Building diversity: the value of inclusivity in the construction industry
|Construction Law International homepage » November 2019
Research across all industries has demonstrated that inclusive workplaces and diverse management lead to better performance in organisations. In construction, where current challenges include attracting and retaining talent and replacing an aging workforce,1 diversity and inclusivity are becoming increasingly important areas of focus for organisations. The ‘Top 10 Canadian Construction Trends to Watch in 2019’ predicted that inclusive workplaces would be on the rise in 2019.2
The construction industry is beginning to recognise that competitive advantages may go to companies whose workforces look more like the communities they serve. However, the industry, like many others, is slow to embrace change. Adherence to tradition has kept many companies from benefiting from the skills and expertise of people from different backgrounds and deterred younger generations from pursuing careers in construction. While construction workplaces have evolved in recent years, there remains a gap in the infrastructure of many companies with respect to the promotion of equality and development of talent from high-performing, diverse groups.
Diversity and inclusion statistics
Globally, the construction industry does not have a reputation for being composed of a vastly diverse or inclusive workforce. According to the Bureau of Labor Statistics’ 2015 data, the construction workforce in the United States was 28.5 per cent Hispanic/Latino, 9.3 per cent female, 6.0 per cent black and 1.8 per cent Asian.3 As of 2018, women still only made up a total of nine per cent of the construction workforce, showing little to no statistical change since 2015.4 In 2017, women held just seven per cent of construction management jobs.5
A diverse workforce will make a company not only more attractive to potential employees, but also more attractive to potential customers
The Good Employer Guide 2016: Diversity Challenge in the UK, highlighted that women and ethnic minorities made up only ten per cent of the United Kingdom building industry’s total employees. Women represented seven per cent of the workforce and ethnic minorities accounted for just 3.2 per cent, with little evidence of significant change or improvement since 2009;6 however, the number of women in construction management jobs was nearly twice that of the US, or 14 per cent of the workforce.7
Willis Towers Watson, a global adviser, predicted that limited workforce diversity will be a top 20 risk for construction firms through 2027.8
The value of diversity and inclusivity
Diversity and inclusivity can have a significant impact on company culture and success. Research shows that diverse workplaces can provide a company with a competitive business edge.
The National Centre for Diversity in the UK evaluated diversity in the construction industry to determine how essential it is for organisations and individuals to embrace equality, diversity and inclusion in the industry, and to encourage industry professionals and corporations to make a conscious shift towards diversifying the workplace. The study found that diversity was a driver of innovation, allowing individuals to share their experiences, background and knowledge. The statistics showed that gender-diverse companies are 14 per cent more likely to perform better than non-diverse companies, and ethnically diverse companies are 35 per cent more likely to perform better than their less diverse counterparts.9
The study also found that the pool of consumers is increasingly diverse, according to the Department for Business, Innovation and Skills’ report UK Construction: An Economic Analysis of the Sector. Today any organisation that does not promote equality, diversity and inclusion is neglecting valuable markets, missing out on sales and ultimately losing profits.
There is a direct link between diversity and inclusion, and financial performance. In McKinsey’s Delivering through Diversity study, more than 1,000 companies over 12 countries were studied in relation to profitability and long-term value creation, through exploring diversity at different levels of each organisation, considering a broader understanding of diversity and providing insight into best practices.10 While the study was not focused on construction, the lessons learned are relevant and applicable:
• In 2014, companies in the top quartile for gender diversity on executive teams were 15 per cent more likely to experience above-average profitability than companies in lower quartiles. In 2017, this number rose to 21 per cent, showing a positive correlation between gender diversity on executive teams and higher financial performance and profitability worldwide.11
• In terms of ethnic and cultural diversity, the 2014 finding for companies showed that companies with the most ethnically diverse executive teams were more likely to outperform their peers on profitability. The statistics show that companies that were in the top quartile had a 35 per cent likelihood of outperformance than those in the lower quartile, and the 2017 finding was a 33 per cent likelihood of outperformance of companies in lower quartiles.12
All of the above numbers support the business case for diversity in the construction industry. A diverse workforce will make a company not only more attractive to potential employees, but also more attractive to potential customers due to the fact that diversity brings along broader problem-solving perspectives and innovative ideas. Industry professionals should not ignore these statistics when developing or updating their business and employment models.
Active discussions should take place within companies to implement strategies and best practices that promote diversity and inclusion to create a better workplace and to achieve greater business success.
