a philosophical standpoint, Quigley said, it’s important that people put their biases and assumptions to the side for that first conversation on second chance hiring.

“These employees are hardworking, they’re loyal, [and] they’re appreciative of the fact that they got a second chance,” he said. “It’s good business, and it also has the benefit of being the right thing to do.”