Construction Companies That Lack Diversity Lack Profitability

Editorial Note: This article was brought to you  courtesy of Rose Morrison, managing editor of  Renovated.com.        

The phrase “diversity is our strength” might be overused, but the message remains true — especially for construction. It has become the motto for many workplace diversity, equity and inclusion initiatives. A diverse group of employees leads to better productivity and profitability. 

Construction Industry Demographics By the Numbers 

As of 2021, the construction industry employs approximately 11,271,000 people in the United States alone. Given the ongoing labor shortage, this number has likely decreased since the latest census, but it’s the most comprehensive number available. Here are the demographics of those 11,271,000 people: 

• White: 87.9% 
• Hispanic: 32.6% 
• Women: 11% 
• Black: 6.3% 
• Asian: 2.1% 

As you can see, white and Hispanic men are significantly overrepresented in the construction industry’s workforce. This trend continues despite the United States’ increase in multiculturalism in recent decades. White people remain the country’s largest ethnic group at 75.8%, while Hispanic, Black and Asian people comprise 18.9%, 13.6% and 6.1%, respectively.  

Gender diversity is a separate issue that is gaining more attention. Since most entry-level construction jobs are labor-intensive, hiring teams prefer men over women for those positions. However, women are still underrepresented throughout the entire construction workforce, not just in blue-collar positions. 

The National Association of Women in Construction breaks down the 11% of women into the following occupations:  

• Management positions: 44% 
• Sales and office: 28% 
• Service occupations: 21.1% 
• Material production and transportation: 5.9% 
• Maintenance: 1% 

Although women get near-equal representation in management positions, they remain underrepresented in all lower-level occupations. These findings show an interesting hiring pattern in the construction industry. Women are initially overlooked, but once they prove themselves and debunk the negative stereotypes, they receive a fairer chance for upper management positions. 

Construction Industry’s Labor Crisis 

The construction industry needs to be more open in the hiring process. The labor shortage reached more than 500,000 at the beginning of 2023 and continues to grow. To make up for these missing workers, companies must bring in an estimated 546,000 new hires on top of the normal hiring pace in the next 12 months.  

The labor shortage has many direct and indirect causes, including low pay and poor working conditions. These factors have made diversity initiatives more challenging to accomplish because companies with financial struggles can’t afford to prioritize minority hires. They have to take people who are willing to be underpaid, which mostly consists of young white men and undocumented immigrants with little experience. 

Construction companies with diverse workforces have a distinct advantage over non-diverse ones in the current economic climate. They have more collective experience, a wider range of perspectives and most importantly, they don’t have to resort to desperate hiring tactics to compensate for lost labor. 

Benefits of Diversity in Construction 

How does a workforce with a wide range of backgrounds and characteristics help companies succeed? Unsurprisingly, the benefits start at the top leadership positions. A comprehensive 2018 study by McKinsey found businesses with diverse executive teams were 33% more likely to outperform competitors. 

Diversity makes construction companies more productive and profitable in many other ways:

• Employee Engagement: When every employee feels represented, they’re more likely to stay engaged and voice their opinions. Working in construction might be physically demanding, but the labor is easier to tolerate when everyone is seen and heard. 
• Innovation: When workers feel empowered to voice their opinions, innovation inevitably follows. Diversity brings many unique perspectives to the table. The construction industry desperately needs new ideas, especially in reducing its global impact on the environment. 
• Brand Reputation: A diverse workforce is one of the best ways organizations can improve their brand reputation. People are happy to see employees from all walks of life working on the same team. It demonstrates the company’s commitment to social justice and improves relationships with minority customers. 
• Larger Hiring Pool: Minority job seekers are more likely to apply for an open position if the business is diverse. A larger pool of applicants makes it easier to address labor shortages and introduce new perspectives. 
• Lower Turnover Rates: When staff engagement and satisfaction are high, the turnover rate drops as a result. Workers who stay with the same enterprise can form closer relationships with their peers. They are also more likely to earn promotions from within. 

