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A Renewed Focus on Workforce Diversity

Recent social unrest has brought to the forefront the importance of focusing on diversity and inclusion issues as companies make their location decisions.

Q2 2021
While 2020 will certainly be remembered for the COVID-19 pandemic, the year also turned out to be transformative on the diversity and inclusion front (D&I). While much of the world sat socially distanced in their homes, we watched as our fellow Americans expressed outrage and grief over the gaps in opportunity and equity experienced by people of color. While it may have been expected that a global pandemic would shape site location strategy, is it possible that D&I initiatives would also alter the future of site location strategies?

A Wake-Up Call
With the social unrest and calls to action that 2020 brought, the year served as a wake-up call to American businesses that diversity was critical to continued success in this country. In addition to previously conducted studies such as a 2018 McKinsey & Company report finding that diverse corporate leadership leads to increased profitability, the social awakening of the general public demanded that companies become intentional about advocating for equity and acceptance.

In particular, consumer product companies have found that being intentional social justice leaders often leads to greater profits. A growing consumer base, both in numbers and in wealth, demands that the products they are buying come from a company committed to being part of the solution toward social change. As a result, corporate focus on diversity and inclusion is critical to the ongoing success of any business; however, this philosophy is not entirely new.

The Missing Factor
About 15 years ago, I was working on an office site selection project for a major financial services firm looking for a new location to place approximately 300 sales-related jobs in the western United States. The project search criteria included all the customary factors that you would think would go into the site selection process, such as labor availability and skill sets, cost considerations, proximity to educational institutions, ease of access, and real estate options. Our travels took us to numerous locations in the Mountain West, where many of the communities visited were not very racially diverse.

Companies are…developing policies to promote hiring and advancement of individuals who are, or who identify as, part of marginalized groups. One of the meetings that we had during the site visits left a lasting impression on me. We were conducting our normal due diligence and meeting with several community and business leaders around a large table. As the conversation was winding down, I asked a question that changed my perception on diversity in the site selection process. My seemingly benign question to the group was, “If there was something about this community you would like to change, what would it be?”

As we went around the room giving everyone a chance to voice an opinion on the question, we got the standard list of answers that you would expect. Each person gave an answer similar to that timeless interview question where the candidate attempts to self-identify their weaknesses, and somehow finds a way to twist that weakness into a strength. But as the round-robin of answers moved around the table, it eventually got to the only person of color in the room. He paused for a few seconds, and then he simply said in the most heartfelt way, “I wish there were more people like me that lived here.”

The answer hit me hard. As someone who grew up in Brooklyn, N.Y., I was accustomed to diversity being part of daily life. The block I lived on was filled with people from numerous ethnic and religious backgrounds. Right or wrong, business decisions have historically tended to favor financial profit and not social justice action, so it was not surprising that when I started assisting with the site location process, diversity issues rarely were factored into the overall process. But at that moment, I realized we were missing out on a critical factor in our site selection matrix.

Previously, the only D&I factor that was considered was largely tied to language capabilities, and this was typically only a factor during site location projects related to customer-facing contact centers where foreign language skills were a direct need. However, after that encounter, I realized that companies were missing out on a factor that could be an extremely important asset if deployed correctly — diversity.

Gaps of Opportunity
By comparing past site selection practices to current best practices, we can see how far things have come in the struggle to bridge the gaps of opportunity that exist today for people of color. Companies are taking more of an active role in this effort, developing policies to promote hiring and advancement of individuals who are, or who identify as, part of marginalized groups. For many companies, this is a core belief that will pay performance dividends; for others it amounts to an exercise in appeasing a socially conscious populace that has an extremely important and influential amount of buying power. But these D&I practices have predominately been impacting site selection projects that involve corporate offices, such as headquarters, major talent centers, back-office operations, and customer-facing contact centers.

But what about manufacturing projects? Traditionally, manufacturing operations were sited with specific geographic considerations in mind that related to the availability of raw materials and the delivery of finished products. In today’s environment, we are seeing a significant uptick in D&I factors working their way into the site location process for these types of facilities as well. For our most socially progressive companies, locating a facility in a community that aligns with their core belief system is a priority. We have been involved with manufacturing operations that have cut communities from consideration that scored favorably from a mathematical and financial perspective because the current political environment in that location did not match up with their core values.

In 2020 we also saw manufacturing clients remove cities from consideration due to those cities having historical ties to racial injustice, despite current efforts to promote diversity and inclusion. Through these case studies, we can see clear evidence of companies aligning their manufacturing operations with their corporate commitment to social justice.

An inclusive environment must be evident at every level of community leadership from the city council and city staff to local business leaders. In addition to the social responsibility impact, we have also seen manufacturing operations use D&I practices to potentially boost their employment and retention numbers. Underemployment and lack of opportunity disproportionately impact people of color across all industries. With a growing labor shortage tied to issues of worker engagement and the sparse availability of skilled labor, D&I practices can have a dramatic impact on the ability of a company to attract and retain talent. By directly engaging with these underserved and underrepresented populations and showing willingness to put in the training required, manufacturers are tapping into a plethora of potential which could help them solve their immediate and significant labor shortage issues.

Creating a Diverse Corporate Culture
However, in a twist of irony, all diversity and inclusion initiatives are not created equal. Focusing solely on diverse hiring goals does not automatically translate into a diverse and/or successful corporate culture. Employers must focus in on employee engagement in order to tap into the most beneficial characteristics of their D&I practices. This means that the factors we evaluate during the site selection process need to go deeper than a simple breakdown of the existing community population by race. Communities must be able to demonstrate that diversity exists not only in the context of race, but also by ethnicity, religion, sexual orientation, or gender identity among other factors.

Additionally, communities need to show that all people have access to educational opportunities that eventually translate into meaningful career opportunities. Finally, communities need to show that they have promoted an environment where marginalized groups feel included and able to succeed. An inclusive environment must be evident at every level of community leadership from the city council and city staff to local business leaders. This demonstrates to prospective companies that the community is serious about creating high-value opportunities for all people, and that traditionally marginalized persons will find welcoming arms and opportunities in things like community leadership, volunteer organizations, and wealthier neighborhoods that had traditionally been less diverse.

This type of community modeling will also show prospective companies that they will be able to operate in accordance with their core values, including meeting all D&I goals and initiatives that company leadership — and its employees — require. This may be even more critical for a community to demonstrate as the future of remote work is sure to increase beyond pre-pandemic (but hopefully decrease from pandemic) levels. As it is likely companies will still need to set up centralized offices for staff to travel to on occasion, they will need to do so in communities that continue to be leaders in the fight for equal opportunity for all, and ones that can overcome the problem of “I wish there were more people like me here.”

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