Gender diversity has been directly linked with both profitability and value creation. In particular, gender diversity on executive teams showed the strongest correlation to higher profitability across the geographies studied.13
With gender diversity being at the forefront of many workplace discussions in the construction industry, it is important to recognise the statistics and implement strategies to create more opportunity for women to get involved at all levels of the industry. For example, in often male-dominated work environments of architectural and engineering firms, women have struggled to break the glass ceiling on executive teams. The last major industry survey found that women account for half of graduates from architecture programmes in the US, but only make up about 20 per cent of licensed architects and 17 per cent of partners or principals of architecture firms.14 The firm receiving the most high-profile architectural commissions in the world has just two female principals.15 This statistic is, unfortunately, not surprising.
From a wage perspective, women also continue to lag behind their male counterparts in the construction industry. For example, female engineers make 90 cents for every dollar earned by a male engineer, with little change in these statistics since the early 2000s.16
In 2018, in the US, Equal Pay Day was marked on 10 April; that is, on average, a woman must work up to 10 April into the new year to reach the same pay that a man earned in the previous year.17 In the economy at large, white women earn $0.87 for every dollar earned by their white male counterparts. Asian women earn $0.87 for every dollar, black women earned $0.63 for every dollar, Native American women earned $0.57 and Latina women earned $0.54.18 This data illustrates not only issues in the gender pay gap as a whole, but issues within the gender pay gap for other distinguishable groups. It is notable that women in the construction industry earn an average of 95.7 per cent of what men in the industry make. This is 18 per cent higher than the average 81.1 per cent gap found in other industries.19 This data suggests that women in the industry are beginning to get opportunities to succeed to the level of their male counterparts, but that other marginalised groups of women still face challenges and setbacks in this area.
In the UK, as of April 2018, all companies with 250 employees or more were required to collect gender pay gap data and disclose it for publication by the Government Equalities Office.20 This was a major step working towards closing the gap, to evaluate the data and recognise trends and areas for improvement. According to the data, several organisations in the industry had gender pay gaps of 40 per cent or more, and overall trends showed that many firms in the engineering and construction industries were falling behind the national gender pay gap of 18.4 per cent.21
It is important for the industry to heed this data and create more opportunities for women to move towards more diverse and inclusive workplaces, and close the pay gap across the board for all women.
Legal profession and expert witnesses
Mirroring the industry which it serves, the construction bar globally has faced diversity and equality challenges and is currently taking steps to change the status quo. It has been said that lawyers lead the push for equality, but have forgotten to focus on their own profession. According to statistics, law is one of the least racially diverse professions in North America. Many believe that women and minorities have made advances in recent years, and that any remaining issues of inequality arise out of lack of capability, commitment and life choices. While there is more diversity in the profession than decades ago, studies show that gains have been minimal.
For example, the National Association for Law Placement (NALP) in the US has been compiling information on diversity for 26 years. In its 2018 report,22 the NALP noted that law firms were making very slow, incremental progress in increasing the presence of women and minorities, particularly in the partner ranks. Minorities accounted for 9.13 per cent of partners in the nation’s major firms and women accounted for 23.36 per cent of the partners in these firms. At just 3.19 per cent, minority women continued to be the most underrepresented group at the partnership level across all firm sizes and most jurisdictions.
In the UK, the Bar Standards Board has summarised available diversity data in its Report on Diversity at the Bar.23 The data reflects the disparity of women and black, Asian and minority ethnicities in higher ranks of the bar. Women account for 50.4 per cent of pupils, 39.6 per cent of non-Queen’s Counsel (QC) practitioners and 15.8 per cent of QCs. Black, Asian and minority lawyers account for 16.3 per cent of pupils, 13.5 per cent of non-QC practitioners and 7.8 per cent of QCs.
In Sandra Somers’s ‘Where Are the Expert Women?’, an article just published in this journal, it was noted that, as an estimate, only one in every ten experts is a woman. In addition, the ratio of men to women that go through the Academy of Experts is roughly only one in eight. The expert field is primarily male dominated, with many associating the term ‘expert’ with being male. Throughout the industry, the performance of female experts has been praised, with one senior barrister interviewed for the article stating that, in his experience, women are ‘clearer in their reports and in the witness box, and tend to have done more work themselves’. Although the feedback on how these women perform in their roles is positive, there is still a lack of representation from women in expert positions. It is difficult for women to prove that they are the best candidate for the job when they are constantly faced with unconscious male bias in the expert field.
Implementing diversity and inclusion initiatives
In recent years, the global construction community has started to implement initiatives designed to foster diversity and inclusion. Certain governments and major industry groups are actively promoting equality, diversity and inclusion (EDI), and companies are developing EDI action plans to attract and retain a diverse workforce.