All these factors improve the speed and efficiency of construction projects, leading to happier customers and greater profits. However, financial incentives shouldn’t be the only reason to embrace diversity. 

About 80% of Fortune 500 companies reported their primary motivations for diversity were profit-driven. This motivation is understandable but shouldn’t be the organization’s main focus. Enterprises must stop making the business case and focus on diversity ethics, especially as the progressive-minded Gen Z becomes the global workforce majority. 

Building an ethnically diverse workforce is the morally right thing to do. As the world becomes a cultural melting pot, all industries should embrace equal representation along race and gender lines. Businesses must adapt to the world’s changing values. 

How Companies Can Bridge the Diversity Gap 

If businesses want to reap the benefits of a diverse workforce, they must make greater community efforts. Here are some significant ways construction companies can bridge the diversity gap and create an inclusive environment for minority workers. 

Improve Community Outreach 

The greatest thing construction organizations can do to get more diverse hires is to improve community outreach. Provide informational resources to students at local schools, attend high school and college job fairs, offer apprenticeships and host fundraising events. These efforts are especially important in low-income communities, which are more likely to have minority residents. 

Social media activity is also an essential part of community outreach. Facebook, Twitter and Instagram are the ideal platforms for enterprises to demonstrate their commitment to diversity. Users who belong to minority groups can get an up-close look at the company culture and its various outreach activities. 

Minority groups not pertaining to race or gender — such as veterans and people with disabilities — also benefit from better community outreach. These forgotten individuals need all the help they can get to find job opportunities. 

So far, the efforts are collectively paying off. College-aged people are showing greater interest in the skilled trades than in four-year universities (which is good news for companies looking to fill in-demand skilled trades). This trend bodes well for the construction industry’s labor crisis moving forward. 

Provide Ongoing Diversity Training 

Companies must provide ongoing diversity training to reduce discriminatory behavior and create an open-minded workplace. Training is a crucial part of employee development in all facets of construction. Managers should approach the topic of diversity the same way they approach safety regulations and equipment operation procedures.  

Diversity training is especially important in entry-level positions where discrimination is more likely to occur on a daily basis. These positions do most of the manual labor on construction sites. Tensions can rise, even between trusted colleagues. Companies can’t afford to have racial tensions interfering with their projects. 

Break Down Language Barriers 

English is unsurprisingly the most common language on construction sites. This wouldn’t be a problem if a significant chunk of the workforce wasn’t multilingual. The United States also has many unique English dialects that further complicate communication. 

A 2021 study confirmed language barriers in construction negatively affected worker productivity and caused avoidable delays in many projects. It can also decrease the quality of work, increase the risk of injury and lead to more wasteful construction practices. All these factors hurt the company’s bottom line.  

The construction industry can break down language barriers by providing more educational resources to non-English speaking employees. All safety manuals, handbooks, project plans and other essential documents should be available in multiple languages. Businesses should also hire more bilingual workers, especially those who speak English and Spanish. 

Update the Recruiting and Hiring Process 

Construction companies must also update their recruiting and hiring processes to make them more accessible to all demographics. This initiative requires closely analyzing your current hiring strategies to identify unconscious bias. Bias comes in many forms, including simply overlooking candidates for having foreign-sounding names. 

Once organizations identify the weak points in their hiring process, they can mitigate the bias and make the application as fair as possible. For example, there has been a massive increase in recruitment from historically Black colleges and universities, which has helped them reach a level playing field with other prestigious American universities. 

More companies are also investing in artificial intelligence to eliminate bias. By taking human emotions and prejudices out of the equation, minority groups will get equal opportunities with white men in the construction industry. This technology isn’t perfect, but it provides much-needed objectivity during the hiring process. 

A Diverse Construction Team is a Productive Construction Team 

The construction industry serves a direct purpose in the world — to build homes, businesses and other essential structures for our communities. A job so important and so dangerous has no room for discrimination along race or gender lines. A diverse construction team is a productive construction team, from communication to innovation to long-term profitability. 

 This is a guest post written by Rose Morrison, managing editor of Renovated.com .