In a world of changing homebuyer demographics, a diversity of professionals in the real estate industry leads to a range of new thinking and problem solving to everyday business problems. Over the summer, the CEO of HomeServices of America, a Berkshire Hathaway affiliate, appointed Teresa Palacious Smith as Chief Diversity, Equity, and Inclusion Officer to champion the company’s goals of greater equity and diversity among its employees and champion the mission of increasing minority homeownership.
At ALTA ONE’s virtual conference this year, she’ll be leading a session on Three Ways Diversity Can Grow Your Business. Whether you’ll be attending or not, here are some of the reasons why businesses should sit up and pay attention to initiatives to build a diverse workforce.
Why Businesses Should Focus on Diversity
In my interview with Diane Tomb, CEO of American Land Title Association, we talked about a lot of things affecting the industry, including the need to consider how professionals can create a positive change toward racial equity and sex parity within the industry and among homeownership.
“There’s an opportunity to look at our industry and think of who our clients are and how we reflect what they look like. There’s an opportunity to be more diverse. It’s the right thing to do, but it’s also good business. That’s who is going to be buying homes.”
– Diane Tomb, CEO of American Land Title Association
Diane’s right. Even if you’re not the hold-hands-and-sing-Kumbaya type, adding more diversity of people equals more diverse experiences, diverse thought, diverse voices, and diverse problem solving to your business.
Here are some powerful statistics on why diversity makes good business sense:
- A Boston Consulting study found that companies with more diverse management teams have 19% higher revenues due to innovation.
- According to a Deloitte Millennial Survey, job loyalty among millennials increased as employers address diversity, inclusion, sustainability and re-skilling.
- One Pew Research Centre survey listed several areas where women scored higher in key areas of both politics and business. The survey showed that women are 34% more likely to be honest and ethical, 34% better at working out compromises, 25% more likely to stand up for their beliefs, 30% more likely to provide fair pay and benefits, and 25% better at mentoring.
- A McKinsey Diversity Matters report found a 21% higher profitability rate associated with organizations that have sex parity on their leadership team versus those that don’t.
- That same report also showed that companies in the top 25% for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry median.
Reaping the benefits of a diverse workforce goes beyond hiring for appearances. It requires that companies actively create a culture of inclusion by promoting minorities and women to positions of leadership and encouraging an environment of fostering new ideas from everyone.
In the Boston Consulting study, it notes that some big impacts can come from small changes among a company’s leadership team in terms of gender balance, national origin of executives, range of industry backgrounds, and career paths. Age and educational focus showed a lesser effect.
Women in leadership
Over the last few decades, women’s representation in the workforce has grown. In the United States, women are catching up with men in business as 40% hold a management occupation, but when it comes to rising above the ranks of manager, women often struggle.
Diane also highlighted that while women make up about 70% of the title industry, their roles are often limited to everyday operations and they are underrepresented in higher decision-making roles.
In the 2019 State of the Title Industry Report, only 1% of female respondents indicated their role as CEO or president of their company. That number lags behind the average (23%) among all US organizations and for Fortune 500 companies, it’s 6.6%.
Dr. Jean Lau Chin’s research on leadership shows that women frequently:
- Experience challenges to their leadership
- Are questioned about their legitimacy as leaders
- Are evaluated more negatively than men doing the same job
- Face performance expectations based on sex stereotypes rather than their leadership
She has also found that women tend to eschew the Charisma/value-based leadership style preferred by many men and more likely to embrace collaborative and participatory forms of leadership. What we consider to be a good leadership trait or style has evolved in response to scandals like Enron, paving the way for more appreciation for stereotypical female characteristics like compassion and collaboration in our leaders.
While many Americans say that women are just as qualified as men to run for office or run a boardroom, some sex stereotypes about women still persist to both their benefit and detriment.
One Pew Research Center survey showed that most Americans find female leaders indistinguishable from their male counterparts on many key leadership characteristics like intelligence and capacity for innovation, but many people say women are stronger than men in terms of compassion and organization.
When asked who would do a better job running a professional sports team, most Americans (54%) say men would do a better job and only 8% thought a woman could do better. A majority (46%) also agreed that a man would be better qualified to run a large oil or gas company. But when it comes to running a major hospital or retail chain, respondents indicated that a woman is two and a half times more likely to do a better job than a man.
Racial minorities in leadership
Today, there are only three black Fortune 500 CEOs. In 2009, Urusal Burns became the first black female CEO of a Fortune 500 company, Xerox. Currently, there are no black female Fortune 500 CEOs.
In an article for Fortune, Burns shares a couple of reasons why her success hailed as a milestone has become more like an anomaly:
- Education and Career Development: “Even with black women graduating from college in record numbers, ‘not enough are coming out of the education system to get them all the way through to the C-suite,’ states Burns. And the black women who do make it often end up in support positions rather than the operational roles that lead to CEO jobs.”
- Networking: Burns says that more importance should be placed on developing connections between black women with leadership potential and upper management. “There is no natural pathway for connection; it’s not going to happen just walking down the hall,” she explains. Intentionally developing these relationships through mentoring can help provide direction.
In general, the US Bureau of Labor Statistics shows that black (31%) and Hispanic (22%) workers are less likely to be employed in management, professional or related occupations (the highest paying major occupation category) compared to white (41%) and Asian (45%) workers.
Racial minorities face biases and stereotypes that challenge their ability to lead. Recently, a black British barrister shared how these ugly and racist assumptions affect how she is treated on a regular basis by other professionals in the criminal justice system. Her tweet about being mistaken for a defendant and yelled at three times in one day went viral. “I felt exhausted. I was shouted at, ordered to leave the courtroom, and treated dismissively multiple times. It was humiliating and no one, defendant or barrister, should be treated like this,” she wrote for the Independent.
One of the best ways to increase women and minority leadership at your company is to create more mentorship opportunities. According to a study by Heidrick & Struggles, women and minorities were more likely to say that mentoring was extremely important to their careers. These groups were also more likely to continue to have an active relationship with their primary mentor.
The study’s co-author, Mark Livingston, said that mentoring is effective for mentees to get access to leadership they would not get otherwise. He says, “It gives them access to top leaders’ thinking and their experiences – how they got where they are. Again, for women and minorities who are underrepresented in top leadership, this is an opportunity for them to be advancing their careers.”
However, when there are few women and minorities in leadership positions, it can make finding the right mentor more difficult. Almost everyone seeks out a mentor with a similar background. Christine Lindor, a management consultant and author of The MECE Muse, echoed this sentiment as a black woman in the male-dominated world of business consulting, “I grew up thinking a mentor was going to be an older version of myself. I was looking for someone who looked like me and I never found that person. I hardly saw women in leadership consulting positions and even to this day it’s rare to see people of color in leadership consulting roles.”
If industries can put more people with diverse backgrounds in executive leadership roles to foster the next generation of diverse executives through mentoring programs, it creates what Livingston describes as a “virtuous circle.”
Mentoring programs also help organizations attract more candidates and retain employees at higher rates, but the organic relationships formed between leaders and employees in informal settings work better than formal mentoring programs. Livingston says, “If you don’t have senior leaders engaging and wanting to act as mentors, if you don’t create an environment to allow these relationships to generate, folks found that mentoring relationships just don’t last when they are seemingly forced via a formal matchmaking process.”
So if you’re looking to increase diversity among your leadership team, cultivating a culture where informal mentoring of employees from diverse backgrounds with mentors who can relate their experiences is a good place to start.