In the US, the National Forum for Diversity in Construction strives to maximise strategies for promoting growth and opportunity among the construction industry through ‘think tank’ discussions held quarterly. At these meetings, industry professionals evaluate current data and trends to formulate strategies to promote best practices in using diversity in construction as an economic tool.24 Companies are engaging more with organisations such as the National Association of Women in Construction (NAWIC) and the Construction Employers Association to hold learning and training sessions and encourage mentoring between larger, established contractors and small minority and female-owned construction firms.
In the UK, the Construction Industry Council (CIC) has worked to raise awareness regarding issues of diversity and inclusion in the workplace.25 The CIC has also developed a panel to create a forum to allow all industry professionals to participate in the discussion to promote diversity, and to share insights and brainstorm potential initiatives that may be effective in accomplishing this goal.
In Canada, Bill C-25 received royal assent in 2018, and all publicly traded companies are required to disclose their policies on diversity and the diversity of boards and senior management. Further, a new federal Apprenticeship Incentive Grant for Women provides funding to registered apprentices who have successfully completed their first or second year or level of an apprenticeship programme in eligible Red Seal trades, a partnership programme between the federal government, provinces and territories that sets common standards to assess the skills of tradespeople across Canada. At a provincial level, the Ontario Government has set a target for composition of boards to be 40 per cent women by December 2019 and is working with the private sector to achieve this goal. In particular, the Ministry of Finance is working with the Ontario Securities Commission to ensure that progress among Toronto Stock Exchange (TSX)-listed issuers continues to be tracked and published. The construction industry has also worked to better integrate First Nations peoples on job sites.26 The Canadian Construction Association has developed an Indigenous Engagement Guide to assist construction companies in developing successful working relationships with indigenous groups.27 Companies that see the most success in these relationships are those that develop an understanding of indigenous history and communications, and understand the cultural and social values of these communities.
As an example on a corporate level, a recent survey shows that 81 per cent of the UK staff of Mott MacDonald, a global consulting firm, now feel that EDI is being taken seriously and that EDI initiatives have been effectively implemented.28 These include initiatives such as preparing an EDI Action Plan, employing an EDI manager, unconscious bias training and opening dialogue around more inclusive language and behaviour. At Dialog, a North American multi-disciplinary design firm, efforts are being made to continually examine issues such as pay equity; develop programmes to support women, employees who speak English as a second language and younger employees; and provide younger members with opportunities to develop ideas through internal scholarships for personal research projects. EllisDon, a Canada-based contractor, has an in-house mentoring programme and helps employees newly arrived to Canada with language and other challenges by pairing them with established employees from a similar background. Bechtel, a global engineering, construction and project management company, collaborates with external organisations focused on the development of underrepresented groups in science, technology, engineering, and mathematics (STEM) fields, including the National Action Council for Minorities in Engineering.
In 2018, the American Bar Association passed Resolution 105 to promote and expand diversity in alternative dispute resolution.
Within the legal profession, recognising that lawyers play a key role in shifting behaviours towards colleagues, clients and the public, many associations and governing bodies are now internally examining their make-up, identifying issues and implementing diversity and inclusion programmes. In 2018, the American Bar Association passed Resolution 105 to promote and expand diversity in alternative dispute resolution (ADR). Resolution 105 provides an action plan, including initiating diversity discussions within law firms, asking prospective neutral panels about their policies and practices, and selecting diverse neutrals to act as arbitrators. JAMS, an American-based organisation of ADR services, took steps to assess its own members and employees, and released statistics showing that of its workforce, 27 per cent of senior management and 45 per cent of employees reflect diverse backgrounds, and 46 per cent of senior management and 72 per cent of employees are women. JAMS has created a sample clause that can be inserted into contracts to promote diversity in the selection of an arbitrator or a panel:
‘The parties agree that, wherever practicable, they will seek to appoint a fair representation of diverse arbitrators (considering gender, ethnicity and sexual orientation), and will request administering institutions to include a fair representation of diverse candidates on their rosters and list of potential arbitrator appointees.’
The Canadian Bar Association, the largest professional association for lawyers in Canada, has established an equality committee dedicated to achieving equality in the legal profession and overseeing the implementation of equality-related resolutions adopted by the association’s council. The Law Society of Ontario, which regulates legal professionals in the province, has launched a multi-pronged approach to address barriers faced by racialised members, including requiring firms to create a statement of principles to promote equality, diversity and inclusion, and publishing an inclusion index for workplaces with 25 or more licensees.
The Society of Construction Law, UK, has instituted an Equality and Diversity Policy and requires all members to agree to adhere to the policy, which includes creating an environment free from bullying, harassment, victimisation and unlawful discrimination, and which promotes dignity and respect for all. The society hosts regular seminars and panel discussions focused on issues of diversity and inclusion for the construction bar.
