20 Feb 2020
Diversity & Inclusion in the construction industry
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In the face of a tightening labor market, it pays to look at hiring, developing and training a more diverse labor force.
One of the most serious challenges currently facing the American construction industry is a tight supply of skilled workers. This shortage has a variety of short- and long-term causes.
It is, for example, a side effect of a healthy economy. As unemployment hits historically low levels, the labor pool shrinks, driving the cost of skilled laborers up and ultimately forcing companies to hire from a less inspiring labor pool. But it’s also a byproduct of changing demographics.
As the Baby Boomers (a large generational cohort) begin to retire, there are simply not enough Gen X-ers (a smaller cohort) to take their place. This mathematical problem is only exacerbated by the negative perceptions about construction that keep many younger and diverse workers from considering the industry for their careers.
These systemic challenges, combined with continuing federal pressure to limit immigrant labor from Mexico and Central America, have made talent acquisition a real problem for the construction industry.
Two main strategies for circumventing the talent shortage
The first is to continue to focus on digital and automation initiatives that can improve productivity and decrease a company’s dependence on certain types of labor.
The second—and the central theme of this article—is to hire, develop, and train a more diverse workforce.
Diversity in the Construction Industry: A portrait
Diversity & Inclusion (D&I)—or the lack of it—is not a new topic in the construction industry. For decades now, the majority of construction participants have been white. There has been significant Hispanic representation (30.7% in 2018), particularly in the laborer ranks, but disproportionately small inclusion of other ethnicities.
According to the Bureau of Labor Statistics, African Americans, who amount to some 12% of the US workforce,comprised only 6.2% of all construction workers in 2018. Asians make up about 6% of the workforce but only 2% of construction workers. Women, who according to the US Department of Labor amount to 47% of the workforce, fill only 9.9% of construction jobs.
The percentage of LGBTQ construction workers remains unknown, but we can assume that there are proportionally fewer members of the LGBTQ community in construction than in the US population. (A recent study in the UK found that only 2% of the construction workforce belongs to the LGBTQ community.)
The industry’s lack of diversity is problematic on a number of levels—not the least of which is that diversity is clearly good for business.
Study after study has shown a high statistical correlation between corporate diversity and business performance.
Recent McKinsey research, for instance, found that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians,” while laggards in both gender and ethnic diversity “are statistically less likely to achieve above-average financial returns.”
Many of the construction industry’s most important players are very aware of diversity’s benefits.
For years now, farsighted leadership teams have placed significant emphasis on D&I initiatives, working to attract diversity talent and build the inclusive cultures necessary to retain them. But as the numbers demonstrate, the industry, weighed down by its long history of non-inclusion, still has a particularly long way to go. With the talent shortage growing more and more severe, companies now need to pursue D&I initiatives with a greater sense of urgency.
Start with leadership
Change, in my experience, must begin at the leadership level. When leadership teams are genuinely committed to improving diversity, their organizations step into line and begin to reflect that.
When leadership teams are themselves diverse, they reinforce a commitment to inclusivity that will help attract more diversity talent to all levels of the organization.
For companies hoping to make immediate diversity inroads, looking for both diverse leaders and leaders committed to diversity is the right place to start. In many companies, this may mean integrating diversity requirements into the recruitment process.
One of my recent C-suite searches, for example, required our firm to ensure that 50% of the finalist candidates brought some diversity qualification to the organization. I see requirements like these, which are increasingly common in executive search, as an important step toward ensuring that companies are looking beyond traditional demographics in their search for top talent.
Companies need to formalize their commitments to inclusivity in the workplace.
This can mean a variety of things. It can mean educating leaders and managers about the core importance of inclusive behavior and teaching them how to manage diverse teams, to identify unconscious biases in themselves and others, and to pass their commitment to inclusivity on to their employees. But it can also be structural.
Inclusivity can mean reevaluating everything from built-in vacation days and promotion standards to anti-discrimination policies.
Efforts like these will go a long way toward changing people’s negative perceptions about individual companies and, over time, the industry as a whole. In the long run, effecting this change is particularly important step if the industry wants to become an employer of choice for millennial and Gen Z talent, both of which value diversity and report being particularly turned off by the construction industry’s poor track record in this area.
Companies need to think creatively about who they do business with and how they attract talent. They need to continue being aggressive and intentional about forming partnerships with Minority Business Enterprise (MBE) organizations, while at the same time working with local resources—high schools, vocational schools, and colleges. This will advertise their commitment to diversity and inclusion, and establish a continuous pipelines of diverse emerging talent.
Conclusion: A long road ahead
Construction firms trying to bring diversity to their boards, executive teams, and workforce need to formally state their D&I intention, then back it up with recruiting mandates and structured inclusion programs.
I am confident that the industry will, over time, become a thoroughly diverse and inclusive place, and in doing so it will alleviate the industry’s labor shortage, increase bottom lines, and have a positive impact on employees, communities, and shareholders.