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Manufacturers: Make Diversity & Inclusion Initiatives a Priority

As the U.S. demographic changes, manufacturers and other companies must step up their diversity and inclusion efforts in order to fulfill their workforce needs.

Workforce Q4 2019
Racial profile of U.S. Population, 2045
Racial profile of U.S. Population, 2045
The term diversity and inclusion or “D&I” is more important than ever and serves a greater purpose. The U.S. demographic is shifting — the latest U.S. Census showed that 13.7 percent (or 44.5 million people) of the U.S. population is foreign-born, and by 2045, the U.S. white population is projected to be a minority at 49.9 percent, followed by Hispanics (24.6 percent), blacks (13.1 percent), Asians (7.8 percent), and multiracial individuals (3.8 percent).

So, what does this mean? It means that public perceptions and demands around diversity are changing, and companies need to pay closer attention. Some business leaders do recognize that D&I efforts need to be stepped up further and are increasingly tying D&I to overall management performance, company innovation progress, and even the bottom line.

Manufacturing D&I Initiatives
And then there are some industries where they understand that D&I initiatives are crucial, but they may be struggling to implement these efforts within their workforce. The manufacturing sector is one that is currently trying to catch up.

The manufacturing industry is traditionally more known to be white and male-dominated, which makes it even more difficult in trying to change its perception and attract a wider representation of non-white and female cohorts. Although women make up nearly half of the U.S. labor force (47.5 percent), in 2016 they represented only 29 percent of the manufacturing workforce. The industry has traditionally been seen as a “hard hats” type of job not amenable to women.

But that is all changing. The manufacturing sector is undergoing a digital transformation journey that is creating new opportunities which leverage automation and digital technologies; however, this is also creating challenges in trying to fill those highly technically skilled positions with their current workforce. Realizing this, manufacturers have changed their approach on how they recruit, retain, and promote their workforce — including expanding their D&I programs. But, because of the long-held perception of the makeup of the manufacturing industry workforce, manufacturers have a steeper climb than others in trying to expand their D&I initiatives to create fundamental changes in their culture, while also aiming to create a more diverse workforce.

D&I Initiatives are increasingly becoming embedded into organizations as a core business goal. We at PwC wanted to see how companies were going about developing D&I initiatives, so we partnered with The Manufacturing Institute and interviewed chief diversity officers and D&I professionals from manufacturing companies, as well as from other industries. Our key takeaway from these interviews is that D&I initiatives are increasingly becoming embedded into organizations as a core business goal. There may be different ways of going about how that’s done — and companies are progressing at different paces — but it’s happening, as companies strive to cultivate innovation through building a more diverse workforce, in addition to securing and retaining talent in today’s tight labor market.

D&I Efforts Must Start from the Top
When talking with the D&I specialists who were interviewed for our report, all agreed that D&I success hinges on executive leadership. So, what does that executive leadership effort look like? There are many forms of leadership that can take place — from public statements on D&I issues to the institution of training programs and establishment of policies, such as setting representation targets around recruitment and promotions — and even tying compensation, bonuses, and promotions to D&I performance.

However, even though companies acknowledge the importance of D&I to their success, there seems to be a gap between the degree of commitment at the highest levels within organizations. For example, a recent PwC study found that while 87 percent of consumer and industrial products organizations surveyed agreed that D&I is stated value or priority, only 46 percent agreed that lack of diversity is a barrier to progression in their organization. The study also found that only 33 percent of industrial manufacturing and mining companies have a C-suite D&I leader.

Women in Engineering
Women in Engineering
Is Your D&I Initiative a Success?
Every company must have a clear picture of where their D&I programs are now and where they want to go. But how do you measure success? How do you know if your D&I programs are actually working and implementing a cultural change? D&I metrics are one way to measure success and are often used to create scores and benchmarks to track improvement, or lack thereof, and signal areas of attention. For example, we are increasingly noticing that companies are seeking to tie D&I involvement and effectiveness to overall compensation schemes, such as computing a D&I “scorecard” and using it to calculate an overall performance score that drives decisions around promotion, salary increases, or bonuses.

Measuring diversity — how different employees are represented — is nothing new to most organizations, but measuring inclusion — i.e., the degree to which an employee feels valued, respected, welcomed, and understood — can be a challenge. Companies should start by capturing the status of their D&I programs and policies via metrics on D&I-related employee recruitment, hiring, retention, and promotions, and even employee exits. Once those metrics have been established, businesses should respond coherently to the outcomes of the various programs and policies.

Empower Your Employee Resource Groups
This finding was probably the most striking from our report: After conversing with D&I professionals for our survey, we have found the rising importance of employee resource groups or ERGs and how they’re influencing companies from the grassroots levels and affecting cultures upward and across organizations. The creation of ERGs is not only opening opportunities to share experiences, but also serve to advocate for positive change around diversity and inclusion. The sheer number of ERGs is really impressive across industries and suggests the whiff of a real movement.

ERGs are also becoming important for enabling companies to draw vital insights that can guide company policy around D&I issues and how to respond to sociopolitical trends and events. Some companies are spreading the word on their D&I policies through conferences, meetings, and even small group discussions, allowing employees to share their perspectives and also providing a platform for employers to clearly describe their expectations of the workforce. The purpose for all of this is to open lines of communication, which hopefully can enhance D&I efforts by informing leadership of concerns and issues that may arise. In addition, holding off-site D&I events can give participants a chance to help build networks with others possessing similar interests outside the organization. We’re also seeing how ERG initiatives are cross-pollinating and working together as stakeholders both inside and outside the company, suggesting their increasing power and influence.

Diversity Will Spur Innovation
As previously stated, manufacturers are finding themselves in a difficult position when it comes to hiring a diverse workforce as the labor market tightens and STEM-related roles are hard to fill for this particular industry. For example, the Society of Women Engineers found that while 22 percent of all college engineering majors were women, only 14 percent of working engineers are women. As the sector continues along its digital transformation journey, manufacturers must find a way to become attractive employers in order to entice a diverse workforce that has the STEM skills needed to spur innovation.

Employee Resource Groups are helping to advocate for positive change around diversity and inclusion. Manufacturers and other companies can also broaden their prospects to reach a more diverse workforce by nurturing relationships with outside groups or “workforce intermediaries” from educational institutions, federal and local employment agencies and nongovernmental organizations, and national professional groups. Such efforts can also serve to close the skills gap, especially for industrial manufacturers and other sectors that are adopting advanced technology.

Another option to consider in forming a diverse workforce is the attraction of foreign-born talent. The percentage of the U.S. population that is foreign-born rose from 9.3 percent in 1990 to 15.2 percent in 2017, as reported by U.S. News & World Report. Integrating this group of prospective employees could mean taking different approaches to recruitment, as well as making cultural changes to an organization, making it even more pertinent for organizations to have a strong and effective D&I program.

Best Practices
Throughout the process of speaking with highly-regarded chief diversity officers and D&I professionals, we have uncovered some best practices in initiating and executing D&I initiatives as follows:
  • Get leadership to lead on D&I and transmit that message through all ranks of the organization.
  • Make D&I a core (and daily) business performance issue — and not an isolated HR program.
  • Master D&I metrics (create a dashboard including all D&I-related recruiting, hiring, retention, promotion and leadership data).
  • Tie D&I performance to overall performance/compensation.
  • Organize and empower D&I employee resource groups (ERGs).
  • Cross-pollinate ideas (across functions and geographies).
  • Enable free dialogue and carry out regular training around D&I.
  • Drive D&I to help close the skills/talent gap.

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