CRE's professional profile hinges on retention

CRE’s professional profile hinges on retention

Recruitment called the easier step in diversity, equity and inclusion strategies
Monday, January 30, 2023
By Barbara Carss

Employee turnover eroded some of the gains the North American real estate industry made in broadening its professional profile last year. Recently released results of a second annual benchmarking exercise for diversity, equity and inclusion (DEI) policies and practices show a year-over-year increase in the proportion of women and people of colour across 171 participating companies, with women representing 42.5 per cent and people of colour accounting for 31.3 per cent of their total workforce as of October 2022.

However, an uptick in junior and mid-level hiring belies the leakage of under-represented groups higher on the career ladder. Notably, women of colour accounted for slightly more than 7 per cent of all new hires in the senior professional ranks and 14 per cent of departures — effectively shrinking in presence.

“We’re losing women of colour at twice the rate that we’re hiring,” observed Dionna Johnson Sallis, director of DEI management consulting, with Ferguson Partners, which administered the survey on behalf of seven commercial real estate associations worldwide, including Canada’s REALPAC. “To bring the diversity in, that’s step one. Step two, the harder of the two, is the retention.”

Benchmarking is arguably part of that more challenging strategy. The seven sponsoring organizations — representing private and listed real estate companies, investment managers, developers and institutional investors throughout North America, Europe and Asia-Pacific — launched the initiative in 2021 as a means to gather DEI data, enable peer-to-peer comparisons, measure outcomes, chart progress and identify slippage. For 2022, data is drawn from 210 survey respondents (81 per cent based in North America) that collectively have more than 357,000 fulltime employees and hold more than USD $2 trillion worth of assets under management.

During an online presentation last week, Johnson Sallis framed disconcerting findings in the context of overarching trends and reiterated that reporting and benchmarking are meant to help highlight shortcomings and where more work is needed. “It doesn’t have to be detrimental if we catch it,” she asserted.

“In the near-term, the focus seems to be more around recruitment, but a holistic DEI program is not just about recruitment,” concurred her colleague, Lindsay Wilhusen, head of Ferguson Partners’ survey practice. “Once you bring these individuals on, how do you retain them? How do you develop your people within your organization? How do you create that inclusive work culture and how do you track performance and hold yourself accountable for those standards that you’ve set as an organization?”

More formal commitment to action registered in 2022

Beginning with commitment: the majority of 2022 survey respondents (53.6 per cent) meet the definition of having a “formal” documented DEI policy with senior management endorsement; 30.4 per cent have a dedicated budget for DEI initiatives with the average allocation pegged at USD $225,000; and 25.4 per cent have staff solely carrying out DEI pursuits.

The largest share of respondents (55.2 per cent) fund DEI initiatives via other department budgets, such as human resources. Nearly 42 per cent report they have some DEI programs, despite lacking a formal policy. Meanwhile, fewer than 5 per cent have no vestige of a DEI program, but 14.4 per cent provide no funding for DEI actions.

Compared with 2021 data, Wilhusen reported growth in the adoption of formal DEI programs across all sizes of companies. She also correlated formal DEI policies with a tendency to higher proportions of people of colour in companies’ staffs.

Nevertheless, women generally made more noticeable gains in 2022. White women were the only demographic sub-category to increase their representative share at both the executive management and senior professional levels. (White men continue to dominate in sheer numbers, but the weighting of their share slipped.) Men of colour made gains at the senior professional level, but dropped slightly within executive management ranks.

The split between sub-categories is most equitable at the junior professional level, with white men and women each accounting for about 27 per cent of employment and men and women of colour each filling 20 to 21 per cent of positions. (No ethnicity is specified for 2.8 per cent of men and 2 per cent of women.) Divisions widen with career experience as white men hold 56.3 per cent of the senior professional positions versus 20.9 per cent women, 11 per cent men of colour and 7.6 per cent women of colour. (Again, no ethnicity is specified for 3.1 per cent of men and 1.1 per cent of women.)

That latter reflects the historic predominant intake of white men, while DEI proponents place priority on changing that profile as succeeding generations become the majority. Nearly 70 per cent of North American survey respondents are aiming to increase the number of senior level employees from under-represented groups by at least a minimum targeted percentage, and nearly 54 per cent agree that greater diversity in their company’s senior leadership should be one of the key goals of a DEI program.

Pickup in mentoring and training support indicated for 2023

With the passing of time since the events around the murder of George Floyd galvanized many employers to introduce or expand DEI programs, Johnson Sallis warns that momentum could be flagging. That said, 2022 survey results show increased uptake across a slate of 13 recruitment, retention, professional development and inclusive culture measures since 2021.

For example, two-thirds of North American respondents report they now reach outside the industry in the search for job candidates and make sure representatives of underrepresented groups participate in hiring decisions. The same percentage also host in-house events and celebrations of importance to under-represented groups, such as marking Pride Month, Black History Month and International Women’s Day. An even greater proportion have ensured dress codes accommodate religious observations (76.8 per cent) and bestow holiday time for significant religious and cultural days not covered by statutory vacation days (77.7 per cent).

Fewer than half the respondents currently provide personalized mentoring or sponsorship (48.7 per cent) or inclusive leadership training (46.2 per cent) for employees from under-represented groups. However, those results could be quite different in the 2023 survey since 28 to 36 per cent indicate they plan to introduce such programs this year.

Johnson Sallis places particular emphasis on prospects for more sponsorship, citing its ABCDs — amplify, boost, connect and defend — as a progressive force for surmounting barriers, identifying opportunities and navigating a path to advancement.

“A mentor will answer questions and prep. Sponsors will lead the way,” she submitted. “If I had to sum up the major difference between the two, it would be influence.”

And the required learning goes two ways.

“People leave because the dominant culture sometimes doesn’t know that their practices are exclusive to the very talent that they want to keep,” Johnson Sallis mused. “Going back to two-and-a-half years ago when there was a huge uptick of DEI awareness, it’s starting to fall flat within organizations. The class of 2020 and class of 2021 are starting to decipher whether what they received was lip service or true implementation of a strategy.”

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