Clients also play a role in advancing diversity in the legal profession. Companies such as HP are issuing diversity mandates to the law firms they retain. HP has established a ‘diversity holdback’ policy that permits withholding up to ten per cent of all amounts invoiced by firms that do not meet or exceed HP’s minimal diverse staffing requirements. These initiatives by governments, associations and companies reflect an understanding around the world that diversity and inclusion are invaluable to the success and health of the construction industry.
While the benefits of improved workplace diversity and inclusion are recognised, changes in the construction industry will not happen passively. Companies, large and small, will need to continue developing and implementing initiatives to attract and retain a diverse workforce or fall behind in economic growth. Initiatives such as diversifying management, working with external organisations committed to fostering diversity, mentoring and addressing pay gap issues will enable the industry to progress. The result will be a more productive and innovative environment where all employees feel welcomed and are supported to work to their full potential.
1 David Blackman, ‘Good Employer Guide 2016: Diversity Challenge’ (Building’s Good Employer Guide, 25 November 2016) www.building.co.uk/professional/careers/good-employer-guide/good-employer-guide-2016-diversity-challenge/5085129.article accessed 24 June 2019.
2 ‘Top 10 Canadian Construction Trends to Watch in 2019’ (On-Site Magazine, 5 December 2018) www.on-sitemag.com/features/top-10-canadian-construction-trends-to-watch-in-2019 accessed 24 June 2019.
3 Emily Peiffer, ‘3 Key Takeaways from ABC’s Summit on Diversity in Construction’ (Construction Dive, 27 June 2016) www.constructiondive.com/news/diversity-in-construction/421466 accessed 24 June 2019.
4 Cathy Chatfield-Taylor, ‘Workforce Diversity in Construction Improves Productivity and Profits’ (Redshift by Autodesk, 7 November 2018) www.autodesk.com/redshift/workforce-diversity-in-construction accessed 24 June 2019.
6 See n 1 above.
7 See n 4 above.
9 ‘Three Reasons Why We Need Better Diversity in the Construction Industry’ (National Centre For Diversity, 14 November 2016) www.nationalcentrefordiversity.com/three-reasons-need-better-diversity-construction-industry accessed 24 June 2019.
10 Vivian Hunt, Lareina Yee, Sara Prince and Sundiatu Dixon-Fyle, ‘Delivering through Diversity’ (McKinsey & Company, January 2018) www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity accessed 24 June 2019.
14 Allison Arieff, ‘Where Are All the Female Architects?’ The New York Times (New York, 15 December 2018) www.nytimes.com/2018/12/15/opinion/sunday/women-architects.html accessed 24 June 2019.
16 Society of Women Engineers, ‘SWE Research: Fast Facts’ research.swe.org/wp-content/uploads/2018/10/18-SWE-Research-Flyer_FINAL.pdf accessed 24 June 2019.
17 Courtney Connley, ‘Why the Gender Pay Gap Still Exists 55 Years after the Equal Pay Act Was Signed’ CNBC (Englewood Cliffs, 10 June 2018) www.cnbc.com/2018/06/08/why-the-gender-pay-gap-still-exists-55-years-after-the-equal-pay-act.html accessed 24 June 2019.
19 Laura Haverty, ‘A Job in This Industry Has One of the Lowest Gender Pay Gaps’ NBC News (New York, 25 February 2019) www.nbcnews.com/know-your-value/feature/job-industry-has-one-lowest-gender-pay-gaps-ncna974476 accessed 24 June 2019.
20 Fiona McIntyre, ‘Construction Gender Pay Gap Revealed’ (New Civil Engineer, 16 April 2018) www.newcivilengineer.com/business-culture/construction-gender-pay-gap-revealed/10030129.article?search=https://www.newcivilengineer.com/searcharticles?qsearch=1&keywords=gender pay gap accessed 24 June 2019.
22 See https://www.nalp.org/uploads/2018NALPReportonDiversityinUSLawFirms_FINAL.pdf accessed 24 June 2019.
23 See https://www.barstandardsboard.org.uk/media/1975681/diversity_at_the_bar_2018.pdf accessed 24 June 2019.
24 National Forum on Diversity in Construction, ‘Objectives of the Forum’ www.constructiondiversityforum.org/objectives-of-the-forum accessed 24 June 2019.
25 Construction Industry Council, cic.org.uk/networks-and-committees/diversity-panel.php accessed 24 June 2019.
26 See n 2 above.
27 Canadian Construction Association, ‘Indigenous Engagement Guide’ www.cca-acc.com/wp-content/uploads/2016/03/IndigenousEngagementGuide.pdf accessed 24 June 2019.
28 See n 4 above.