Placing priority on diversity, equity, and inclusion (DEI) is not just the right thing to do, but there are also many practical benefits for a company. A strong DEI plan increases an organization’s competitive advantage, enhances hiring capabilities, improves employee retention, and creates more opportunities to obtain work.
Why Is DEI Important in the Construction Industry?
Labor Shortage & Innovation
One of the biggest challenges that the industry faces is a labor shortage.
According to “Construction Industry Faces Workforce Shortage of 250,000 in 2022” by the Associated Builders and Contractors, the construction industry will need to hire another 650,000 workers in 2022, and an additional 590,000 on top of normal hiring to meet demands for the need for labor. In 2021, in construction, 11% of the workers were women, 6.3% were Black or African American, and 32.6% were Hispanic or Latino.1 By not focusing on DEI, construction companies are ignoring a potential solution to fill the employment gap.
A diverse employee base can also lead to greater innovation, as having varied opinions can highlight different perspectives that can lead to faster or more creative resolutions.
Qualify for Federal Contracts
To qualify to be a federal contractor, companies with more than 50 employees must develop an affirmative action plan for contracts over $50,000, depending on the type of work (construction vs. non-construction) and type of contract (federal construction vs. federal-assisted construction). Considering that federal construction work accounts for over $100 billion in spending annually, according to the Associated General Contractors of America, ignoring diversity can close a lucrative market to a construction company.
Improve Company Performance
According to a report called “Diversity wins: How inclusion matters” from McKinsey & Company, companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability. In terms of ethnic and cultural diversity, companies in the top quartile were 36% more likely to have above-average profitability. It is evident how diversity can be a great contributor to a company’s overall success.
Improve a Company’s Brand
Media outlets regularly spotlight organizations that are leading the way when it comes to improving DEI, including the high-profile Forbes list of America’s Best Employers for Diversity. And 87% of Gen Z employees believe DEI initiatives are very important to the workplace,2 while 75% of job seekers report that a diverse workforce is an important factor when evaluating companies and job offers.3 Willis Towers Watson (WTW) research also noted that employees who believe DEI is a high priority and rank their employer poor in this area are 33% more likely to leave their employer for a 5% increase than those who ranked efforts high.4
According to Construction Review Online, the High-Speed Rail project in California is currently the only U.S. project in the top 15 largest for construction global projects. To participate in global projects, it is important for U.S. construction companies to have a diverse workforce that can help bridge language and cultural gaps with international owners, construction partners, and suppliers.
Setting the Foundation for Successful DEI Efforts
Within the early stages of DEI, some of these steps can be foundational basics. Barriers can easily exist in each of these steps, which is why it is so important to have data tell a story, the business case for why DEI is good for the industry, and leaders that are on board and actively exhibit the desired behaviors.
An Authentic DEI Strategy
Links to safety and wellbeing could be the starting connection to a broader strategy that celebrates and supports diversity of the workforce across all employee levels by providing a sense of inclusion. This will allow employees to feel a sense of belonging, dignity, and respect, as well as to help them be more willing to bring the diversity of their thoughts and experiences to the work. If an organization or industry is unauthentic, it is not likely to resonate with the workforce, gain support at the employee level, or get buy-in from senior leadership.
Focus on Education & Leadership
Recognize that bias and stigma are often stronger in the construction industry, so basic education and inclusive leadership training and consensus are foundational to a DEI strategy and making progress. Talking about DEI requires starting from the beginning of why it is important, how it applies throughout the industry, and how it can impact business performance.
Let the Data Tell a Story
It is important to conduct demographic, pay, benefits, and career analytics to determine the equity (and fairness) in the total reward programs. The pay and analytics will provide quantitative evidence about whether or not there is a pay gap based on gender, race, or ethnicity. Career analytics will help understand if there is a diversity bias or an opportunity for inclusivity. Benefit reviews will illustrate gaps in benefits based on different workforce cohort needs and life stages (e.g., gender, race, ethnicity, LGBT+, disability, and age).
Talk with and listen to employees. Employee listening is another key data point to understand how the DEI strategy is resonating and helping employees thrive. While there are many questions to ask, you can begin with:
- What are employees feeling?
- Is there a sense of inclusion and belonging?
- Do employees have what they need? If they do, are they willing to give the extra effort of engagement?
It is important to understand the workforce demographics by diversity; role; and the recruitment, retention, and promotion of diverse cohorts. Available labor analytics will supplement how your workforce compares by job family/industry and how you evolve your workforce strategy.
How to Incorporate DEI Initiatives & Benefits of Overcoming Obstacles
The construction industry and its industry associations understand the importance of DEI and have been taking steps to integrate this into their organizations for years. The following advice is relevant for all companies hoping to effectively incorporate DEI.
Senior Management Engagement & Representation
It is important to have senior management buy-in and a diverse management team to ensure that DEI remains a focus, related issues are fully understood, and there is a road map for change. To accomplish this, many organizations have invested in learning, development, and leadership programs to ensure inclusion of underrepresented groups (e.g., gender, race, LBGT+). A focused approach to addressing potential gaps to career growth will help increase the diversity of employees on the management track.
For example, WTW launched its “She Leads” program in 2021 to increase the representation of women in leadership roles in the U.S. by retaining female talent at a critical point in their careers and supporting more women to build and expand the leadership capabilities that are most important to them.
This 10-month virtual program includes monthly learning modules as well as opportunities for networking and connections with colleagues across the organization. Participants are also connected with a coach for the duration of the program to help them set goals and identify opportunities for professional growth and are encouraged to continue those relationships after program completion.
“As a participant in the 2022 She Lead’s program, I have gained invaluable knowledge, connections, and support from the program,” said Waiman Yeung, WTW’s Director of Surety Client Relationship Management. “I am proud to be part of an organization that is completely invested in DEI.”
Reduce Language Barriers
According to a 2019 study by the American Council on the Teaching of Foreign Languages, the construction industry has one of the greatest foreign language gaps among all industries with 40% of construction employers indicating that language was an issue.5 To mitigate this, employers can offer language training programs, hire employees with multilingual abilities, and seek partnerships with colleges that have a specialization in international studies and foreign languages as a talent source.
It is important to embed DEI in all aspects of business including with partners, customers, and vendors to ensure greater inclusivity, collaboration, and innovation. This is also beneficial from a profitability standpoint, as many projects at the state and federal level can receive funding from the Federal Disadvantaged Business Enterprise Program and Minority Business Enterprise Program.
There are varied reasons why DEI is an important initiative, especially for construction companies. Contractors that develop strong DEI plans benefit both financially and socially and stand to create lasting impacts by setting solid foundational frameworks for effectively incorporating DEI into their company cultures.
- “Labor Force Statistics from the Current Population Survey.” U.S. Bureau of Labor Statistics. January 20, 2022. www.bls.gov/cps/cpsaat18.htm.
- Peralta, Paola. “Gen Z employees are vocal about diversity and inclusion — your company needs to be, too.” Employee Benefit News. August 11, 2021. www.benefitnews.com/news/dei-initiatives-matter-to-gen-z.
- “What Job Seekers Really Think About Your Diversity and Inclusion Stats.” Glassdoor for Employers. July 12, 2021. www.glassdoor.com/employers/blog/diversity.
- “2022 Global Benefit Attitude Survey.” Willis Towers Watson.
- “Making Languages Our Business: Addressing Foreign Language Demand Among U.S. Employers.” American Council on the Teaching of Foreign Languages. www.leadwithlanguages.org/wp-content/uploads/MakingLanguagesOurBusiness_FullReport.pdf.
Copyright © 2022 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in November/December 2022 CFMA Building Profits magazine.